As young investors turn to social media for financial advice in droves, retail investing platforms need to be doing more to point their customers in the direction of authoritative educational resources, says Superhero founder, John Winters.
According to the results of a recent investor survey conducted by Superhero, some 39% of investors between the ages of 18 and 24 are turning to YouTube for financial advice, while as many as 19% said TikTok has become their first port of call.
Winters told Business Insider Australia the widespread democratisation of investing in the market is no longer a conversation about “access”, after the market fielded a flood of new entrants, most of them first-time investors, in the early hours of the pandemic.
Instead, education has become a primary focus for the platform, he said, as it navigates offering young investors educational resources, without crossing the line into financial advice.
“Education [has become] a major piece of what we’re doing,” Winters said. “And that has started.”
“We have started to lift the content side of things. We’re trying to give people digestible information through our social media channels, and we’ll see that further integrate right throughout our app as well in the coming weeks and months.”
Winters said he bases the platform’s success off that of its customers, and pointing them in the direction of authoritative resources has become a big part of it. It’s more than he could say of how “some of our peers have built their businesses.”
“I think there’s a very big generational shift happening — probably one of the biggest in our lifetime,” he said. “It’s bigger than one company; it’s bigger than one industry. It’s up to all of us, if we’re in this space, to be leading the way on financial literacy.”
As platforms like Superhero have thrust share market trading into the mainstream with bus stop marketing campaigns promising walkers-by they “don’t need a suit to invest”, hoards of unqualified financial advisers have come to accompany them.
It’s become a rapidly expanding space in Australia, evidenced recently by Australia’s first financial influencer conference in July. There, a motley crew of guests from TikTok producers and Instagram stars to vloggers and podcasters each presented alongside financial regulators, university professors, investment analysts and ASX small-cap companies.
However, most — if not all of them — speak to their audiences without the Australian Financial Services Licence (ASFL) required of them by regulators.
It’s an issue the Australian Securities and Investment Commission (ASIC) has been forced to reckon with. The corporate regulator said in September that it had moved to undertake a review of “selected” finance influencers, or “finfluencers”, after describing them as a cohort of major “concern” at the agency three months earlier.
Winters welcomes the regulatory crackdown, which he said is in many cases well deserved as social media’s financial pundits increasingly come to make a profit on the financial products they tout online.
“Providing advice to retail investors is a heavily regulated space, for good reason,” Winters said. “There’s a huge rise of people effectively giving their opinion, which is advice, without any formal knowledge, education or training, and without the oversight of the regulators.”
“Now, when it’s factual information, when it is information that can help people — that is fantastic,” he said. “But when it gets to the point where people are recommending particular products under the guise of helping someone, when really, they’re getting paychecks going out the back door to them, I think that’s where there is a major conflict.”
By comparison, the issue has been one of less prominence among crypto investors. In part, because most investors accept that they’re buying into a highly volatile underlying asset. But also because cryptocurrency exchanges go to far greater lengths to make resources available to investors of all experience levels.
Publishing educational resources in troves has become a minimum investor expectation for crypto exchanges, where insights and analysis of any number of market indicators are made available on a daily basis.
Jonathan Miller, managing director of crypto exchange Kraken Australia, told Business Insider Australia the firm has long been passionate about education, but wouldn’t be drawn on the educational efforts of his competitors across the aisle.
“We take our role as the facilitator of a fair and secure trading environment very seriously and work tirelessly to produce high-quality educational resources for our clients so they can better understand crypto technology [and what they’re investing in],” Miller said.
“Our in-house research team produces daily intelligence and regular in-depth reports, and we continuously update our Learn Centre with guides, tutorials and videos to make sure that our clients are up-to-date with movements in the crypto industry.”