Advisers need to be finfluencers says planner

New technology has facilitated the rise of “finfluencers” in the recent past, who have amassed large audiences and engendered trust with them.

However, they have been caught in the crosshairs of the Australian Securities and Investments Commission (ASIC), which recently flagged that finfluencers could be breaching the law if they discuss finance and investing without an Australian financial services licence (AFSL) or authorisation from a licensee.

The corporate regulator’s information guidance on how the law applies to social media influencers and licensees who use them outlined activities where influencers may contravene the law if they are unaware of their legal requirements, considerations they should take, as well as guidance for licensees who are engaged with influencers.

ASIC said “misleading and deceptive conduct” identified would amount to a criminal offence and warned that “if we see harm occurring, we will take action to enforce the law”.

To combat this, Firefly Wealth director and senior financial adviser, and founder of The Savings Squad podcast Adele Martin said licensed financial advisers could become finfluencers themselves by using social media tools and implementing a marketing strategy.

“We’re all financial influencers. It’s just that some are licensed and some aren’t,” Ms Martin told ifa ahead of her session at the 2022 Adviser Innovation Summit in June.

“Finfluencers really brought discussions about finance to the forefront and took away the taboo. Advisers didn’t do a very good job of that. We made it seem like a smoke and mirrors thing and we weren’t willing to share information.

“As a result, the public doesn’t know what it doesn’t know. They don’t even know that they need to go to a financial adviser.”

Build the know, like, trust factor

After falling under ASIC’s radar, finfluencers have been stepping away from discussing topics like index funds and instead pivoting to topics that do not require a licence, like budgeting or cryptocurrency.

Therefore, advisers could use social media to educate their clients around finance and investment topics covered under their licence and provide general advice, Ms Martin said.

“The large majority of people who have had a really big impact on social media are not advisers,” she said.

“That’s because they're used to other mediums of communication. Most advisers wait for referrals from accountants or mortgage brokers. While that works really well for some people, it takes a lot of work to get that relationship to work.

“But if clients have seen your videos on Facebook or TikTok, or your Instagram stories, or heard your podcasts, it really builds the know, like, and trust factor.”

Ms Martin likened it to the mere exposure effect, a psychological term that refers to our tendency to be inclined towards people or objects we are familiar with.

“The more they see you, the more they know that they can trust you, and that is the power of social media,” she said.

However, Ms Martin urged advisers to clarify their goals and ask whether and why they are required to become a financial influencer.

“Maybe they’ve got quite an old client base, or they’re worried about intergenerational wealth transfer. Maybe they're not growing as quickly as they would like,” she said.

“Maybe they get lots of leads but they go nowhere because the client hasn’t seen them before, and doesn’t already know, like, and trust them.”

The next step is to pick a medium that is within the adviser’s comfort zone (including videos, podcasts, or writing articles and blogs) and where they can produce content consistently.

“There’s also lots of ways to repurpose and reuse content, to save time,” Ms Martin said.

“You can record a podcast or a video once and use it in multiple ways. You can strip the video out and use bits of it in different ways. You can turn it into an email and send it out to your client database.”

Other means of saving time are automating processes and scaling the business to increase efficiencies, so advisers can focus on client-facing tasks and growing their brand awareness, according to Ms Martin.

Joining hands with finfluencers

Conversely, they could partner with credible finfluencers by recruiting them into their business and delegating the social media strategies to them.

However, if the finfluencer intends to discuss finance and investment matters on social media, they would be required to obtain a general advice licence.

“That’s where an adviser could support them and show them what that looks like,” Ms Martin said.

“They could consider sharing the costs of the general advice licence with them if they’re going to have the finfluencer under their banner. There are definitely different ways for them to work together.”

Hear more from Ms Martin about how advisers could form strategic relationships with financial influencers to build client relationships and become thought leaders at the 2022 Adviser Innovation Summit.

The summit will be held on 1 June in Melbourne and 8 June in Sydney.

Places are limited so secure your place today and make sure you don’t miss out!

For more information about the 2022 Adviser Innovation Summit, including agenda and speakers, click here.