Why Aren't Popular Financial Advisors Real Financial Advisors?

I'm curious to know why the people who offer financial advice always have a disclaimer that they aren't a real financial advisor?

I only started on my financial literacy a few months back when I read the barefoot investor's book. This progressed to finding some very helpful youtube channels, a mix of Aussie and American ones.

But it dawned on me that they always preface their advice saying they are not financial advisors and you should seek professional advice. This also includes the barefoot investor himself!

If you make your living providing financial advice, wouldn't it be beneficial to you to be properly accredited?

And then on the flip side, why aren't real financial advisors sharing their knowledge to the masses and have youtube channels, or have I not come across them yet?

What do you think?

Comments

  • +17

    Why bother making a YouTube channel if you're a full time financial advisor?

    • +3

      Branding and Marketing? get your name out there, show you're a trusted and knowledgeable advisor. Get more customers hence larger ongoing commission?

      • -1

        You don't see other professions making YouTube channels in order to promote business, there are better ways to get business and customers. putting that much effort into a Youtube channel isn't worth the results you will get

        • +1

          There are real planners with channels though. It's a good idea, as it's helpful for potential clients in conducting their due diligence.

        • +5

          You don't see other professions making YouTube channels in order to promote business

          You must be out of touch. You'll find all sorts of professions on YouTube. Singers, programmers, engineers, accountants, doctors, gardeners, welders, gamers, pilot, athletes, you name and most likely it's there.

          Youtube channel isn't worth the results you will get

          This is like saying investing in shares isn't worth it. There are many examples of successful businesses that is booming because of YouTube.

          • @Indomietable: I understand where you are coming from, but what I was referring to the fact that you would have to go through the effort of uploading consistently, editing videos, and hoping to gain enough of an audience to get back what you put in.

            Only a very small percentage of people who start a YouTube channel will ever see it exceed, plus who's going to take serious financial advice from a YouTube channel?

            • +1

              @GooseLord: That is the idea of entrepreneurship. You give and hope that you get something in return.

              According to some website 97% of businesses in Australia fail within 3 years. Does it mean is not worth opening a business? Lots of people put their lifesaving on the line when starting up and lost it all.

              Putting up videos on daily basis is low risk, low cost exercise compared to signing 3 year building lease.

              plus who's going to take serious financial advice from a YouTube channel?

              I do and I know lots of people do.
              Knowledge and information can come from anywhere. You obviously have to know how to filter the information.

        • +1

          one of my mates is a Tax Law expert working for a professional body. Accountants require X amount of time per year of professional development. My mate has developed a quite popular online video series of Tax Law seminars. Of course he doesn't give them away free on you tube though.

    • +1

      Some of these youtube financial advisors are making 50-100k/month.. maybe thats why..

    • These tik tok, YouTube fin channels can take in great $$$

  • +33

    Nearly everyone on ozbargain are unofficial financial advisors

    • +14

      80K high yield investment vehicles FTW!

    • +4

      Something something crypto

      <Article extracts>

      Something something overseas laws are different

      • Exactly my thoughts on crypto….<research paper on blockchain by a random US based university> and <global economic article in a random overrated magazine> confirms the ideas you shared.

  • +6

    who offer financial advice always have a disclaimer that they aren't a real financial advisor?

    Because they are only an influencer. (e.g. can't do the real work).

    • +3

      The proper term is finfluencer!
      Many actually have a disclaimer their info is for Entertainment purposes!

    • +4

      Its a sad world when an influencer is a real thing

      • +4

        Often they are more like an Influenza.

        Why? Some, goes viral and does damage than good!

        • +1

          agree eleventy hundred %

    • The only real work that matters is to monetize content.

      There are plenty of YT and TikTok that make 6 and 7 figures making vids WFH or studio. A good gauge is 1m subs = >$40,000 p/m + sales.

  • And then on the flip side, why aren't real financial advisors sharing their knowledge to the masses and have youtube channels, or have I not come across them yet?

    Why don't farmers just give away their stock for free?

    • I'm sure they would give samples away to give people a taste of the quality of their products?

  • +17

    If you make your living providing financial advice, wouldn't it be beneficial to you to be properly accredited?

    I'm not a lawyer, but as far as I understand it, many jobs can get you into trouble (legal and financial) for providing advice either without proper accreditation, or research or it negatively affects someone in some way. You also see similar things when people give medical advice or legal advice (like I did at the start).

    As I understand it, if someone gives you advice, and it hurts you negatively, you may have some case against them, and because some of this advice is either more for the common public its best to keep yourself safe that way. Imagine as a financial advisor you tell everyone to put their money into housing, then a crash happens and people lose their money. Some of these profesisonals also may have this covered as part of their T&Cs or may have specific clients placed under insurance usually.

    • Thanks, that makes a lot of sense.

      • That makes sense. Cheers

        • Cheers. That makes sense.

      • The Barefoot investor details this exact reason in the first chapter.

    • +1

      In a nutshell, it's illegal to give financial advice unless you are licensed to do so

    • +2

      I'm not a lawyer

      Next thread, why aren't real lawyers giving legal advice on ozbargain??

    • This. Even properly accredited Financial Advisors have disclaimers when advertising, etc as they haven't reviewed their advise in relation to your circumstances. And even when they give you advice in relation to your circumstances, they have disclaimers.

      It's all just a CYA1 exercise


      1. Covering Your Ass 

  • +7

    Licensed or not, people don't want to get sued while being popular.

    This also includes the barefoot investor himself!

    You mean he disclaimed he could give general advice, but for individual circumstances seek professional advice?

    Also Scott moved to become financial counsellor and had to surrender his financial advice licence IIRC.

  • +1

    Because they didn't needed to become financial advisers to make people believe in their advice.

    Similar to how the fad diet, natural therapy, Pseudo science etc works.

  • +1

    It's a good way to cover your backside if something you said or recommended goes pear shaped.

  • +7

    " why aren't real financial advisors sharing their knowledge to the masses and have youtube channels"

    If you are good at something, never do it for free.

  • You wouldn't want to be tagged with the term financial advisor. No way I would trust my money with some dipshit who did a 6 week tafe course. Professional brokers, asset managers are a different kettle of fish, because they are actual professionals.

    • +5

      That's a bit of a roasting but you'll find that many are actually well qualified, even before the minimum education requirements were out into place.
      Entry now requires AQF8 level, which is above bachelors aqf7. How many accountants (presuming you think they are actual professionals) are AQF8 level? How many loan brokers (who sell loans) are aqf7 let alone AQF8?
      Many are required to study a masters to give advice now, depending on their education pathway (aqf9).
      That's a hell of a lot of study, probably a bit more than 6 weeks. But yes, that was an old stardard.

      • +1

        That seems untrue.
        https://www.cpaaustralia.com.au/tools-and-resources/financia...
        Implies that it's only bachelors degree that's required but you can do a (shorter) masters degree if you're reskilling.

        Basically it's the same as any other university educated professional career e.g. teaching, but it sounds like less PD is required

        • Yes it depends on the pathway. A brand new adviser could do a specific fp bachelor course aqf7. I'm not sure if this is typical though.
          I think the majority of existing advisers and new ppl moving into adviser role wouldn't have this approved course so they either have to do an approved aqf7 course which is generally not feasible as its 3yrs full time study so many will have to study at AQF8 level.
          Many advisers who had no degree and did just diploma previously and want to stay in industry will likely be AQF8 or aqf9.
          Regardless, it's a bit more than 6 weeks, which is good for the industry and consumers.

  • Damn that was quick, thanks for all the comments, it's so clear to me now.

  • +2

    The actual reason as I understand it is related to FSRA (Financial Services Reform Act) requirements. Only those qualified to provide "specific" advice are able to do so, which means that people give disclaimers that they are providing "general advice only which doesn't take in to account your personal circumstances. Speak to a professional" etc etc etc.

  • +11

    As someone who works in the industry, a licenced financial adviser isn't allowed to give informal personal advice to a member of the public or even acquaintance as it can be construed a personal advice.

    They can't give personal advice verbally without it being backed up in writing with disclaimers/warnings. End of the day, they don't give informal advice because it's just not worth the hassles (and their licence forbids it).

    However a member of the public or taxi driver who gives personal advice can't be sued if the financial advice was wrong because an average person would not consider their advice as gospel.

    That's why if you ever meet a financial adviser, lawyer, accountant, other specialist at a party, they are very reluctant to offer verbal advice because they are bound/sued by that advice (which can be loss in translation or wasn't provided the full story) yet aren't being paid, it's a lose/lose situation for them.

    But if you're an influencer or Joe Bloggs down the street, then by all means preach all you want and pretend to be a subject matter expert (on shares, tax, finance, nutrition, Covid, flat-earth).. you're not going to be sued for your advice.

  • +7

    Most youtubers who talk about finances are mostly just trying to spruik their affiliate links.

    • To be fair, that applies to most YouTubers who talk about anything.

  • +6

    Licenced financial advisors have a fiduciary duty to give advice that protects their clients best interest. That includes recommending crap investment instruments that yield 1% to 5% APY.

    Non-financial advice from YT and TikTok bruh isn't hamstrung by such conditions and can show plebs how to ape in on assets that can blow up their portfolio by 10000% gain or -99.99% rekt.

  • +2

    To give financial advice a person must be listed on the financial adviser register

    https://moneysmart.gov.au/financial-advice/financial-adviser...

    If they are not on this register they are not legally able to provide financial advice.

  • +1

    You should see the ones on Tiktok.

    • +5

      And let's not even start on the ones on OnlyFans… they're not just barefoot investors.

      • What else are they? Lay it to me bare!

        • Bare-Naked-Ladies Advisors

  • +2

    You need an AFS license to offer specific financial advice to someone. It is a criminal offence to offer specific financial advice without said license.

    • +1

      That's how I understand too.

      And people might not know the difference between general information and specific advice. E.g. someone explainng how debt recycling work, suggests a NAB product.

      JimB comment has me thinking, maybe an unlicensed person, not suggesting they are giving licensed advice, can get away from being sued?

      • +2

        So I think it is the difference between general advice and specific advice. I was allowed to give general advice but not specific advice.

        Its the difference between telling them what to do in their situation and providing insight into how they could deal with their situation. One is tailored to their circumstance the other is a comment about their circumstance. it is typically always based on how you phrase it which is why Verbal advice is iffy because their is no proof you did not give specific advice other than a he said she said type situation.

        Any time I gave general advice I would always finish with something along the lines of,
        "I recommend discussing this with your financial advisor as this is not my area of expertise" plus we has a general advice disclaimer at the bottom of our emails to prevent liability.

        the disclaimer was

        "Any financial product advice is provided by (our advisory company, which is not who I worked for). The information provided in this email is general in nature and is not personal financial product advice. The information provided in this email has been prepared without taking into account your objectives, financial situation or needs and because of this you should, before acting on it, consider the appropriateness of it having regard to your objectives, financial situation and needs."

      • +2

        Bjingo is correct, you need to be licenced to offer advice- financial advice (financial planner), legal advice (lawyer), tax advice (tax accountant) etc.. but enforcing this is very difficult unless the person is advertising / charging for said advice.

        If they aren't purporting to be licensed or charging for the advice, no court is going to convict them for providing unlicensed advice. Every man and his dog has opinions that a normal person ought not to rely on, e.g.
        - taxi driver "yeah bitcoin is the way to go, it's going up, guaranteed. trust me"
        - plumber "yeah sure you can knock out that beam no problems, doesn't look structural to me".
        - Pizza maker "just claim your clothes as a tax deduction, everyone does it"
        - Paleo Pete "buy these magic beans to replace the medicine your doctory prescribed, you will cure cancer, improve your IQ and your penis will grow an extra inch".

        Replace the taxi driver with financial planner, plumber with builder/engineer, pizza maker with accountant and Pete with pharmacist and it's a very different matter because these professionals have a duty of care to know a normal person would rely on their expert advice and therefore would not make flippant comments or give incorrect advice.

        But if you're not a professional then talk as much shit as you want, you're not going to get into trouble for it. Just don't claim you're licensed or qualified to provide said advice.

  • +4

    Financial advisors before the commission/reforms didn't need to have a qualification.
    You could literally do an online course that took ~ a week and you could call yourself a financial advisor, due to legacy issues these people are still operating until the government's mandate comes into force (next year i believe).

    Until then you can call yourself a financial advisor without being qualified/having a degree.

    After that date however you can no longer practice unless you've qualified/received a relevant degree. It's going to decimate the industry but it's much needed as financial planners were effectively average joes telling you what to do with your money.

    • +1

      financial planners were effectively average joes telling you what to do with your money

      Isn't that what Real Estate Agents are and do :P

      • +2

        This is true,
        unfortunately the real estate industry mandates minimum training standards and membership to retain the ability to 'sell a house'

        Which really is stupid as it takes next to no skill and what training they get they quickly forget given the scum of the earth title they hold.

  • +5

    Scott Pape (Barefoot Investor) is a little different though. He USED to be a fully fledge financial adviser, with his own financial advice business. He had to give that up because he was moving into non-profit support to help people get out of financial trouble. So his content is still pretty damn good. He has to preface because:
    1. He no longer holds an adviser license.
    2. He doesn't know your specific circumstances.

    As for "finfluencers" I'd take their opinions with a large helping of salt.

    • +1

      It's interesting. He regularly promotes specific products eg a very specific investment option on a very specific investment product which is a product provider he had dealings with previously and he is also a very big influencer with a financial planning background.
      To me, this is really getting real grey. Yet asic does nothing.

      • Yes, but he claims he doesn’t get any kickbacks. And also changes his mind: e.g. I think he’s unhappy with ING these days because of all the hoops and recommends another/other transaction accounts..

  • +2

    Most medical advice on YouTube is given by Chiropractors.

  • +3

    Most financial advice is boring, there really is nothing interesting in good financial advice.

    Things that go on YouTube or tiktok is usually cool, exciting or interesting enough to grab your attention is usually not prudent financial advice.

    • +2

      It is a pretty simple/boring recipe to get rich slow!

      • +2

        That’s it, but who gets excited with 10 or 15% growth, it’s so slow. Give me 50 or 100% like crypto or some other exotic way to get rich quick. That’s what gets the eye balls.

  • +2

    They may or may not be financial advisers. That is actually irrelevant.

    The point is they are not providing financial advice in the context of their books, videos, etc. They have to make their point as then no one can come back to them when the "advice" goes wrong.

  • +3

    Having worked with a financial adviser, and having a little financial experience / knowledge … might be a little off, but pretty close

    Financial advisers use to be in one of two categories:
    - people trying to sell stock packages (no qualification until about 10 years ago)
    - people advising on investment strategies and superannuation investment plans (formal qualification, the most recognised in Australia being AMP)

    After the banking reform, new legislation came out in July 2018 that made qualified financial planning a lot less viable as a business model, so the planners who were switched on, got out of the industry before it tanked …

    The finance industry is strange, if they claim to give financial advise and you lose money, you can sue them for poor financial advise, so they're VERY careful about what they can and can't say … my dad can write a home loan for you, but can't give financial advise, i'm FSRA Tier 2 certified, but i wouldn't have a clue what he's talking about :)

  • +3

    This article made me think of this post… https://www.theage.com.au/business/markets/finfluencer-follo...

    This wasn't just advice but an offer to invest in a scheme

  • +2

    In some cases where they are financial advisors or financial professionals they preface their videos with something containing the words "this is not financial advice" because everybodies circumstances are different and the topic they are talking about is general in nature. They are covering themselves for the liability of someone saying "Barefoot investoooooor told me to do X,Y and Z on his yootoobe video and now i lost all my money so now i'm taking him to court!"

  • is this one of those things where - if you are good you dont need to market and if you need to market then you probably arent that good?

    • It's more the case that good financial advisors and educators take home 7 figures, the ok ones 6 figures and the 5 figures are crap at their job.

      Anyone that makes 5 figures shouldn't be telling other people how to invest.

      • 7 figures as a salary is pretty high and rare… Maybe a while back when commissions were around, but now that bulk of commissions are switched off it would be difficult to make. I'm guessing someone earning 1mil salary would be generating 2 to 3mil in revenue… That's say 100 clients paying $30,000each…

  • +1

    They are probably basing "financial advice" on experience or what they've learnt from the internet themselves.
    Anyone can make a YouTube video. If people watch it, they can make money, or perhaps they just enjoy doing it. Perhaps they are not making a living from it.
    It actually takes a lot of time and effort to make a professional looking YouTube video that people will watch and you need to want to do it (not everyone does). A busy accredited professional financial adviser may not have the time nor inclination to make a video.
    They have to make a disclaimer at the start to cover themselves.

  • +1

    because of licensing and regulation. If you are a financial advisor you have to be in compliance with all the regulations, if you are just throwing out random opinions you don't have those same requirements. Most financial "influencers" you find online are spruiking things they are paid to spruik or have a vested interest in the advise, hence they could potentially be sued if they were calling themselves financial advisors.

  • Hey op thanks for raising this discussion topic!
    I think it's an interesting topic and does highlight things that doesn't get sufficient attention in the community.
    It doesn't help that the media (the worst culprits) continue to misuse the term financial adviser and call any Tom dick and Harry an adviser.

  • This $491k case is different because the "finfluencer" made an offer directly, but is interesting nevertheless.

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