Although finfluencers tend to “swim outside the safety flags”, they signal an unmet demand from a younger generation seeking advice and information, according to Insignia.
Speaking at Elevate Digital 2023, Insignia Financial’s thought leadership and virtual adviser education program chief executive, Renato Mota, explained how social media and other digital platforms could play an important role in the Australian advice landscape.
“I’ve actually watched with interest how it has unfolded, and my reflections on [finfluencers’] existence has been that they fill an unmet demand,” he said.
“There’s a demand, particularly from a younger generation with a desire to consume information, empower themselves with knowledge through social media, through different means that may not be my first port-of-call or an older population, but it plays an important role.
“Like most new ideas, there’s been a degree of swimming outside the safety flags and there’s been some of them operating in unlawful ways, which isn’t acceptable. I think the one principle we should all abide to is one set of rules for everyone to ensure that a) what we stand for and our fiduciary obligations are protected, and b) we protect the reputation of our profession.”
Under the right settings, he said he saw great potential in using social media to help young Australians.
“To the extent that we’re all playing by the same set of rules, I think there’s a fantastic opportunity to embrace social media to engage a younger generation — potentially in advice-like services earlier in their lives where they can have greater influence on their outcomes through life,” he said.
Earlier this year, the Federal Court issued a permanent injunction against finfluencer Tyson Robert Scholz to prohibit him from carrying on a financial services business after it was found he provided financial product advice regarding ASX share trading without a licence between March 2020 and November 2021.
Prior to this, Gabriel Govinda was charged with market manipulation in June 2022 in relation to online posts on the trading forum HotCopper, using the name Fibonarchery, where he sought to pump up the share price, then dump them at a higher price. It marked the first time ASIC had made a conviction related to social media activity.
Insignia’s chief advice officer, Darren Whereat, commended ASIC for taking stronger action in regulating this segment that was “fraught with danger” and left licensed advice professionals taking the flak.
“The reality is, the regulator has stepped up. If [the finfluencer] is licensed and they’re providing commentary and insights, I think they’re playing a role in the advice eco-system,” he said.
The executives also addressed the growing popularity of digital tools and artificial intelligence (AI) in advice.
According to Mota, it would be a “massive missed opportunity” to not embrace the digital revolution, though there remained questions around its governance.
“What better opportunity for us to embrace that, to really try to use that as a means to complement and enhance the humanist aspect that sits at the heart of a trusted adviser relationship?” he said.
Whereat added this was important when individuals and clients outside of the advice space would likely use such tools for information and to research their options.
“Particularly, if I look at the next wave of advice consumers, they’re going to check what you’re giving them. They’ll go away and run it through an algorithm or ChatGPT,” he said.
“The reality is, I think that is a good thing, and we should embrace it. There’s going to be a lot of individuals with access to the value of advice, they’ll access information in a different way, [and] it may actually lead them to getting advice much earlier.”
Renato, what you have said is a “crock”.
Finfluencers do not play within the operating parameters required by those who do, that are actually licenced to provide financial advice and education.
The profession/industry has had a plethora of legislative changes over the past 23 years in an attempt to protect the public against false and misleading claims by the unscrupulous.
Now you believe anyone who thinks they know more than those working full time as practitioners should be doling out advice to the gullible because they relate to a similar age demographic.
Who did you have in mind, one of the Kardashians ?