Research from investment analysis site WallStreetZen has found 63% of TikToks offering stock advice contain misleading content.
- Research suggests the majority of investment advice on TikTok is 'misleading'.
- Most content does not have a disclaimer, or offers unrealistic returns, promoted by unqualified influencers.
- However, other social media financial trends could be more positive.
- 'Loud budgeting' and 'No spending months' might have led to a tangible boost to young Australians' savings.
This would mean a view count of 194 million on misleading videos, while creators who make deceptive or spurious content may have accumulated more than 107 million followers.
The research also found just 0.8% of TikTokers who are advertising stocks have relevant qualifications.
Based on a review of 1,089 TikToks containing popular related hastags like #stocktok, content was marked as potentially misleading if any of the following was true:
- The content did not have a disclaimer
- Viewers were encouraged to invest in a specific stock
- A return on investment was implied
- Viewers were encouraged to invest a certain amount of savings/income
The vast majority (95%) of stock content had no disclaimer, while 22% of the videos analysed implied returns on investment, suggesting an average of a 600% annual return.
In 2022, ASIC published an information sheet for online influencers who discussed "financial products and services", with then-Commissioner Cathie Armour warning those who did not comply with financial services laws risked substantial penalties.
"ASIC monitors select online financial discussion by influencers who feature or promote financial products for misleading or deceptive representations or unlicensed advice or dealing," Ms Armour said.
"If we see harm occurring, we will take action to enforce the law."
In April 2023, social media influencer Tyson Robert Scholz was found guilty of contravening the Corporations act by carrying on a financial services business without an Australian financial services license.
Mr Scholz was permanently banned from operating a financial services business in Australia, and hosting online groups regarding stock picks where a membership fee is charged.
Late last year, the Albanese Government outlined plans to reform financial advice, aiming to make professional financial advice more accessible and fill the 'advice gap' currently filled by 'fin-fluencers'.
"Access to financial advice will reduce the harm caused by scammers posing as ‘fin‑fluencers’, with investment scams representing over 60% of all scam losses so far this year," said Stephen Jones, Assistant Treasurer and Minister for Financial Services.
The emergence of more positive financial TikTok trends
At the same time, other trends on TikTok have been praised for improving people's budgeting skills, particularly Gen Zers.
'Loud budgeting' is a growing trend of younger people embracing a more money conscious attitude, spreading the word about the benefits of cutting back on non essential spending.
NAB research has found Australians under 30 are saving more than $450 each month from cutting back on luxuries like restaurants, entertainment and streaming services.
Another trend NAB identified was "low or no spending months," where users give up things like alcohol, takeaway food or clothes shopping for a month, and instead putting the money into savings accounts instead.
NAB Personal Banking executive Paul Riley said this trend was consistent with what the bank has been observing.
"We've seen steady growth in the number of younger customers opening savings accounts in the last 12 months and, despite cost-of-living pressures, savings account balances in this age group have risen too," he said.
"Fresh warnings issued over financial advice on TikTok" was originally published on Savings.com.au and was republished with permission.