Gold medal-winning British athletes are today under fire for promoting high-risk trading that have cost naive savers millions of pounds.
Olympians Max Whitlock MBE and Hollie Pearne-Webb MBE are among the sporting heroes signed up as brand ambassadors for broker Trade Nation.
Yet, as the trading site admits, nearly 80pc of its retail investors lose money. City watchdog the Financial Conduct Authority (FCA) has warned that investors using similar platforms lost more than £1billion in one year alone.
Trading on celebrity status: Hollie Pearne-Webb
England international cricket stars Dom Sibley and Craig Overton also promote the brand and have carried the site’s logo on their bats. But investment experts say the endorsements from household names are deeply irresponsible.
It comes as young, first-time investors have piled money into the online trading boom during the pandemic. Experts have long raised concerns that new investors are risking huge loses betting on cryptocurrency and volatile financial assets.
Reality TV stars are also increasingly used to promote trading sites and smartphone apps to their followers. The Only Way Is Essex star Lauren Goodger had an Instagram post about trading foreign currency banned just last week after failing to declare that it was an advert.
Gymnast Whitlock, who won gold in Tokyo in the men’s pommel horse event, is quoted by Trade Nation as saying: ‘Trading means weighing up risk and reward and I find that very exciting, especially when you think about how this overlaps with what I do as a gymnast and athlete.’
The six-time Olympic medallist, who promotes the broker to his 277,000 followers on Instagram, adds: ‘I try to go out of all competitions with a ‘bang’, and sometimes I take risks — and sometimes that pays off. It’s important not to dwell on the mistakes when things don’t work out. Successes and failures are all part of the journey.’
What the VIPs are endorsing
Trade Nation is a trading platform with offices in London, Sydney, Johannesburg and the Bahamas. Its ‘brand ambassadors’ include sporting heroes such as Olympic gold medal-winning gymnast Max Whitlock and England cricketer Dom Sibley.
Investors can buy and sell financial assets, including foreign currency — betting on whether the price will go up or down. But the website warns that 78pc of retail investors lose money.
Gary Stevenson, former trader at Citibank, says he is extremely concerned about the booming online trading industry and the ‘irresponsible marketing of it to ordinary, hard-working people’. He says: ‘Trading is a risky and potentially addictive activity, even for financial professionals, and the vast majority of non-professionals who take part lose money.
‘Hundreds of thousands of people across the country are losing money on these platforms, partially because of marketing like this that portrays what is essentially gambling as sound financial investment, and I would encourage Max and Hollie to withdraw their support.’
Trade Nation offers investors the chance to buy and sell financial assets including foreign currency (forex trading) — betting on whether the price will rise or fall. The deals use contract for differences (CFDs) that allow investors to profit from price fluctuations, without ever owning the asset.
On the broker’s website, under the heading ‘The legal stuff’, it warns: ‘Financial spread trading comes with a high risk of losing money rapidly due to leverage. You should consider whether you understand how spread trading works and whether you can afford to take the high risk of losing your money.’
Justin Modray, of Candid Financial Advice, says: ‘It’s really concerning to see Olympic heroes promoting a spread betting site, as they and their fans may not appreciate the potentially hefty risks involved.
England international cricket star Dom Sibley also promote the brand Trade Nation and have carried the site’s logo on his bat
‘This type of investing amplifies market movements, so get a bet wrong and your losses could quickly spiral. ‘Where celebrities are paid to endorse investment services I’d like to see them disclose whether they have invested, and, if so, their track record.’
Money Mail asked if the Trade Nation ambassadors had tried trading using the site themselves and if they had made any money, but received no response. Pearne-Webb, who won the field hockey gold after scoring the winning penalty in Rio in 2016, says on the broker’s website: ‘I like what Trade Nation stands for in terms of promoting hard work in order to reap the rewards. Nothing in life comes easy! This is exactly the same principle I have to align to as an elite athlete.
‘I’ve grown very interested in trading recently… which is why I’m really excited to be working with Trade Nation.’
But Laura Suter, head of personal finance at investment service AJ Bell, says: ‘The danger with household names touting these risky trades is that people will think they are suitable for everyone, when in reality doing forex or CFD trading is for knowledgeable, experienced investors who can afford to ride the volatility they bring.
It’s somewhat ironic that people who should know so much better are putting their names to schemes which are aimed at popularising monumental risks and a ‘get rich quick’ philosophy
Neil Lovatt, commercial director at mutual Scottish Friendly
‘As a minimum, any ‘celebrity’ touting these ‘investment opportunities’ should be forced to explain exactly how they work, and, for example, go through the technical details on forex trading.
‘But people who see these posts or endorsements shouldn’t be drawn in without doing their research — don’t just invest because an influencer has. Make sure you know how much risk you’re taking.’
When the partnership with Trade Nation was announced in January, cricketer Sibley said: ‘I understand from talking with the team at Trade Nation that trading the financial markets is something that many people across the world are looking at.
‘But, as with professional sport, trading is not easy. It requires effort and work to become successful and this fits in with my goals and beliefs as a cricketer.’ Bowler Overton added: ‘I have been fascinated by trading and the financial markets for some time.’
Investment experts have criticised the partnerships and say the influential sports stars are sending out the wrong message. Neil Lovatt, commercial director at mutual Scottish Friendly, says: ‘World-class athletes know that you gain success with patience, hard work and putting in the hours. The difference between gold and bronze is not just effort and skill but avoiding silly mistakes and stupid risks.
‘It’s therefore somewhat ironic that people who should know so much better are putting their names to schemes which are aimed at popularising monumental risks and a ‘get rich quick’ philosophy.’
Gymnast Max Whitlock, who won gold in Tokyo in the men’s pommel horse event, is quoted by Trade Nation as saying: ‘Trading means weighing up risk and reward and I find that very exciting, especially when you think about how this overlaps with what I do as a gymnast and athlete’
Campaigners have likened the type of trading offered by Trade Nation to gambling and called for tighter regulation.
Matt Zarb-Cousin, director of Clean Up Gambling, says: ‘These CFD platforms encourage ‘over trading’ and speculating, which is much more akin to gambling than it is to investing. But because they’re regulated as financial services, consumers are deceived by the veneer of legitimacy this gives what are essentially pseudogambling sites.
‘Endorsements from Olympic athletes are lending more credibility to something that has little to no relation to skill.’
The FCA requires CFD trading sites to calculate and publish the percentage of customers that have lost money over the last 12 months. The figure is typically around 80pc. Yet Trade Nation chief executive Stuart Lane defended the partnership with sports stars.
He told Money Mail: ‘Hard work and commitment are the only ways to succeed in sport and the same goes for trading. This is why we have made it clear that customers should spend time properly educating themselves on the financial markets before they even think about placing a trade.
‘Our customers know that there are risks, and we provide all the tools and support they need to trade sensibly.’
A spokesman for the cricketers says neither of them had encouraged anybody to trade and that Trade Nation was keen to educate and offer comprehensive training programmes. He adds: ‘We keep all of our partnerships under constant review.’
Representatives for Max Whitlock and Hollie Pearne-Webb were approached for comment.