In the world of investment advice, a new player has emerged that leaves traditional analysts behind: the finfluencer. A recent study by Vaibhav Lalwani on financial YouTubers in India reveals fascinating insights into how these unregulated advisers influence markets. Insights that institutional investors cannot afford to ignore.
The study, which analyzed more than 31,000 videos from 38 prominent financial YouTube channels between 2017 and 2024, shows that finfluencers have a predictable preference for certain types of stocks. They systematically focus on stocks with
- high trading volumes,
- strong momentum returns,
- lofty valuations, and
- heavy intraday activity.
In other words: they deliberately choose stocks with the potential for short-term price moves.
This finding is anything but trivial for institutional players. While traditional analysts often focus on fundamental value and long-term perspectives, finfluencers operate by a different logic. Their business model revolves around viewer engagement and growth, which draws them to spectacular stories and stocks. The result is a bias toward equities that can hold attention—precisely the names that also attract retail investors.
What makes this study particularly relevant is the discovery that finfluencer recommendations actually have predictive power for future stock returns. Stocks more frequently recommended by financial YouTubers perform significantly better in the following month. This raises fundamental questions about market efficiency and the role of social media in price formation.
For institutional investors, it means a new information channel has emerged, running parallel to traditional research. Finfluencers act as an early warning system for retail sentiment and can signal which stocks may come under pressure from retail buying. It is a form of crowd-sourced market intelligence that traditional models fail to capture.
The implications go beyond signal detection. The study shows that positive recommendations from finfluencers have much stronger predictive value than negative ones. This asymmetric effect suggests the predictability is likely driven by attention-induced buying pressure from followers rather than superior stock-picking skills by the influencers themselves.
This dynamic creates both opportunities and risks. Institutional players can benefit by monitoring finfluencer sentiment as an early indicator of retail flows. At the same time, a new kind of market manipulation risk arises, where unregulated content creators can have significant market impact without the checks and balances that bind traditional analysts.
The phenomenon is not limited to India. According to FINRA research, YouTube is the most widely used social media platform for financial advice worldwide. With billions of views on financial content, the influence of finfluencers is growing exponentially. For asset managers, this means retail sentiment is increasingly shaped by sources outside the traditional research ecosystem.
The practical implications are clear. Risk management teams need to start monitoring finfluencer trends as part of their early warning systems. Trading desks can profit from sentiment shifts initiated on social media before they show up in traditional metrics. And product teams must understand how retail flows are increasingly driven by social media narratives.
At the same time, this raises questions about market integrity. If unregulated content creators can systematically influence market prices, a new form of information asymmetry emerges. Institutional players with access to finfluencer monitoring potentially gain an edge over those who rely only on traditional sources.
Lalwani’s study marks a turning point in how we think about market information. The days when financial advice flowed exclusively through regulated channels are gone for good. For institutional investors, the question is no longer whether to monitor social media sentiment, but how quickly they can integrate it into decision-making. The finfluencer revolution is unstoppable—the question is whether traditional players can keep up.
Gertjan Verdickt is assistant professor of Finance at the University of Auckland and a columnist at Investment Officer.