Jul 30, 2021
A friendly word of warning to those looking to social media and online forums for investment, money or finance tips — it could be irrelevant, misinformation or worse, a scam.
The Australian Securities and Investments Commission (ASIC) has cautioned Australians about the dangers of taking financial advice from online personalities.
Instead, it’s recommended to get personalised advice from qualified, licensed and experienced professionals who not only have the expertise but also the accountability.
Gaining audiences and influence across digital platforms, especially among the younger generations, ‘finfluencers’ — an influencer who shares finance-focused content — are swaying their followers into making financial decisions.
Their opinions range from helpful advice, such as budgeting and saving, to more problematic pressures like pushing particular investment schemes and asking for money. While the content might be engaging and the opportunity might sound amazing, these self-proclaimed ‘financial gurus’ are unlicensed to give financial advice, and following their recommendations could put you in hot water.
Unregulated and unlicensed
In Australia, it is illegal to give personal financial advice without an Australian Financial Services Licence. As such, ASIC has outlined concerns about unlicensed individuals giving financial advice and selling financial products online. ASIC has stated that the information influencers share may be inaccurate and risky. Because legislation has not been updated to provide the necessary protections, Australians need to be savvy and protect themselves from the risks.
Online warning signs
Although influencers have helped increase the interest in wealth management among millennials and Gen Z consumers, and can share useful tips like long-term saving and good money management practices, it’s vital to understand that they can sway their content to serve their interests.
Watch out for social media users asking for money and recommending investment schemes and products, like promoting cryptocurrency, which could provide them with commissions and other benefits. In the same breath, be wary of influencers making ‘too good to be true’ claims. Usually, the old adage is true.
When reading advice online, it’s essential to check credentials. Remember, a large online following doesn’t necessarily equate to credibility. Ask yourself:
- Are they licensed to give this information?
- What do they potentially have to gain from sharing this advice?
- What verifiable qualifications and relevant experience do they have?
- Is the post sponsored, and what does the sponsor have to gain from your investment?
Everyone is unique
Like a Wikipedia page, social media has democratised access to information and is powerful when gathering information to understand big picture financial concepts better.
However, no matter how helpful it can be, generalised financial advice doesn’t necessarily mean you should directly apply it to your unique financial circumstances. Use your discretion, consider the risks and consult with a licensed professional about your own unique situation before making any significant financial decisions.
Talk to the experts
Under the law, consumers receive protection when receiving advice from licensed professionals. The same cannot be said for accepting guidance from influencers. When seeking safe and personalised wealth management advice, it pays to talk to professionals. Talk to the team at Calder Wealth Management to discuss wealth management options best suited to you. Call us on (08) 8373 3333 to schedule your free initial appointment.
Written by Ben Calder at Calder Wealth Management.
This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial adviser and seek tax advice from a registered tax agent. Information is current at the date of issue and may change.
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