High fees leaving consumers seeking advice via TikTok

Australians without the means to afford financial advice are being forced to rely on social media and TikTok for their financial advice, according to one MP. 

Speaking in the House of Representatives on the Better Advice Bill, Labor MP Julian Hill said the affordability of advice meant younger or poorer Australians were left to seek financial advice on social media. 

Last week, managing director of Easton Investments, Nathan Jacobsen, said it would be unlikely to be cost-effective for an adviser to  help a client with only $20,000 of investments as they would struggle to afford the $3,000 to $5,000 fee in the first place. 

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“Everyday Australians are being left to look to social media and TikTok influencers,” Hill said. 

“The minister doesn’t think this is a problem as it is no different to speaking to someone in the pub but ASIC [the Australian Securities and Investments Commission] are concerned.  

“These ‘influencers’ are taking kickbacks, that is what the Government is leaving people to, and it is a return to the bad old days of commission.” 

Earlier this year, ASIC indicated it would be investigating wealth coaches and ‘finfluencers’ with ASIC chair Joe Longo describing them as an “area of big concern” for the regulator. This would particularly examine if any were offering financial advice which would require a licence and was illegal without one.  

Meanwhile, the Financial Planning Association of Australia (FPA) chief executive, Dante De Gori, described it as the ‘next bubble to burst’  and that any problems which arose in the space would have a negative effect on legitimate financial advisers.  

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"Finfluencers"... what could possibly go wrong?

There is another big unregulated advice scam that's growing.

There are financial information websites and newsletters that provide good quality general information, but then incorporate product advertisements which could easily be perceived as implied endorsements from a trusted expert. In some cases they even email product promotions directly to their subscriber base and position them as "special offers ". The discredited Mayfair product was one that paid trusted online information providers for this sort of implied endorsement advertising.

Unlike the Tik Tok brigade, these websites will often be run by licensed providers, and use highly qualified experts. This makes them all the more dangerous, because consumers are more likely to trust the implied product endorsements.

You mean like Scott Pape?

Yep great job Mr I Hate Advisers Frydenberg and Minister for Robo Advice Hume.
Massive BS over regulation & strangulation of Real Advice = illegal online advice & finfluencers.
What a disgusting LNP, Frydenberg, ODwyer, Hume, ASIC, FARSEA & AFCA driven result.
Out with Frydenberg now !!!!

What happens when you impose expensive Hayne2 red tape (that doesn't exist in the UK nor in the USA). Low income families can't tell the difference between over-regulated "personal" advice and easy access "general" advice. Hayne2 must be amended to make personal advice affordable - there is no other solution.

Are licensed financial advisers funding ASIC's investigation into these Finfluencers via the ASIC Levy?

Be rest assured that ASIC aren't wasting a dollar on investigating FinInfluencers, as they aren't bothering the Union Super Funds. The regulator is so transparently biased (in favour of the Union Super Funds), it's embarrassing.

Oh dear, what next. The spiral continues. Very sad !

Laura, well done for bringing this up in your article. Well may we say the fin-fluencers will cause all sorts of troubles for consumers however I'm really concerned about what happens when the last of the 'proper' risk advisers leave this once-great industry in forlorn disgust. Can you imagine - the new insur-fluencers giving insurance advice all over the internet! No 'know your client', no analysis, no SoA, no help with an application, no yearly policy review, no claims advice - no NUTHIN' in the area of responsibility. All just bluster to raise the insur-fluencer's profile!

It is beyond reprehensible the govt academics who have never lived in the real business world and have little idea of the struggle street landscape are reeking such damage to consumers. It is beyond incomprehensibly contradictory that these glorified clerks are, incredibly, allowed to decimate the life insurance industry and client-best-interest by driving out advisers AND simultaneously collect their taxpayer funded paypacket each week.

After 35 years in this space my calcs confirm to me that over 90% of risk advisers will be OUT by 2025. Sadly, I also know where that will leave the clients, the life companies and the statutory reserves upon which they depend. Life insurance always has been and always will be SOLD - not 'bought' and the treacherously dangerous robo-advice is most certainly not the answer. This ongoing story is going a lot deeper and into many more rabbit holes than you've read anywhere in the press so far . . .

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