Sydney, August 2024: Alarming new research has found that almost one in three Australians now seek financial advice from so-called social media influencers.
The survey of 1,000 Australians by leading financial comparison site Compare Club found that over half of those aged 18-24 and 10% of Australians aged 55+ use platforms like YouTube, Facebook, and TikTok for financial insights. Surprisingly, 37.27% of higher-income earners ($200k+) are more inclined to use social media for financial advice than lower-income brackets.
“This research highlights that there is a growing demand for cost-effective, accessible and easy-to-understand financial insights at a time where cost of living pressures are high,” says Kate Browne, Compare Club’s Head of Research.
The average first-year cost of hiring a financial adviser is $8,180. This typically includes the initial financial strategy, upfront fees, and ongoing advice throughout the year.
“While many content creators do a great job teaching skills like budgeting or investing, it can be very difficult to assess the legitimacy of advice. We’ve found an alarming link between those who use social media for financial advice and increased difficulties in their financial affairs,” says Browne.
Survey respondents reported following a range of people and institutions to get their financial advice, ranging from local finance gurus like She’s on the Money’s Victoria Devine and Barefoot Investor Scott Pape to the USA’s Dave Ramsey to, alarmingly self-proclaimed “misogynist” Andrew Tate who is currently awaiting trial for human trafficking and rape in Romania.
Compare Club research* shows that those who primarily get their financial advice from social media are: - Twice as likely to pay their bills late - 35% more likely to experience anxiety about paying credit card bills - Three times more likely to use a credit card - 79% more likely to be living beyond their means
As of 2022, ASIC has been tightening its regulations for online creators. It broadened its scope for what is considered a financial service, warning influencers that earning money through affiliate links to online brokers may count as providing a financial service.
Jess Brady is a qualified financial adviser who helps thousands of Australians take control of their financial decisions through her “Greenhouse Money Growing Program” and “Evergreen Money Club”.
"This research shows that we're witnessing a significant cultural shift in attitudes towards personal finance. For centuries, the financial world has been perceived as exclusive and inaccessible. Now, driven by economic pressures such as rising living costs and unaffordable housing, people are actively seeking financial education. This surge in interest represents a quiet revolution—individuals are privately investing time to understand money matters, challenging long-standing taboos around financial discussions.
It’s exciting to see more and more people lean into improving their financial wellbeing, my advice would be to look for trusted sources to learn from. Just like you probably wouldn’t take legal advice from someone who has never studied or practised the law, when it comes to your money, you ideally want to find someone relatable who is a qualified financial adviser with experience helping people like you,” says Jess Brady.
So, how do you verify a financial adviser's registration? To verify if your favourite finfluencers are licensed, you can use the ASIC financial adviser registry by inputting their name, ABN, or suburb. This ensures that you are receiving legitimate advice relevant to Australia.
Those checks and balances are great if you’re dealing with Australian content creators but 29% of people get their advice from USA based influencers and that comes with a few traps.
For instance, many influencers recommend credit cards with high reward points but fail to mention the high annual fees and interest rates, leading to financial strain for their followers. In America, declaring bankruptcy is promoted as a way to get out of debt but in Australia has very serious implications.
“If you declare bankruptcy in Australia, it impacts your credit rating and your ability to get finance and loans even after your bankruptcy has ended. It also impedes your ability to travel overseas and does not clear your debts," says Kate Browne.
REAL EXAMPLES OF COMMON BUT QUESTIONABLE FINFLUENCER ADVICE
Physical cash stuffing: Keeping large quantities of cash is not advisable as it doesn't earn interest and can be lost or stolen. Cash-stuffing videos on TikTok also promote an “aesthetic” that uses flaunting physical money to disguise questionable budgeting.
Drop shipping: This business model often comes with legal issues, low profit margins, high competition, and no control over the supply chain. While some people may make a profit it can be a risky way to try and make money.
Investing in AirBnBs on properties you don’t own: Sub-letting properties you are renting and do not own can lead to legal issues and liabilities.
Declaring bankruptcy: While it might be recommended overseas as a way to clear debt, it doesn't absolve all debts in Australia under Australian law.
Investing in virtual currencies: Crypto investments are highly speculative and can fluctuate significantly so investing comes with a high level of risk.
“Many learn money basics from social media but struggle to piece it all together. They often plateau, unsure how to progress or if they've missed crucial steps. While social media offers initial insights, for true financial security and freedom, I recommend a comprehensive money program or personalised financial advice for those who can afford it,” says Jess Brady.
“The key takeaway is that social media isn’t all bad. Financial literacy is not taught in schools and the cost of advice can be so expensive it’s inhibitive. Get the basics from social media, but always check the validity of the advice and that it’s relevant to Australia,“ says Kate Browne.
-ENDS-
NOTES *Compare Club’s Bill Stress Report 2024
For media enquiries: Jasmine Kostas Media + Capital Partners 0425 327 224 jasmine.kostas@mcpartners.com.au
About Compare Club Compare Club is one of Australia’s fastest-growing personal finance marketplaces. It helps Australians save money by navigating complicated and important financial decisions. Compare Club’s panel of experts offers bespoke advice to over 3.6 million members making 1 million product enquiries per year on key financial decisions, including health insurance, electricity and gas bills, and personal, car, and home loans. Compare Club is locally owned and employs 350 passionate staff across Sydney, Melbourne, and Brisbane and another 50 staff in Indonesia and the Philippines.
