Bringing Order to the Finfluencer Ecosystem

Canada’s financial regulatory system is built for a world that no longer exists.

It assumes that financial advice is delivered by licensed professionals, through regulated firms, in clearly defined settings. But for millions of Canadians – especially younger ones and those with modest assets – that is no longer how financial information is consumed. Today, investment ideas, trading strategies, and money advice are increasingly delivered through social media, by “finfluencers” who operate almost entirely outside the regulatory perimeter. This shift reflects not only changing preferences, but reduced access to regulated advice models for smaller account sizes which are deemed uneconomical by many firms.

This is not a fringe phenomenon. For many first-time investors, social media is now the starting point for financial education. Some of that content is responsible and genuinely educational. Much of it is not. And the real problem for policymakers is not that bad information exists, but that the current regulatory framework has little to say about influence when it is decentralized, algorithm-driven, and monetized in opaque ways.

Canadian financial regulations still rely heavily on the concept of “advice” as something personalized, compensated, and delivered one-on-one. Finfluencers exploit that gap. They routinely provide highly specific investment guidance while insisting – often verbally and in fine print – that they are “not giving advice.” Legally, those disclaimers may matter. Practically, they do not. Audiences do not consume this content as abstract education; they consume it as guidance from someone they feel connected to and trust because they hold similar worldviews.

The result of this is a regulatory grey zone where influence is powerful, incentives are misaligned, and accountability is thin. Licensing, suitability, know-your-client requirements, the traditional regulatory rules, were never designed for a digital ecosystem where a single video can reach hundreds of thousands of people in minutes, often across borders. By the time regulators react, the damage may already be done.

But it would be a mistake to reach for heavy-handed solutions. Over-regulation risks sweeping up legitimate educational content, chilling financial literacy efforts, and pushing creators onto platforms or jurisdictions where Canadian regulators have even less visibility.

But doing nothing is not a neutral option, as I discuss in my recent C.D. Howe Institute paper. The current vacuum creates exactly the wrong incentives. Social media algorithms reward engagement, not accuracy or prudence. That encourages increasingly extreme claims, risky strategies, and speculative behaviour, particularly when combined with leverage, derivatives, or volatile assets like crypto. Regulatory frameworks that raise fixed compliance costs can unintentionally narrow the range of viable advice business models. When regulated providers retreat from smaller accounts, unregulated digital sources predictably expand to meet unmet demand.

What policymakers should focus on are proportionality and transparency as key regulatory goals. In practice, investor needs exist along a spectrum, ranging from basic guidance and decision support to comprehensive financial planning. Regulatory frameworks that recognize only the most intensive forms of advice risk excluding scalable models capable of serving modest‑ and middle‑income Canadians and pushing them to seek advice in unregulated spaces. Hence the rise of finfluencers.

Many finfluencers are not just sharing opinions but they are marketing products or services, earning money through affiliate links, referral bonuses, sponsorships, and token promotions that are often poorly or never disclosed.

This is where regulation can be modernized without becoming overbearing. Clear, enforceable disclosure standards for digital financial content, especially where compensation or conflicts of interest exist, would go a long way toward aligning online behaviour with a shift toward principles‑based regulation, such as that being advanced by Ontario’s Financial Services Regulatory Authority (FSRA).

Enforcement, however, remains a challenge. Even when existing laws are broken, regulators face real capacity constraints. That reality points to the need for deeper cooperation with platforms themselves, clearer expectations around takedowns, and better tools to understand how algorithms amplify financial content.

Financial literacy is often offered as the solution, and it has a role to play. But education alone cannot counteract a system designed to reward hype. Teaching Canadians how to assess risk, recognize persuasion tactics, and understand incentives is necessary, but it cannot substitute for guardrails.

The rise of finfluencers reflects a broader shift in trust. Younger Canadians are often skeptical of institutions and more receptive to peer-driven sources of information. Regulation that assumes a return to older, one-size-fits-all regulation of advice, compensation, and sales practices will fail.

Finfluencers are not going away. The real choice facing Canada is whether to continue regulating a financial system as it was, or to confront the reality of a digital financial ecosystem that is already shaping investor behaviour. Regulatory frameworks that preserve flexibility for sustainable advice business models, while maintaining clear disclosure and accountability standards, offer a more durable response than attempting to regulate influence after the fact. Waiting until harm becomes systemic is not prudence, it is abdication.

Gary Edwards is Co-Founder and Principal of Golfdale Consulting. To send a comment or leave feedback, click here.

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The views expressed here are those of the author. The C.D. Howe Institute does not take corporate positions on policy matters. This Memo is extracted from a recent C.D. Howe Institute podcast.

This Memo is extracted from a recent C.D. Howe Institute podcast.