Need to know
- 'Finfluencers' (financial influencers) make content on superannuation and other finance topics for social media
- The regulator has recently cracked down on these accounts, which may have been offering unlicensed financial advice
- Super Consumers Australia says the popularity of finfluencers underlines the need for quality, free financial guidance for all Australians
Finfluencers (financial influencers) are on the rise, particularly with a young audience.
An Australian Securities and Investment Commission (ASIC) survey found that 28% of people aged 18–21 follow at least one 'finfluencer' on social media. Of those who follow influencers, 64% have changed at least one of their 'financial behaviours' as a result.
These finfluencers aren't necessarily financial professionals; they may be gamers, actors or sportspeople. So, are they a good source of information about your super?
Finfluencers and the law
The relevant law states that anyone carrying on a financial services business must hold a licence to provide financial services. Essentially, this means you can only give financial advice if you're licensed.
The regulator (ASIC) recently met with around 30 finfluencers to outline how they may be breaching the law by offering financial advice. Some of the finfluencers were reportedly shocked to find the definition of providing financial advice was wider than they thought. Penalties for providing financial advice without a licence include hefty fines and even jail.
ASIC said it had been dealing with a rising number of complaints about unlicensed advice since March 2020.
Anyone carrying on a financial services business must hold a licence ... this means you can only give financial advice if you're licensed
The regulator noted that providing affiliate links could break the law. This is where the person providing the link gets a financial reward when a viewer clicks through and buys the product or service. At least one superannuation platform had affiliate links with finfluencers before the regulator's intervention. The regulator urged financial services providers to take a long, hard look at these arrangements.
Super Consumers Australia policy manager Franco Morelli says there is merit in the work some finfluencers are doing and they can be particularly effective in engaging younger people with super. However, it is helpful that the regulator has clarified the law in this area and stamped out conflicted product advice.
"Australians need independent guidance, not recommendations from someone getting a kickback from suggesting a product," says Morelli.
What are finfluencers saying?
Angel Zhong, an associate professor of finance at RMIT University, says some finfluencers have removed their content since the ASIC crackdown.
Finfluencers may no longer be recommending products or giving more detailed advice. However, they still post short how-to guides, explainers and information on setting up a self-managed super fund. The quality of the information they provide on superannuation seems to be mixed.
Australians need independent guidance, not recommendations from someone getting a kickback from suggesting a product
Franco Morelli, Super Consumers Australia
Some finfluencers may present information that isn't incorrect as such, but needs more context to help you make decisions about your super. For instance, one influencer says: "You can actually access (super) early to help you pay the deposit of your first house."
Some important details here are that you can only withdraw voluntary contributions (i.e. not any money contributed by your employer), there is a cap on how much you can use for this purpose, and the initiative can be complex to use.
Other finfluencers use the ASFA standards to try and show how much super you'll need to retire. The Productivity Commission found these standards reflect a level of spending that is "more than many people spend before retirement" and that they're "no more than an arbitrary benchmark that should be ignored in policymaking".
There are examples of TikTokkers completely missing details on super policy proposals
There are also examples of TikTokkers completely missing details on super policy proposals.
On the other hand, some finfluencer content can introduce important tips (like consolidating your super into a single account) in a quick, snappy format, or refer you to existing reliable resources like Moneysmart and the ATO's super fund comparison tool).
Why do people turn to finfluencers?
"We need to look at the elephant in the room – why are (finfluencers) so popular?" says Zhong.
"Why do investors turn to them in the first place? One reason is the barriers to accessing financial advice in Australia – it can be expensive, and the quality is mixed."
Zhong says finfluencers became more popular during COVID-19 as people in lockdown explored new interests online. "Most of (the audience) are young investors, and they're hungry for knowledge, so they turn to finfluencers for free financial advice."
Some finfluencers have a talent for explaining complicated finance concepts in an engaging way
Angel Zhong, RMIT
Savvy content creators may also be able to present information that's more accessible and attuned to a young audience than traditional sources of information about super.
"Some finfluencers also have a talent for explaining complicated finance concepts in an engaging way," she says.
Young people and super
Perhaps surprisingly, ASIC found that most of the 15–21-year olds it surveyed agreed or strongly agreed that it was important to start building up their super at their age. 37% were interested in choosing their super fund.
There were, however, many people in this age group disengaged with their super; 9% didn't know if they had a super account, while another 17% weren't sure which fund was looking after their super.
The need for accessible, engaging super information
As we've outlined previously, there's a range of useful free online resources to help Australians manage their super and other retirement-related finances. However, these are spread across multiple different government departments and sites. In some cases, the resources may be underpromoted and underutilised.
"Bringing all these resources together would be a start," says Morelli.
"We ultimately need a one-stop shop where all Australians can go for free, independent, high-quality advice to help them build up their retirement income."
Morelli says there are currently many people without anywhere to turn for advice. With some finfluencers leaving the market or stepping back their content, even more people will have no avenue to get free advice.
We ultimately need a one-stop shop where all Australians can go for free, independent, high-quality advice to help them build up their retirement income
Franco Morelli, Super Consumers Australia
"Traditional advice models aren't going to be the solution. People won't simply stop using TikTok and shell out thousands of dollars for advice. Not everyone wants to get advice the traditional way, and it's time this is recognised."
Morelli rejects the argument from industry bodies that cost is the only barrier to getting financial advice as misguided.
"There are also massive issues with trust and accessibility. That's why we've been calling for a 'guidance guarantee', as we've seen in the UK. This guarantee would ensure everyone can get quality, conflict-free advice. It would complement existing advice services and fill in the gaps we see with the present system.
"You can see why people turn to finfluencers as they present information in an engaging, simple to access format. The lesson here is to present advice in a way that works for consumers," he says.
This content was produced by Super Consumers Australia which is an independent, nonprofit consumer organisation partnering with CHOICE to advance and protect the interests of people in the Australian superannuation system.
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