Digital adoption in the advice sector has increased rapidly in recent years and so too has the rise of the social media influencer, or “finfluencer”.
This adoption grew quickly in such a short period of time largely due to the COVID-19 pandemic which forced almost all industries globally to go online.
Finfluencers in particular have been a contentious issue in advice in part because it is a new territory. There is no doubt that financial advisers can grow their business and their own profiles by utilising social media, but the big question mark surrounds those who are unlicensed and providing advice.
The Financial Planning Association of Australia (FPA) CEO Sarah Abood summed up the concerns accurately when addressing finfluencers in advice back in April.
“Financial planners are subject to a high degree of oversight and regulation, and consumers can have confidence in the advice they receive from a professionally qualified and registered financial planner. None of these protections apply where finfluencers are concerned.”
But let’s start with the positives.
The rise of finfluencers has identified the need for financial advisers to find their “voice” and show what sets them apart from the competition.
Social media posts, video marketing, online tutorials and tips are just a few ways advisers can reach existing and prospective clients.
Firefly Wealth director, senior financial adviser and founder of The Savings Squad podcast, Adele Martin, believes advisers should look at what finfluencers are doing now to implement a marketing strategy.
In her work, Ms Martin has advocated the importance of finfluencers and the massive opportunity for advisers “to step-up” in this space, previously saying: “If we don’t, then we risk newsfeeds only being filled with crypto and property (things outside of ASIC justification) or perhaps worse, still we take a backward step where no one talks about money.”
“As a whole, I think finfluencers have done a great job at making money not a taboo subject and helping people to think more about their finances,” Ms Martin told ifa.
“They are great at building trust with public — particularly through building a personal profile/brand. They are authentic and as a result, people trust them.”
Ms Martin acknowledges that tapping into the social media space is not as simple as it sounds, given how much financial advisers already have on their plate in 2022 in regard to cost and compliance. However, she says there are many benefits to creating a social media presence.
“But if we can find space — through automation and outsourcing — and get them away from admin tasks like checking emails, then we have more time to be creative and focus on social media,” she says.
“I set aside one hour a week to work on my social media and I’m a big fan of having one piece of content and using it multiple ways; like maybe you do a Facebook live and then audio get turned into a newsletter, blog, meme, cut into smaller videos etc.
“Also, social media isn’t just for new clients. It’s a great way to stay connected with your current clients between meetings.”
Given the positives in an adviser using social media to grow their business, why has there been such contention about finfluencers? Apart from the fact that many are unlicensed and providing advice, initial concerns had to do with the fact that they were unregulated.
However, in March, ASIC sought to address the issue and published an information sheet on how the law applies to “finfluencers” and licensees who use them, which was backed by industry stakeholders like the FPA. The guidance outlined activities where influencers may contravene the law if they are unaware of their legal requirements, considerations they should take, and guidance for licensees who are engaging with influencers.
ASIC commissioner Cathie Armour said at the time that “If we see harm occurring, we will take action to enforce the law”. Like many others in the advice industry, Ms Martin understands the concern and potential apprehension by advisers towards finfluencers, saying she, herself, has seen some red flags. “I have seen some finfluencers downplay risks and call things ‘interest’ where it’s really an investment and by using the term interest, it seems safe like a bank.
“Also, the way they are paid is often conflicted and not disclosed — and as advisers, we all know what happens when you go down that path.” However, Ms Martin says ASIC’s focus on finfluencers in recent months shows that Australia has taken a very different approach to overseas markets.
“In the USA, financial bloggers and podcasts are massive and can coexist with financial advisers. They even have a joint conference called Fincon (one of my favourite conferences),” she says. “Australia protects the consumer through more laws and legislation. Whereas in USA, I feel the onus is placed more on the individual. I can see both sides. But I worry that without finfluencers, does that mean money goes back to being a taboo topic? Or more concerning, does that mean things like crypto become more of a focus now (as its outside ASIC jurisdiction)?”
Whether you are for or against finfluencers in the advice space, the underlying message is clear — there is much to be gained by an adviser utilising social media and creating an online presence. However, those that do that should be licensed and abide by the same laws as any other planner in Australia. And it’s not just for the benefit of the adviser. Being online is extremely enticing for clients too.
In May, wealth giant BT conducted a survey on the effectiveness of social media as a tool for advisers with head of platforms distribution Christopher Mather saying at the time, that prospective clients are increasingly searching the web for financial information.
“Customers are also conducting more research into financial products online. It’s fair to say that they may also be reviewing financial advisers’ LinkedIn profiles, before engaging their services,” Mr Mather said. “Many advisers acknowledge that social media has a legitimate place in their marketing strategy.”
The time for advisers using social media to grow their brand and business is now due to the increased digital adoption and millions of Australians seeking advice online. However, how they choose to implement it into their strategy, and how heavily, could play a major factor in the growth of their business.
The primary driver of the rise of finfluencers in Australia has been bad regulation. Regulators have been conducting a biased persecution campaign against all licensed financial advisers, including the honest majority. This has made it much harder for consumers to access affordable professional advice. At the same time regulators have largely ignored illegal, unlicensed advice sources like finfluencers. Little wonder that finfluencers have proliferated and become the preferred technique of dodgy product floggers and scam merchants. Australia’s regulators and politicians have been derelict in their duty to Australian consumers.