A pair of figures from FINRA Foundation research has the shape of a warning: retail investors who used social media for investment decisions answered 42% of an investment-knowledge quiz correctly, while 63% described their knowledge as high. The numbers have since become a compact story about confidence outrunning competence.
That interpretation is plausible, but incomplete. The underlying research brief also found that social-media users consulted more information sources and checked financial professionals' backgrounds more often than non-users. Their problem was not simple lack of access or effort. It was that those activities coexisted with weaker quiz performance and much higher reported fraud exposure.
Two measures create the apparent contradiction
FINRA's objective measure was a 10-question quiz covering returns and risk, margin, short selling, fees and taxes. Social-media users answered 42% correctly, compared with 47% for non-users. Its subjective measure asked respondents to rate their knowledge from one to seven; ratings of five through seven counted as high. Sixty-three percent of users fell in that group, versus 53% of non-users.
Those are group averages built from different instruments, not proof that the same individual claimed mastery and then missed 58% of the questions. The brief calls the pattern indicative of relative overconfidence, and says it persisted after controls for demographic and psychographic factors. “Calibration” is still the more precise analytical label: how closely self-assessment tracks demonstrated knowledge.
The distinction matters for platforms, brokers and educators. More market access can improve participation without automatically improving risk comprehension. A confident user may place greater weight on a weak source, trade a complex product earlier or interpret familiarity with market language as understanding. Those are possible mechanisms, not outcomes the survey directly observed.
More research did not produce safer outcomes
The study challenges another easy assumption: that social-media investors live inside one isolated feed. Excluding social media itself, users reported relying on 7.6 information sources on average, compared with 4.0 among non-users. They were more likely to use brokerage research, financial articles, online video, podcasts, apps, professionals and friends or family.
They also reported more formal checking. Thirty-six percent of users said they had checked a financial professional's background, registration or licence with a state or federal regulator, versus 14% of non-users. FINRA's BrokerCheck description shows what that process can establish: registration history, qualifications, employment and certain disciplinary or financial disclosures.
So the result is not “more sources, less verification.” It is more sources and more reported verification alongside worse outcomes on other measures. Breadth can add independent evidence, but it can also repeat the same claim across several channels. A background check can confirm a professional's record, but not validate every stock tip — and it offers little protection if the person in the message is an impostor.
Fraud exposure is the financially material result
The largest gaps appeared in fraud questions. Twenty-nine percent of social-media users said they had been targeted by an investment fraud or scam in the prior year, compared with 3% of non-users. Among respondents who said they were targeted, 68% of users reported losing money, versus 42% of non-users.
The survey also presented a hypothetical investment promising a guaranteed, risk-free 25% annual return for five years. Sixty-nine percent of social-media users failed to reject it, compared with 13% of non-users. The authors reported that fraud losses and failure to detect red flags remained significantly more likely among users after controls that included age and investment knowledge.
These figures are associations, not a causal chain from scrolling to loss. Social-media use may increase exposure to unsolicited approaches; people targeted by scams may seek information on more channels; newer or more active investors may do both. The SEC's February 2026 alert identifies practical mechanisms the survey cannot see, including impersonation, group-chat stock tips and manipulated promotions. It recommends checking registration and then contacting the professional through independently verified details, because a genuine name can still be used by a fraudster.
Demographics prevent a causal verdict
The study used the 2024 NFCS Investor Survey: an online sample of 2,861 adults who owned investments outside retirement accounts. Data were weighted to approximate that investor population by age and education. The main survey report says responses were self-reported and not checked against account statements or third parties; subgroup estimates may not be representative.
The groups were also materially different. Sixty percent of respondents under 35 used social media for investment decisions, compared with 9% of those 55 and older. Users tended to be younger and have smaller portfolios, and varied by gender, race and ethnicity. Multivariate controls reduce some obvious confounding, but an observational, cross-sectional survey still cannot randomly assign social-media use or prove direction.
There is a constructive counterargument. Social media may draw in people who did not see themselves represented in traditional finance. In the brief, 46% of users agreed that people like them are not usually investors, compared with 23% of non-users. Wider participation and community can be benefits even when knowledge gaps demand stronger safeguards.
Calibration can be measured in the next survey
The useful target is not lower confidence by itself. It is confidence that becomes more accurate as knowledge and verification improve. Future evidence would be stronger if repeated surveys followed the same people, separated message boards from platform feeds, linked self-reports to observed decisions, and tested whether specific interventions reduce losses.
An improving pattern would combine higher quiz scores with fewer respondents accepting guaranteed-return scenarios, lower losses conditional on targeting and verification performed before money moves. More source use without those changes would show activity rather than progress. If fraud exposure fell while participation remained broad, the access-versus-safety trade-off would look less severe.
The 63%-versus-42% headline is memorable. FINRA's deeper result is more demanding: engaged investors can research widely, perform some due diligence and still misjudge what they know. Access supplies information. Calibration determines how safely it is used.