A finfluencer is defined by the Australian Securities and Investments Commission (ASIC) as a social media influencer who discusses financial products or services online.
A recent survey of more than 1,300 investors found that only 11% of Superhero investors said they found finfluencers trustworthy.
It was also revealed that female Superhero investors are more likely to trust finfluencers (15%), compared to men (9%).
Superhero investors aged between 18 and 24 were most likely to consider finfluencers trustworthy – with one in five admitting they trusted finance related content creators.
In contrast, just 5% of Superhero investors over the age of 55 said they would trust a finfluencer.
CEO and co-founder of Superhero John Winters said the role of finfluencers and social media content creators sharing advice with Australians, has been an incredibly hot topic over the last six months.
"What’s clear from our research is that Superhero investors recognise the level of risk that comes with following financial advice shared by unqualified people," Mr Winters said.
The regulator's warning
In 2021, ASIC's young people and money survey found that 33% of 18-21 year olds follow at least one financial influencer on social media.
The survey also found a further 64% of young people reported changing at least one of their financial behaviours as a result of following a financial influencer.
In March ASIC released an information sheet and warned influencers who discuss financial products and services online of the laws applicable to them, and the relative penalties if breached.
ASIC Commissioner Cathie Armour it is crucial that influencers who discuss financial products and services online comply with the financial services laws.
"If they don’t, they risk substantial penalties and put investors at risk," Ms Armour said.
"ASIC monitors select online financial discussion by influencers who feature or promote financial products for misleading or deceptive representations or unlicensed advice or dealing.
"If we see harm occurring, we will take action to enforce the law."
In Australia, only those with a current Australian Financial Services (AFS) licence or their authorised representatives, are legally able to offer financial advice.
As most finfluencers do not hold an AFS licence, they are not subject to the requirements that apply to licensees, including:
- Having adequate arrangements to manage conflicts of interest
- To provide financial services efficiently, honestly and fairly
- To meet education standards.
If a finfluencer is found to be running a financial services business without having an AFS licence or being an authorised representative of an AFS licensee, they may be in breach of the Corporations Act 2001, which carries significant penalties.
A corporation may also be in breach if it engages with a finfluencer who breaches the law by providing unlicensed financial advice, and is therefore also subject to penalties.
Advertisement
Need somewhere to store cash and earn interest? The table below features savings accounts with some of the highest interest rates on the market.
- A high-interest online savings account with no monthly fees, easy withdrawals and award-winning digital banking
- No withdrawal notice periods or interest rate penalties
Image by Andrea Piacquadio via Pexels.
Brooke Cooper
Harry O'Sullivan
Jacob Cocciolone
Rachel Horan
