Parents and internet most popular among young Aussie for financial advice

A new report by Monash University’s Centre for Youth Policy and Education Practice has revealed that as many as nine in 10 young Australians had experienced financial difficulties at some point during the last 12 months.

More than half thought they would be financially worse off than their parents, while 60 per cent turned to their family members as their main source of support when they ran short of money.

The research also revealed that the most common savings and investment products for young people were term deposits (15 per cent), investments in their superannuation fund (13 per cent), cryptocurrency (12 per cent), and self-managed stocks (11 per cent).

As part of its research, Monash surveyed some 500 young people and, among other things, asked its respondents how they determined which services were appropriate or not appropriate for them. While many interviewees explained that they took recommendations and advice from family members, others said they looked online at recommendations by others, especially on YouTube or Reddit.

One such respondent is quoted as saying: “There was a lot of research that went into whether it would be the right thing for me and obviously, which shares or funds to invest into. A lot of it ranged from both financial institutions ... reading on their websites what would be, you know, the right choices to make. Everything from financial influencers on social media, who cannot necessarily give financial advice, but just generally, not asking questions, but following content that they produce and learning about it, if that makes sense”.

Moreover, quoting an ASIC survey published earlier this year, Monash revealed that as many as 28 per cent of young Aussies followed a financial influencer. More surprisingly, 65 per cent of these young people indicated that they had changed their financial behaviour as a result of influencer advice.

At the time that its research was first published, the corporate regulator said it was aware that the COVID-19 pandemic had “created the perfect conditions for finfluencers to flourish, and the result is the conflation of general and personal advice”.

Finfluencers have been an eyesore for ASIC for quite some time. Speaking before the House of Representatives Standing Committee on Economics in October this year, ASIC chair Joe Longo said finfluencers are often “extravagant, misleading and unlicensed”.

“The whole area is all about essentially well-known people in the community, or celebrities or individuals who are not the holder of a licence, expressing views about what people should be investing their money in,” Mr Longo said.

Trailing behind advice gained from relatives and finfluencers, Monash revealed that only a few of its respondents admitted to having investigated financial services in any depth themselves before choosing to put their money in them.