Navigating Financial Advice in the Social Media Age
Social media has changed the way people find financial advice. Today, many Australians turn to platforms like TikTok, Instagram, and YouTube to learn about investing, budgeting, and wealth creation. However, not all financial content online is reliable or legal.
The Australian Securities and Investments Commission (ASIC) has recently taken action against “finfluencers” who provide unlicensed financial advice. This highlights the importance of knowing how to evaluate financial information online and avoid advice that could put your money at risk.
Why People Trust Financial Influencers
Research shows that 63% of Gen Z Australians use social media for financial information, and more than half trust content from financial influencers. While this trend makes financial education more accessible, it also increases the risk of misinformation.
In April, ASIC issued warnings to four influencers who allegedly provided unlicensed advice, including claims of guaranteed returns. These actions reinforce the need to approach online financial content with caution.
Understand the Difference Between Financial Advice and General Information
To protect yourself, you need to understand the difference between general financial information and personal financial advice.
Licensed financial advisers:
- Provide recommendations tailored to your personal situation
- Consider your goals, income, and risk tolerance
- Must act in your best interests
- Follow professional and legal standards
In contrast, social media content creators can:
- Share general financial tips and educational content
- Explain how financial products work
However, they cannot legally recommend specific investments unless they hold the required license or operate under a licensed provider.
Red Flags to Watch for in Online Financial Content
When you see financial advice on social media, watch for warning signs that could indicate misleading or illegal content. Stop and evaluate carefully if you notice:
- Promises of guaranteed returns or risk-free investments
- Pressure to act quickly on an opportunity
- Claims of easy money or “get-rich-quick” schemes
- Specific product recommendations without understanding your situation
- Content that ignores or downplays risks
Legitimate investments always involve some level of risk. In general, higher returns come with higher risk. If someone claims otherwise, they may provide misleading information.
How Social Media Algorithms Influence Financial Content
Social media platforms prioritize engagement, not accuracy. Algorithms promote content that generates clicks, comments, and shares.
As a result:
- Sensational claims often outperform factual content
- Entertaining posts may appear more frequently than balanced advice
- Trending topics may overshadow reliable, evidence-based information
This means the financial advice you see online may focus more on grabbing attention than providing real value.
Why Financial Strategies Are Not One-Size-Fits-All
Financial decisions depend on your personal circumstances. Factors such as:
- Your age
- Income level
- Family situation
- Risk tolerance
- Existing assets
- Future goals
All influence the right strategy for you. What works well for one person may not suit another at all.
Quick Checklist Before You Follow Financial Advice on Social Media
Before you act on financial advice on social media, take a moment to assess the content carefully:
- ✅ Is the person licensed or qualified to give financial advice?
- ✅ Have they clearly explained the risks involved?
- ✅ Are they avoiding promises of guaranteed returns or quick profits?
- ✅ Are they providing general information rather than telling you exactly what to invest in?
- ✅ Have you verified their claims using a trusted source, such as ASIC?
Taking these steps can help you avoid misleading or unlicensed financial advice and protect your money.
How to Verify Financial Advice Before You Act
Before you act on any financial advice, take steps to verify the source. You can:
- Check the person’s credentials on ASIC’s professional registers
- Confirm whether they hold a valid financial services license
- Look for evidence of professional standards and compliance
Licensed professionals must:
- Complete ongoing education
- Maintain professional indemnity insurance
- Follow strict regulatory requirements
- Operate within formal complaint resolution systems
These safeguards help protect you if something goes wrong.
Frequently Asked Questions About Financial Advice on Social Media
- Is it legal for influencers to give financial advice in Australia?
Influencers can share general financial information and educational content. However, they must hold an Australian Financial Services (AFS) licence to provide personal financial advice or recommend specific investments. - How can I check if a financial adviser is licensed?
You can verify a financial adviser’s credentials by searching ASIC’s professional registers. This helps confirm whether they are authorised to provide financial advice in Australia. - Can I trust financial advice on social media?
You should approach financial advice on social media with caution. While some content is useful, it may not be accurate, balanced, or tailored to your personal circumstances. - What are the risks of following financial influencers?
Financial influencers may provide incomplete, misleading, or unlicensed advice. This can lead to poor investment decisions, financial loss, or exposure to scams. - What is the difference between general information and personal financial advice?
General information educates you about financial concepts or products. Personal financial advice considers your specific circumstances, goals, and risk tolerance and requires proper licensing.
Key Takeaway: Stay Informed and Be Cautious
Social media can be a useful tool for financial education, but you should not treat it as a substitute for professional advice. Always question bold claims, verify credentials, and consider your personal financial situation before making decisions.
By staying informed and cautious, you can use social media wisely while protecting your financial future.
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Important: Clients should not act solely on the basis of the material contained here. Items herein are general comments only and do not constitute or convey advice per se. Also, changes in legislation may occur quickly. We, therefore, recommend that our formal advice be sought before acting in any of the areas.
