A survey targeting young people aged 18 to 28 revealed that 63% of Gen Z respondents obtain financial information and guidance through social media, 18% utilize artificial intelligence (AI) platforms, and another 30% rely on YouTube for financial content. In terms of trust, 56% of Gen Z expressed confidence in financial information found on social media, with 52% holding similar trust in "finfluencers" – online opinion leaders focused on finance and investment. However, AI platforms garnered the highest trust among Gen Z, with a significant 64% of respondents stating they trust AI-generated financial information.
Regulators Urge Caution on Crypto Influencers
The research also highlighted Gen Z's growing influence in Australia's cryptocurrency space, with 23% of respondents owning crypto assets. Among these crypto holders, 29% reported that their trading decisions were influenced by social media content or influencer posts. This trend has raised alarms among regulators. The Australian Securities and Investments Commission (ASIC) has warned that influencers may set unrealistic expectations for investment returns and downplay the realities of market volatility and long-term investing. These findings exacerbate concerns about how promotional content impacts risk perception and trading behavior, particularly in a volatile and increasingly scrutinized sector.
ASIC Commissioner Alan Kirkland emphasized in an interview with the Australian Financial Review (AFR) that marketing campaigns on social platforms could steer consumers toward higher-risk cryptocurrency investments, and even scams. "We are seeing a lot of marketing activity on social media encouraging investment in crypto, and our research shows that some of that is actually leading people into scams," Kirkland stated. "People must be fully aware of these risks because you don't see the same volatility in other types of investments, and that volatility is often driven by forces that individuals in Australia cannot understand."
Kirkland also pointed out the potential for unqualified influencers to offer inappropriate investment guidance within Australia's AUD 4.5 trillion superannuation system. "What we are seeing most is people being attracted by social media advertising and then being encouraged to switch their superannuation. Because superannuation is usually people's most valuable asset, it's often targeted by bad actors, and the consequences can be very severe if people are induced into high-risk products."
ASIC Eyes Compliance for AI Financial Advice
The regulator also stated it is closely monitoring how AI tools generate financial information. If the information source provides financial advice or product recommendations based on an individual's circumstances, it would require licensing. "Under Australian law, any entity providing financial advice must be licensed. Therefore, if an AI tool, regardless of who provides it, is actually making recommendations about specific financial products based on an individual's circumstances, then it must be appropriately licensed."