The corporate watchdog has warned ‘finfluencers’ — influencers posting financial content — to watch what they say on social media or face jail time, as more people turn to social media personalities for financial advice.
The Australian Securities and Investments Commission (ASIC) released a new information sheet yesterday that targets social media personalities offering big return on investment without the proper financial credentials.
It comes as finfluencer popularity is booming. An ASIC survey last year found a third of Australians aged 18 and 21 followed a finfluencer on social media and a further 64% admitted to changing their behaviour after seeing their posts.
ASIC Commissioner Cathie Armour says she recognises the way investors access information is changing, but financial services laws still apply. The Corporations Act imposes hefty penalties for breaches, including up to five years’ imprisonment for individuals and financial penalties into the millions of dollars for corporations.
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The corporate watchdog has shown it’s not afraid to make good on its threat when it’s in the public interest, with ASIC having previously taken lavish lifestyle Tyson Scholz to court over his luxury-laden posts referring to his “mobile trading office”.
With training courses, seminars about trading in securities on the ASX, and regular stock tips, ASIC alleges Scholz is operating a financial services business without a licence, something he denies. The case returns to court next month.
Finfluencers welcome clarity from ASIC
However, many finfluencers are in it for the right reasons. Newcastle-based Ellie Withers, who posts under the brand name thelady.fire, welcomed the new resource from ASIC, telling SmartCompany this morning it provides much-need clarity around what financial advice is — “and what we’re allowed to post”.
“I’ve always strived to be open about investing on my page and the main reason for starting it was to start conversations and get people to think about their finances early in their life,” Withers continues.
“I don’t ever promise ‘hot stock tips’, and I hope these changes will stop people doing that and setting people for unrealistic gains that often leave them worse off then when they started.”
Withers says her goal is to educate young people about how to successfully budget and build long-term wealth — what some have called the “get rich slow” method.
She also shares her journey to early retirement known as the F.I.R.E method — Financial Independence Retire Early — a growing movement that is seeing younger people plan for an earlier exit from the workforce.
“I think about it as a combination of personal finance, being frugal and minimalistic,” she writes on one of her characteristically pink tiles.
But, Withers says, the threat from the watchdog could be seen as fairly heavy-handed by others who, like her, are hoping to help unlock financial freedom among younger folks.
“I just hope the changes brought in don’t scare off other would-be finfluencers due to the threat of fines or jail time,” she says.