Is Social Media a Bad (F)influence on You?

But, nuance, truth, and evidence-based thought are the first casualties on the internet especially when it comes to social media.

Certainty, however illusory, makes for more click-worthy content than does rigour and nuance. 

And on the internet it’s all about the clicks – without clicks content dies. 

As a result, much of the content published on the internet consists of, "Spend 60% of your income on daily expenses, buy life insurance worth 10 times your annual income, save 15% of your income for retirement, start a side hustle" and so on.

Despite this, social media has an important role to play in growing engagement with personal finance matters and improving the general level of knowledge among consumers.

But how do you know who you should listen to?

The role of content on the internet is in general to generate clicks. What matters is why the creator seeks to generate those clicks and what they do with them.

Here are 5 ways to tell if a content creator in the financial space is worth your attention:

1. Work out how the creator makes money. If the goal is to send those clicks to sponsors or affiliate merchants with the intent of convincing the audience to buy what the presenter is wearing, the car they drive, or the makeup they use, then the content is likely to be lightweight and fairly harmless. On the other hand if the intent is to encourage the audience to buy the creator's share or foreign exchange trading course, trade crypto, or invest in a specific way, then there is scope for significant consumer harm.
2. Notice if they're hiding behind a pseudonym. If so, ask yourself, “why?”. If it’s because they’re disclosing personal financial information, that might be okay. Otherwise, it could be a big red flag.
3. Investigate their qualifications and experience. Just because the creator managed to pay off $50,000 in consumer debt does not make them a personal finance expert.
4. Check if they practice what they preach. Most people writing about early retirement on the internet are too busy selling others on the early retirement dream to actually retire themselves.
5. Most importantly, look to see if they are qualified and licensed.

This is why our financial regulator (the Australian Investments and Securities Commission or ASIC) enforces a licensing regime for anyone providing financial advice. Australian consumers are probably the best protected globally in this area, although the UK Financial Conduct Authority may not be far behind if it implements the thinking behind its current consultation process.

At Life Sherpa, we are committed to creating and promoting quality financial content and have teamed up with a great group of content creators. It’s a great partnership. We provide their financial services licence and together we create, collaborate, and build community.

Our community of creators includes:

• Glen James at my millennial money
• Victoria Devine at She’s on the Money
• Queenie Tan at Invest with Queenie
• Phil Muscatello at Shares for Beginners

Much of what we’re told about managing money is based on myths and half-truths. But in reality, the world has changed, so we need new rules for managing our money. Be careful about where you get your advice.