Why can’t a finfluencer offer you Financial Advice?

Recently, MAS warned 5 content creators that they were providing financial advice without a license.

Three questions follow:

1. What is financial advice?
2. Why can’t finfluencers provide financial advice?
3. What sort of information can finfluencers provide, then?

What is financial advice?

MAS offers guidelines on what constitutes financial advisory service.

“Generally, MAS considers a particular communication, whether oral, online or in print, to be financial advice if it expresses an opinion on the merits of buying, selling or holding a particular investment product or a class of investment products.” (para 3.2, page 4 of MAS’ guidelines)

Then, MAS considers the following:

• Is it tailored to individual circumstances?
• Is it regular?
• Is it compensated?

Each yes makes it more likely that this is financial advice.

This is why my own blog will not give you personalised recommendations. I can only give you general information e.g. what kind of portfolio matches what kind of risk tolerance, what kind of person has a high or low risk tolerance, etc.

Why can’t finfluencers provide financial advice?

Well, they can.

But, they’ll need a license to do so.

Financial advice can only be given by financial adviser representatives. Actually, only financial companies can be “financial advisers”. Individuals are then “representatives” of these companies. Hence, “financial adviser representatives”.

Of course, it is entirely possible to see finfluencers who give financial advice. I myself am working towards getting a license, because I want the advice here to be sound, sensible, and impartial.

Financial advice is complex.

It involves 6 steps laid out by the Financial Planning Association of Singapore (FPAS).

1. Establish and define the relationship with the client.
2. Collect the client’s information.
3. Analyze and assess the client’s financial status.
4. Develop the financial planning recommendations and present them to the client.
5. Implementing the financial planning recommendations.
6. Review the client’s situation.

Financial advice would involve multiple meetings and rounds of data gathering and presentation.

You can’t do this over Tiktok, Instagram, Youtube, or a blog.

Hence, you can’t reasonably expect finfluencers to give you financial advice over their social media.

This is also why insurance agents always contact you for a no-obligation chat and then ask you about your “future needs”. It is a must for them to justify selling their products to you. They need to show that they have done their due diligence.

What sort of information can finfluencers provide, then?

MAS advises finfluencers to:

1. Present accurate information e.g., by explaining both risk and rewards.
2. Avoid “inducing FOMO” or panic.
3. Consider their followers’ financial interests and well-being.

In other words, finfluencers are being reminded to give good advice.

That’s not very promising.

MAS recommends the following financial tips:

1. Make informed decisions (that’s why you’re reading this blog!)
2. Have good fundamental knowledge like your own personal risk tolerance
3. Conduct independent research (like reading this blog!) and seek professional advice when needed
4. Perform budgeting and avoid overspending
5. Read the fine print and T&Cs

You can tell that this blog has already covered the fundamentals that MAS provides.

But there is no guarantee that finfluencers out there are giving accurate information.

That’s why this blog exists. It exists to give Singaporeans out there the accurate fundamentals that they need to make their informed decisions and to have an independent source of research to back up their decisions.

Thanks for reading.