Find a ‘balance’: How to avoid the pitfalls of social media finance advice – The New Daily

Australians are being warned about falling for dodgy financial advice on the internet, as new data shows many people are looking to “whatever’s trending on social media” when deciding where to invest their savings.
As corporate regulator ASIC cracks down on so-called ‘finfluencers’ on platforms like Instagram and TikTok, Global Prime research finds men are four times more likely than women to follow financial advice online.
This risky investment strategy is becoming popular, particularly among young people, with ASIC data showing 64 per cent of 18- to 21-year-olds have changed their financial behaviour because of online finfluencers.
It comes after a review into selected finfluencers and ‘pump and dump’ schemes last year, following revelations that Australians lost more than $35 million to cryptocurrency scams on the internet in just six months.
ASIC is now warning it will act against influencers caught flogging dodgy products or advice, releasing guidance earlier this week about how to discuss financial services on the internet.
“If we see harm occurring, we will take action to enforce the law,” ASIC Commissioner Cathie Armour said.
So, how can you protect yourself from dodgy financial advice online?
University of Sydney academic Andrew Grant said that while finfluencers might be sponsored to promote a product or service, this doesn’t necessarily mean that the advice is bad or won’t benefit you.
But the tips you can get from social media won’t be tailored to your specific circumstances and needs, and the fact many finfluencers don’t have an educational or professional background in finance should also make you think twice before blindly following their lead.
Hard Line Wealth director and partner Cody Harmon said it’s best to get a good balance of sources for your knowledge, rather than just relying on one.
If you can afford to, he recommended drawing from professional advice, finfluencer tips, and your own research before making financial decisions.
Although finance experts agree some social media advice can be useful, there are signs of harmful or incorrect information to look out for:
On Monday, ASIC executive director of market supervision Greg Yanco stressed to the Australian Financial Review that unlicensed financial advice can carry a penalty of up to five years’ jail or fines of more than $1 million.
But Mr Harmon said this could heighten the risk of people getting poor financial advice online, as legitimately helpful finfluencers could be scared away.
He said regulated financial advisers in Australia have to go through so much red tape, they have no choice but to charge clients thousands of dollars to offset costs.
If you earn $60,000 and are charged $6600 for advice, that would eat up more than 10 per cent of your salary, he said.
“How is that affordable for someone trying to make smart decisions with their money and starting out? It’s not,” Mr Harmon said.
“So they need to be able to turn to podcasts and educational tools which help them, for a low cost, get to a better place.”
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