Gen Z’s Risky Reliance on Social Media and AI for Financial Advice

A growing number of young Australians are turning to social media platforms and artificial intelligence (AI) for financial guidance, raising concerns about the accuracy and reliability of the information they receive. New research from the Australian Securities and Investments Commission (ASIC) reveals a significant trust in “finfluencers” and AI, despite warnings about potentially misleading or incomplete advice.

The Rise of Finfluencers and AI in Gen Z Finance

According to a recent ASIC survey of Gen Z individuals (aged 18-28), 63% are now using social media to seek financial advice. A substantial portion, 30%, are watching YouTube videos, and 18% are relying on AI tools to inform their financial decisions. This trend highlights a shift in how young people approach financial planning, moving away from traditional sources towards digital platforms.

Trust Levels in Digital Financial Sources

The survey data indicates high levels of trust in these newer sources of financial information:

• Social Media: 56% of Gen Z respondents somewhat or completely trust financial information found on social media.
• Finfluencers: 52% trust financial influencers.
• AI Platforms: A significant 64% place their faith in AI platforms for financial guidance.

While 60% of Gen Z also utilize formal or professional sources, and 50% consult family and friends, social media remains a dominant influence, even with acknowledged limitations.

ASIC’s Warnings and Concerns

ASIC Commissioner Alan Kirkland has cautioned against relying solely on social media and AI for financial advice. “Financial information on social media and accessed through AI tools can be incomplete, promotional or misleading,” he stated. The regulator emphasizes that algorithms prioritize engagement—clicks and views—over accuracy, potentially leading young investors astray.

Cryptocurrency and Speculative Investment

The study also revealed that 23% of Gen Z own cryptocurrency, with 66% of those investors taking a short-term, speculative approach. Alarmingly, 29% of cryptocurrency investors base their trades on social media and influencer recommendations. ASIC warns this strategy fosters unrealistic expectations about returns and the inherent volatility of the market.

The Need for ‘Sense-Checking’ and Reliable Resources

ASIC is urging young Australians to “sense-check” information found online and to utilize reliable, independent resources. The government’s Moneysmart website is highlighted as a valuable source of free and trustworthy financial guidance.

Key Takeaways

• Gen Z is increasingly turning to social media and AI for financial advice.
• Trust in finfluencers and AI platforms is high, despite potential risks.
• ASIC warns against the incomplete, promotional, or misleading nature of online financial information.
• Speculative cryptocurrency investments are common among young investors, often influenced by social media.
• Young Australians are encouraged to verify information and utilize reputable resources like Moneysmart.