With influencer marketing increasingly under the regulatory microscope — perhaps most prominently seen in the recent Therapeutic Goods Administration rule changes — it stands to reason that the highly regulated industry of finance would continue updating its guidance in this area.
The phenomenon of the ‘finfluencer’ (i.e. social media influencers making content around financial or money-related information and advice) has once again come under scrutiny in Australia.
What is a ‘finfluencer’?
The Advisers Association (TAA), the organisational body promoting greater awareness of and access to financial advice for Australians, recently issued a statement about the intersection between financial planners and social media finfluencers. It cited the rising popularity of finfluencers as a side effect to a recent “mass exodus” of financial planners from the industry. The TAA claims there is an unfair advantage given to finfluencers, who do not have to abide by the same strict regulatory standards as financial planners when sharing information or advice — not to mention their services are given to the public for free, as opposed to the costly endeavour of engaging a financial planner.
Ultimately, how brands choose to engage with finfluencers must be underpinned by a thorough understanding of both the changing regulatory guidelines and how the content provided by a finfluencer is presented. This way, the integrity of the brand and the finfluencer themselves is maintained — not to mention the provision of quality information to their followers.
The rise and rise of finfluencers
According to research from HypeAuditor, the “finance and economics” Instagram influencers category grew at a rate of 27 percent globally in 2021, the fastest growing of any category, surpassing those traditionally associated with influencer marketing such as beauty or travel.
In 2022, data showed Australian finfluencers themselves and their audiences are most likely to be millennial women. Among the finfluencers identified, 37 percent were women aged between 25-34, with only 15 percent of men in this age group. Fifty-nine percent of the audience were women, of which 47 percent were aged 25-34.
With the rise of online banking, cryptocurrency, and general global economic uncertainty, the corresponding growth of “finfluencers” across social media platforms is not surprising. More specifically, what this reveals is a strong impetus to fill a gap where traditional financial institutions or more formalised financial planning businesses have made access to basic financial literacy either challenging to navigate or cost prohibitive to younger people.
Many millennials are at the stage in their life when they may be considering buying a first home or investing in shares for the first time, and platforms such as Instagram, YouTube or TikTok provide bite-sized, easily comprehensible information from finfluencers — an attractive alternative to the paid or intimidating options presented by traditional financial planners.
Heed the guidelines or risk losing consumer trust
ASIC recently issued a reminder to Australian financial services firms who use influencers to do their due diligence and “have appropriate risk management systems and monitoring processes” in place during an engagement with a financial influencer.
One of the most effective ways to do this is to use a data analytics platform and campaign management system that continually checks the quality of an influencer’s audience as well as providing measurement on their activities.
From a content perspective, it is absolutely crucial for finfluencers and the brands working with them to take serious heed of the advice from ASIC that financial content shared on social media stays as information only, and doesn’t stray into ‘advice.’ Whilst many influencers in Australia do have finance backgrounds, not all are qualified to provide financial advice.
Brands must be vigilant in the discovery phase: determining the most relevant and reliable finfluencers to partner with. Similarly, consumers will need to exercise caution analysing the financial information they access on social media.
With more financial influencers coming on to the scene, being safeguarded by the right platforms will go a long way to ensuring regulatory compliance.
Alexander Frolov is the CEO and Co-Founder of HypeAuditor.