Australians aged 18–34 years old are demonstrating a higher degree of trust in social media-sourced advice over professional financial advisers.
New research from the Association of Superannuation Funds of Australia (ASFA) has revealed that young Australians increasingly turn to and trust social media for financial advice, potentially exacerbating financial cyber crime risks.
It found that for 51 per cent of Australians aged 18–34, who sought advice relating to retirement or super, social media was the second-most common (15 per cent) source of advice after friends and family (36 per cent).
Just 6 per cent of this cohort had seen a professional adviser, and another 6 per cent had been advised through their superannuation fund.
“It’s alarming to see the reliance of social media so prevalent for people under 35 but it also illustrates their desire for information,” said ASFA chief executive Mary Delahunty.
The under-35s demographic were nearly twice as likely to trust financial advice from social media than those aged 35–49.
Delahunty continued: “We are seeing a much higher degree of trust in social media-sourced advice from younger Australians, with 33 per cent of those in the 18–34 cohort saying they trust social media advice, compared to 18 per cent in the 35–49 cohort.”
Younger Australians’ trust in online advice sources, such as through a finfluencer, could open them up to higher cyber crime risk, with this cohort more likely to report having been cyber crime victims than their older counterparts, according to the Australian Institute of Criminology.
“As an industry, we have seen a number of examples of high-pressure marketing tactics, including targeting account holders through social media, which ASIC has identified as a growing concern,” the ASFA chief executive remarked.
Finfluencers have fallen under ASIC’s regulatory spotlight in the past, such as ASX Wolf Tyson Robert Scholz who carried on a financial services business without an Australian financial services licence (AFSL) and was permanently prohibited.
“Anyone who recommends financial products or provides financial advice on social media must ensure they are complying with the law and may face ASIC enforcement action when they are not,” said ASIC deputy chair Sarah Court in April 2023.
Young people’s personal trust in social media advice, most commonly in platforms such as Reddit, TikTok, and X/Twitter, and their increased likelihood to seek advice over social media make them particularly vulnerable to cyber crime and exploitation, Delahunty continued.
“This threatens their superannuation balances and consequently a comfortable retirement.”
The CEO cited the cost of advice as the main barrier preventing younger Australians from seeking the help of a professional adviser. Adviser Ratings’ research indicates that the median annual adviser fee has risen by nearly 60 per cent over the past five years, up from $2,510 in 2018 to $3,960 in 2023.
“The problem that underpins both young Australians’ reliance on social media for financial advice and all age groups’ lack of advice is that advice from trusted sources is too costly and difficult to access.”
