Finfluencers in the news
A finance influencer, usually referred to as a finfluencer, is a social media influencer that shares financial information and expertise. Due to the nature of the medium, the financial advice given tends to be light-hearted and is often short and snappy. Advice given can range from budgeting to investing to how to buy a house. Popular NZ finfluencers include Simran Kaur, co-host and co-founder of the popular Girls That Invest podcast and Te Kahukura Boynton - The Māori Millionaire. Last year a survey by Finder found 44% of people aged under 25 got investment advice from social media and 28% got investment advice from finance podcasts.
Where finfluencers can get in trouble is when they move from talking about financial matters in a general sense (we’re all for raising financial literacy!) to recommending particular products (whether that’s specific funds, stocks, or insurance) or telling individuals what to do, then that’s likely to be regulated financial advice. They may also fall foul of disclosure requirements as they may receive financial benefits from the operation of their channels.
You can check whether someone is registered to provide financial advice by looking them up on the Financial Services Providers Register.
There’s been a lot of controversy about finfluencers recently. Interest.co.nz recently ran an article about how a TikTok video with millions of views has claimed that paying $1 a day extra on your mortgage can cut the repayment term of your home loan from 20 years to just 5 years. Unsurprisingly, the life hack turns out to be false (unless the mortgage is quite small), with interest.co.nz running to maths to debunk it. But is shows just how easily financial misinformation can reach a wide audience.
In Australia, the Federal Court has made permanent injunctions against social media finfluencer Tyson Robert Scholz, determining he had contravened the Corporations Act by carrying on a financial service business without an Australian Financial Services Licence. Scholz charged for access to online groups where he made recommendations about shares, delivered training courses and seminars about ASX-listed securities where he recommended share purchases.
In 2021, the FMA released a guide for finfluencers that covered how to talk about money online. Rob Everett, then FMA Chief Executive, said
“It’s great to see more people taking an interest and talking about financial matters online, helping others get more familiar with financial products. However, influencers do not want to find themselves caught offering advice they’re not qualified or authorised to give. It’s also important for consumers to be wary of taking an influencer’s recommendation that might not be suitable for them.”
The FMA caution consumers to be wary of what they see online, be aware that some products (particularly cryptocurrencies and derivatives) can be very high risk, to be on the lookout for scams, and to let the FMA know if they think someone is improperly giving financial advice.
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