Technology has been the driving factor behind innovation in all industries throughout the past decade, including the financial advice industry.
“The financial advice industry has been through a lot of change in the last 10 years and digitisation of communications is just another component of that change,” those are the words of Camilla Love, the founder of F3 and managing director of eInvest.
A part of the technological changes to the industry has been the rise of ‘finfluencers’ over the past few years.
Responding to this phenomenon, ASIC recently announced a new regulatory approach to finfluencers that includes implementing a ‘harder line definition of financial advice’.
Among its changes, ASIC also clarified that any discussion of finance and investing online without an Australian financial services licence, or authorisation from a licensee, could put them in breach of the law.
And while Ms Love agrees that finfluencers shouldn’t be able to give financial advice, she believes that their alternative method of financial communication can be beneficial for all parties, provided reasonable and practicable mechanisms are in place to facilitate this new medium while preserving established safeguards for investors.
“These 24-year olds who are standing up and saying 'I have a house and I have this equity in this house and I have debt in this house, I have a car and I've got investments and this is my total net-worth,” said Ms Love.
“Who are we to say that that is not a positive? Personally, I think that's a positive thing. The more people who talk about money the more it becomes a part of life and a much easier conversation to have. The less taboo it is.”
Financial education is a key component for all within the industry, according to Ms Love, and finfluencers are another tool in this crucial communication.
By using a wider platform to communicate to a newer, younger audience in a way that is common and applicable to their daily lives, finfluencers bring the financial services industry to the world.
“If your client is a 55-year-old male who is retired, they communicate differently to someone who is under the age of 35. And those under the age of 35 will soon become those 55-year-olds. So, you need to go and communicate with them and deliver it in a manner that they want to be communicated to,” Ms Love explained.
“As with financial planners, not all finfluencers should be painted with the same brush – some good and some not so good.
“What will end up happening is that these people who are 18 to 25, who are starting their investment journey, will get to a point where their needs become too complex and they need to start getting advice about estate planning or insurance and will turn to a financial adviser.”
Although finfluencers present shorter-term challenges to financial advisers, Ms Love believes that they also present benefits. They can increase the accessibility of people exposed to the financial sector, they can reduce the negative stigma associated with financial discussions and they can present traditional financial advisers with better educated and engaged future clients.
“Finfluencers can do a couple of things; not only can they get people better educated, but also can encourage more people to come to investing.”
A perfect example of that encouragement, according to Ms Love and recent research by Investment Trends, is the rapid growth in the number of female ETF unitholders to over 432,000, with the majority of those aged between 18 to 34.
As such, Ms Love believes that by taking the time to learn, understand and appreciate the role of finfluencers, financial advisers will be better equipped for a digital future.
She will discuss these benefits and more at the Adviser Innovation Summit, hosted in Melbourne and Sydney in June.
“My belief is that in 10 years’ time, advice businesses will need to have some sort of widely accessible digital presence.”
Ms Love will delve further into the legislative environment and answer adviser questions during her session.
The 2022 Adviser Innovation Summit will take place in both Melbourne (1 June) and Sydney (8 June). Click here to secure your place at the Summit and hear Camilla Love speak.
For more information about the Adviser Innovation Summit, click here.
The regulator has also banned the director of the firm linked to the Mayfair 101 Group from controlling a financial services entity.
The big four bank has confirmed the move today.
Joe Longo has addressed ongoing concerns by the industry.
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