An expert from RMIT University is available to comment on Finance Services Minister Jane Hume’s statement about social media finance influencers.
In Australia, giving financial advice without a license is illegal but unlicensed influencers are giving financial advice on social media and the government has so far refused to regulate this activity.
Dr Angel Zhong (0433 810 413 or firstname.lastname@example.org)
Topics: retail investors, ASX, young investors, FinTok, social trading, Millennials, Gen Z investors
“Finance Services Minister Jane Hume recently said the government will not step in and regulate social media finance influencers.
“Hume said an influencer giving financial advice is similar to the bloke down at the pub who wants to tell you all about the really great company he just invested in, but just louder.
“But they’re actually not similar – social media influencers are able to reach a significantly larger audience.
“The bloke at the pub does not make profits from telling you about the great company he just invested in. On the contrary, social media influencers generate income based on the views of their contents. As such, their motives are different.
“Finance influencers are using online platforms like TikTok, YouTube, Facebook, Reddit and ASXbets, to provide unmoderated investment advice without a license.
“There is also a possibility that the influencer has a vested interest in the company, ETF or other investment products that they recommend.
“This is social trading, which refers to unmoderated investment advice provided in social media platforms that lead to hirding behavior in financial markets.
“Investment advice provided on social media tends to encourage day trading, promote get-rich-quick schemes and FOMO (fear-of-missing-out).
“Many videos and posts have also been encouraging investors to borrow money to invest in cryptocurrency, which suffered a huge loss in the recent crypto crash.
“In Australia, giving financial advice without a license is illegal and the penalties can be a maximum of five years imprisonment and / or a fine of up to $133,200 for individuals.
“ASIC has received complaints about unlicensed financial advice being provided through websites and social media.
“It is important that proper measures are in place to monitor and even for governing bodies to step in given the prevalence of social media in investment.
“The large influx of young and inexperienced investors in the share market further highlights the importance of considering having explicit measures in place to warn vulnerable viewers about the reliability of financial advice in social media.
“Unverified investment advice is no difference to fake news, which is frequently flagged by social media platforms that urge viewers to read with caution.
Dr Angel Zhong is a Senior Lecturer in Finance in the School of Economics, Finance and Marketing at RMIT University. Her research focuses on investment and investor behaviour in share markets.
For interviews, contact Dr Angel Zhong: 0433 810 413 or email@example.com
For general media enquiries, contact RMIT Communications: 0439 704 077 or firstname.lastname@example.org
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