Beware of financial advice on social media
Many financial experts on social networks are constantly sharing how to get rich quick, one capital and four words, but viewers need to be wary.
Social media is awash with advice on profitable investing. Reddit is full of stock tips. Instagram has many sites that share how to save and budget. On TikTok, the hashtag #FinTok attracts more than 400 million views, #stocktock has 1.4 billion views, #crypto 4.38 billion, #cryptocurrency 1.68 billion, and #moneytok 11.8 billion.
On these social networking platforms, the people who give financial investment advice are called finfluencer, a combination of financial and influencers. Just as a beauty influencer (who shares beauty tips) talks about makeup habits, skin care, and cosmetic choices, finfluencers talk about smart spending or a personal view of the stock market.
Australia’s 2021 survey of young people’s attitudes and experiences related to money, finance, education and economic security shows that 25% of young Australians follow at least one finfluencer.
The same year survey by the Australian Securities and Investments Commission (ASIC) found that a third of 18 to 21 year olds follow a person on social media. Of which 64% said that they have changed their behavior when viewing finfluencer shares, both positive and negative.
Dr Angel Zhong, a senior lecturer in finance at RMIT University, said that finfluencer became popular from 2020, when many young people first looked to the stock market during the pandemic.
Zhong said that this group of people is easy to succeed because it fills the gap in financial and investment concepts, and attracts viewers with free and attractive presentations. Unlike financial advisors or expensive, dry training courses.
But the downside of finfluencer is that they are not trained, not licensed to give advice, even share unverified information. While the financial advisor profession needs to undergo professional training, have a license to practice, be responsible for the statement.
Queenie Tan is a popular TikTok finfluencer who provides financial advice. Her posts and videos attract 15,000 followers on Instagram and 42,000 on TikTok. The 24-year-old Sydney girl confidently shares all financial topics, from cheap dating ideas, buying furniture, saving first $ 100,000, how to invest in Dogecoin virtual currency. But Queenie’s financial knowledge is very thin. With only the experience of saving $265,000 in assets in 5 years, along with outstanding looks and eloquence, she easily joins the ranks of finfluencers.
Stephen Chen, a Californian (USA), a former math teacher also became a “financial expert” with nearly 780,000 followers on TikTok, when talking about how to get rich quick.
Sarah Coles, financial analyst, financial services firm Hargreaves Lansdown, UK, said online platforms are always two-sided. In addition to useful information from experts, there are still untrained, free speakers.
Cryptocurrency trading platform Plaxful analyzed 1,212 videos from 50 TikTok accounts on financial topics, which were popular in 2020. 14% of them were rated “misleading”, including The provision of unverified information encourages users to purchase specific assets and implies a guaranteed return on investment.
Dr. Zhong advises internet users to carefully check the digital footprint of finfluencers before placing their trust. Actions include looking up the sharer’s profile, knowledge, experience and cooperation with reputable websites. In the case of “virtual experts” repeatedly recommending a product or stock to invest in; Links to specific products; Claims of high return investment methods… be wary.
“Don’t equate popularity with reliability,” warns Dr Zhong.
The Australian Securities and Investments Commission has since March 2020 recorded an increase in complaints about unlicensed financial advice. The agency has expressed concern and is implementing a set of rules that limit the sharing of money advice on online platforms.
Accordingly, finfluencers are not allowed to give financial product advice, promote links to products, mislead and deceive people (even if they don’t mean to). They are entitled to provide neutral advice on savings, budgeting and financial product descriptions. That is, being explained how an exchange’s stock or fund works, rather than an orientation.
If found to be giving financial advice that is not covered by ASIC’s regulations, they could face fines and up to five years in prison.
In the face of information turbulence, financial experts point out three core rules to become a wise investor:
First, Don’t assume that a finfluencer with a large following is trustworthy. Popularity does not equal reliability and education level. You don’t need a degree to become rich, but it does take proof to prove yourself worth listening to.
Second, Why does finfluencer share secrets for free? If they really have some strategy to beat the market, why go on social media instead of enriching themselves? Anyone recommending a particular stock or product or strategy, ask questions.
Tuesday, be wary of all get-rich-quick scheme ads because it’s easy to run into risks when you don’t read through the information carefully.
Minh Phuong (According to ABC News, Guardian, Conversation)
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