Financial FOMO

One of the biggest challenges I see with investors today isn’t a lack of information; it’s having too much of it.

Financial FOMO, or the fear of missing out, has become a real driver of behaviour, particularly as social media and online commentary continue to dominate how people consume financial news.

Information is now available instantly, right at our fingertips. And when someone on Instagram or another platform has thousands, or even millions, of followers, their advice can feel authoritative, almost unquestionable.

But while some of what they share may be relevant, a lot of it isn’t tailored to the individual situation of the person reading it. That’s where the conflict starts to arise with more traditional, fundamentals-based advice.

AI is a perfect example and I’m asked about it constantly; not just where to invest, but whether clients should be getting out because it might be a bubble.

Is this the next industrial revolution? Or is it more like the tech boom, where timing mattered just as much as participation? Those questions reflect the anxiety people feel when they see others talking about massive gains and worry they’re being left behind.

Crypto and NFTs followed a similar pattern. At one point, they were everywhere. Now, NFTs barely come up at all.

What’s important to remember is that we tend to hear far more about the success stories than the many cases where people lost money. But when an investment becomes difficult to explain - how it makes money, how it’s priced, why it has value - that’s usually a sign to be cautious.

With an aging client base, I often notice that when people who wouldn’t normally be on the cutting edge of technology start asking about a particular investment, it’s often near the peak of public excitement. That doesn’t automatically make it a bad investment, but it does mean emotions may be running high.

As advisors, we always bring these conversations back to the plan. If there’s room to explore something new, and if losing that money wouldn’t derail long-term goals, then sometimes it’s okay to “scratch the itch.” But responsibility always comes first and our job is to make sure clients understand the trade-off between risk and return.

I’m human too and I see market trends and feel curiosity just like anyone else. But I would never recommend something to a client that I wouldn’t be comfortable owning myself. I tend to be conservative, and that’s likely why I do this work. In a world full of hype, staying grounded is often the most valuable strategy of all.

Carlo Cansino is a Senior Financial Advisor with CI Assante Wealth Management Ltd. The opinions expressed are those of the author and not necessarily those of CI Assante Wealth Management Ltd. Please contact him at (905) 771 - 5200 or visit https://tmfg.ca/  to discuss your circumstances prior to acting on the information above. CI Assante Wealth Management Ltd is a Member of the Canadian Investor Protection Fund and the Canadian. Investment Regulatory Organization.