Relationships between marketing and compliance teams must be built to mitigate the potential risks posed by financial influencers, according to a report.
Guidance by the CFA Institute, “A marketing and compliance primer,” said marketers must define clear boundaries, educate, demand transparency, and put supervision in place before hiring influencers.
The report comes as the UK watchdog is due to release regulation for the financial firms that are increasingly utilising influencer marketing strategies to access different audiences.
“Compliance officers at financial services firms can play a critical role in identifying and mitigating these risks to help ensure their colleagues in marketing build successful partnerships with finfluencers,” the report said.
The report also encourages firms to consider whether the rewards of hiring finfluencers outweigh the possible reputational, regulatory, and financial risks.
Finfluencers help democratise and demystify financial services providing relatable, lived experiences. Through engaging storytelling finfluencers connect with their communities on important topics that are often not being talked about by their friends and family.
Scott Guthrie, director general at the Influencer Marketing Trade Body, said the guide offers practical advice on how to benefit from finfluencer collaborations whilst navigating potential risks.
“The guide covers important aspects including identifying the applicable regulators, along with compliance obligations and the importance of effectiveness disclosure,” said Guthrie.
By working alongside compliance teams, marketers can foster a culture of responsible engagement and better capitalise on finfluencers.
“Compliance training should emphasize that your finfluencers’ statements must be truthful, balanced, and accurate.
“Depending on the jurisdiction, finfluencers should be instructed on the need for affirmative disclosures about their activities,” the report added.
Staying vigilant, adaptable, and committed to compliance will safeguard firms against regulatory action, the report concluded.
The CFA Institute is a not-for-profit organisation that provides investment professionals with financial education.