Social media has transformed how we access information, including financial guidance. With the Australian Securities and Investments Commission (ASIC) recently taking regulatory action to warn “finfluencers” against acting illegally, it’s worth understanding how to evaluate the financial content you encounter online, so you can protect yourself against acting on unlicensed advice that could risk your money.
Research shows 63% of Gen Z Australians use social media for financial information, with over half expressing trust in content from financial influencers. In April, ASIC issued warning notices to four social media influencers suspected of providing unlicensed financial advice, including making claims about guaranteed returns.
Understanding the difference between general information and personal advice helps you evaluate online content appropriately. Licensed financial advisers can provide recommendations tailored to your specific circumstances, goals and risk tolerance. They’re required to act in your best interests and maintain professional standards.
Social media content creators can share factual information about financial products and general educational content. They can’t legally provide specific recommendations about what you should buy, sell or invest in unless they hold appropriate licences or operate under the supervision of a licensed entity.
Certain content characteristics should prompt you to stop and evaluate carefully, including:
- promises of guaranteed returns for your money, or risk-free investments;
- pressure to act quickly on investment opportunities;
- claims about easy money or get-rich-quick schemes;
- specific product recommendations given without understanding your circumstances; and
- content that downplays or ignores investment risks.
Legitimate investments carry risk, and higher potential returns typically involve higher risk levels. Anyone promising otherwise may be providing misleading information.
Social media algorithms prioritise content engagement over accuracy. Content designed to generate views, comments and active sharing may not represent balanced or comprehensive financial guidance. Sensational claims often perform better algorithmically than measured, educational content, so the financial content you see may be skewed toward attention-grabbing rather than genuinely helpful information.
Financial strategies can’t be one-size-fits-all. Your age, income, family situation, risk tolerance, existing assets and future goals all influence what approaches might work for your circumstances. What works brilliantly for one person could be entirely inappropriate for another.
Before acting on financial guidance from any source, verify the person’s qualifications and licensing status using ASIC’s professional registers. Licensed professionals are subject to ongoing education requirements, professional standards and regulatory oversight. They have professional indemnity insurance and must operate within established complaint resolution frameworks.
