Bloggers, Youtubers and Podcasters Giving Financial Advice

There have been a few articles in the papers recently about 'finfluencers' giving financial advice.

The Australian Securities and Investments Commission told a parliamentary hearing last week it was on the hunt for illegal financial advice being provided to inexperienced investors online, urging consumers to dob in influencers who might be straying from opinion into advice.
Finfluencers back ASIC crackdown on bad apples

See

ASIC concerned by “finfluencers” targeting Millennial investors with unlicensed financial advice - The Market Herald


Meet the so-called finfluencers who say they're empowering a generation. But not everyone's convinced

 

ASIC warns finfluencers: get a licence or risk five years’ jail

The corporate regulator has put social media influencers on notice, warning they could face imprisonment and $1 million fines if they do not obtain a financial services licence or quit promoting stocks and investment funds online.

Greg Yanco, the Australian Securities and Investments Commission’s executive director of market supervision, said the regulator was closely monitoring a handful of popular personal finance influencers – known as finfluencers – and expected them to make swift changes to their content.

“There is a growing number of people who are effectively becoming professionals at providing information about investing on social media,” Mr Yanco told The Australian Financial Review.

“Our concern is when that information turns to providing advice, and operating a business that is providing advice, without a licence. If someone is providing advice, and they don’t have a licence, we will be looking at taking enforcement action.”

Some finfluencers under close watch are understood to be earning five- or even six-figure salaries from promotional deals with licensed financial firms like sharemarket and foreign exchange brokers or investing platforms or fees from paying subscribers and followers.


Under the law, financial advice is defined as any recommendation to purchase financial products such as securities in a listed company or units in a managed fund. Only individuals who are registered with ASIC and hold a financial services licence, or are authorised by a licensee, can provide advice.

Unlicensed financial advice can carry a penalty of up to five years’ jail or fines of $1 million or more, Mr Yanco said, urging social media users to seek legal advice before posting content about investing, especially if they were earning revenue from the posts.

Cont.......

 

Did you see ASIC included an affiliate link in their press release?

(joke)

 

Finance influencers—aka finfluencers—are making finance cool for younger generations

 

Absolutely rife in the crypto industry, and yet no proper regulation of the industry, so it is kind of scary what happens there right now…

 

How are they going to regulate all of the overseas accounts on TikToc, Twitter, Discord, Reddit, Instagram, Youtube & Youtube Shorts etc?

 

There was this one also, having a crack at ASIC

ASIC’s finfluencer crackdown highlights ludicrous how to invest advice laws

Known as “finfluencers”, a handful of these popular commentators are pocketing five- or six-figure salaries from promoting financial products or fees from paying subscribers that dig their content.

That’s a lot more than they’d likely earn by timing their market trades well or entrusting their hard-earned to a professional fund manager.

Given the lack of experience of many investors in this demographic, and the dire consequences that could stem from poor investment choices, some clear guidance around promotion of financial products on social media is warranted.

But before we applaud the watchdog for intervening (and threatening some of these young influencers with criminal prosecution), it’s worth asking why these unlicensed commentators are trending in the first place.

cont....

It is rich for the authorities to crack down on finfluencers for trying to fill the advice gap when their over-regulation has made the professional option unpalatable.

Moreover, ASIC’s suggestion that finfluencers simply become licensed to give some form of advice is a poor solution.

 

I was thinking myself that $1000 doesn't get you advice, it gets you an SOA that is a simple template rabbiting back the data you entered into their fact find and risk analysis...

 

Hmmm there are options. Licensed advisers may charge a fee and can charge you upfront for the time based advice in a fee. The cost of the insurance may be less or the same as a policy where the insurer pays the adviser and there is no fee. Some advisers may charge afee and rebate the comms which is even more transparent. But not very common. Heaps of people dont consider that. They assume they pay more when a adviser gets commissioned. Often the Commission is representative of the time so it has some logic and when its paid by the insrere and doesnt affect premiums as such (it must indirectly!!) it could be wise. . But it can also be lucrative for comms if the insured policy is high end and high cost. The advice needs to address this issue.

A good initial question for any client to an adviser. What will it cost me & what are the options ? Some may choose the commision path because they dont have the $$ or want to pay a fee upfront.

Unfortunately the adviser must jump through signiicant hoops to document advice that shows why their advice is what it is eg comparative quotes, Doesnt take long for simple advice to turn into a paperwork exercise. Four to five hours. And more likley a templated advice outcome. In reality there is a bit to any advice. Its not really push a button. But this is better than the dark old days of commissioned tied advisers who would flog insurance without great advice or disclosure. The sign of why its unprofitable is all the banks who have sold their insurance and advisory divisions. Now insurers tend to be independent of conflicted owners.

Not greatly different to brokers. Many brokers can charge a fee but dont since they get paid a high comm and wear the costs of walk aways. I wonder how many brokers give advice that specifically shows how much they earn on upfront and trails vs the time for them to facilitate services ? Not a rate. A real $ number ? Most people are aweful at maths and a rate may be meaningless. Sure everyone will say - But the lender pays that. However all costs of product supply are reflected in the product price. Banks dont pay a comm and not consder that in their rate setting. Its why lenders who dont support broker channels can offer lower rates. That said, there are major non price benefits to many forms of advice. Without advice outcomes arent as favourable.

 

It is grey area - as properties and OTPs are not considered financial products ?
I guess if they are selling securitised property ownership it will be under ASIC's area.

Fools and their money....

 

nope.

 

What irritates me is some of these people are also giving out credit advice without being qualified. A recent video I watched had a buyers agent advising people on lending. The commentry wasn't particuarly bad, but it wasn't entirely correct either (like a lot of the unqualified credit advice you read here).

Much of this sort of advice comes from people's own observations and experience, but what's right for one person isn't right for another and can lead to disasterous outcomes. A lot of people report on what the banks want them to think, not what actually occurs. If the brokers on this forum come across as a bit vague sometimes, it's because often there are shades of grey in the solution that we don't have enough information to address more specifically. Lending and financial advice can be a lot more intricate than most people appreciate.

 

Yep n=1

 

Pilfered from another thread

I enjoy reading blogs, listening to podcasts, watching youtube videos, etc, but I'm mindful many are content creators and getting $$$ for their content

How Much Money Do You Make With 1000 Subscribers?

Now at 23.5K subscribers

 

Strong Money thoughts

ASIC’s Crackdown of Financial Content & ‘Finfluencers’

On the Planners side

Finfluencers warned: ‘You’re going to need a licence even if you’re not being paid’

 

Finfluencers’ bid early goodbye after private ASIC briefing