Your Money

Beware of online ‘finfluencers’

- July 5, 2024 3 MIN READ

There is a flood of online advice about absolutely anything. Cooking, cleaning, health, gardening, exercise, you name it. And money.

When it comes to following financial advice online, please be careful.

Nearly one in four Aussies are getting financial advice from social media according to new research from Compare the Market.

Zoomers (Gen-Z) aged 18-26 were the most likely to turn to online influencers for money management tips (41 per cent), followed by Millennials (35.8 per cent) and Gen-X (23 per cent). Baby Boomers were the least likely to scroll for guidance (6.1 per cent).

It comes just months after the ACCC announced a crackdown on social media to find deceitful ‘finfluencers’, to ensure they stay legislatively compliant when discussing finance and investing online.

My advice is to err on the side of caution and fact check any advice you have read or seen online to avoid falling into a money trap. It’s absolutely vital to make sure that what you’re seeing is credible because for every helpful tip there could be hundreds of bad ones.

I know that far too many Australians have missed out on a financial education at school and for them the internet is an easy way to access information. Unfortunately, many don’t know how to distinguish between bogus and brilliant advice, especially on a topic they may be unfamiliar with, and there is plenty of unreliable information available that can easily lead you astray.

The survey also revealed that aside from an alarming reliance on social media, more people rely on family and friends for money advice than they do financial professionals. As many as 44 per cent turn to relatives, compared to only 36.6 per cent who speak with accountants, bankers, or financial advisors.

Perhaps unsurprisingly given limited fiscal experience, Gen-Zers are the most likely to rely on family and friends. In fact, they are around twice as likely to do so, as opposed to speaking to an expert. By contrast, Baby Boomers are the only generation that opts for financial professionals over relatives as a source of sound advice.

Other resources that Australians turn to for money advice include traditional media, podcasts, and self-help books.

financial advice chart

Source: Compare the Market

What’s interesting is that when Compare the Market asked a similar question about health advice rather than financial, it saw just 2.6 per cent say they would turn to social media for answers.

Similarly, there is a much higher number of people who go to medical professionals for health advice than there are people going to licenced financial experts for money advice. There certainly seems to be a significant difference in trust across the two industries.

As someone who is passionate about financial wellbeing, I would love to see more Australians take control of their finances and seek sound guidance, just as they do when it comes to their physical health.

Compare the Market’s survey also revealed that as many as 27.3 per cent of the population don’t consult any resources when making financial decisions, a statistic that only heightens with age. Baby Boomers, with arguably the most experience in money matters, are most likely to fall into this bracket – 47.5 per cent of the age group makes decisions completely independently.

My top tips to avoid bogus financial advice 

Don’t use a broad-brush approach
There is no one-size-fits-all approach to managing finances so take caution when using tactics promoted online. What’s worked for one person might not work for you, so it’s vital to take your own specific needs and circumstances into account.

Seek independent financial advice
By going with an independent provider, you are more likely to receive unbiased advice that is based on your individual needs. Keep in mind that anyone giving personal financial advice in a professional manner must have an Australian Credit Licence (ACL) licence, so it’s a good idea to vet this before proceeding. 

Beware of scams and schemes
In the digital age, scams have become harder than ever to spot. Always be wary of an entity that asks for your personal details without first proving themselves to be who they say they are. And when it comes to schemes – if the offer sounds too good to be true, it probably is!

 

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