For many of us, financial affairs have traditionally been treated as personal matters, OK to discuss with professionals like financial advisers, bankers and accountants but not so much with strangers. But things are changing, with millions of people now connecting online to talk about money, budgeting, investing and spending.
These new conversations can widen our access to financial knowledge and help people get support to achieve financial goals. The rise of online investment platforms and social media channels supporting big online communities means a whole range of financial topics are being discussed.
However, we need to be wary of advice and commentary from people when we don’t know who they are or whether their views are worth listening to.
And sometimes, talking about money or investing can cross over into providing financial advice. There are strict rules around providing regulated financial advice in New Zealand that apply to everyone and it pays to know about them.
It’s fine to talk about financial matters online, as long as you keep it general. It’s when you start getting into recommending particular products or telling individuals what to do, that you may be giving regulated financial advice.
This applies to social media commentators, bloggers, and influencers – in fact to everybody!
It’s OK to share factual information that describes a financial product’s features or terms and conditions. But you can’t make a recommendation on whether an individual should (or should not) take up that product.
Here are some examples of what is likely to cross the line into regulated financial advice:
This would be OK: “ABC Banks’ Credit Card has retail rewards points that earn you 10 points for every dollar you spend.
But this would likely cross the line: “ABC Bank’s credit card with retail rewards points is the best credit card out there and you should get one.”
This would be OK: “Rather than trying to pick individual shares, you can put your money into a managed fund that will be able to buy a range of investments.”
But this would likely cross the line: “ABC Finance has a great managed fund that buys shares from around the world, they have low fees, so take your money to them.”
This would be OK: “If you’re getting close to retirement, considering moving your KiwiSaver into a conservative fund could be a good idea.”
But this would likely cross the line: “ABC’s Company has a great conservative fund that has performed really well. I recommend moving your KiwiSaver to them if you’re getting close to retirement.”
This would be OK: “Governments are rolling out COVID-19 vaccines, so tourism companies and airlines could be good investments.”
But this would likely cross the line: “Buy ABC campervan shares now, the tourism boom is about to start.”
Follow social media best practice. Make sure you follow New Zealand’s Advertising Standards – see this Influencers AdHelp Information PDF on Identifying Ad Content and disclose all paid and/or gifted posts.
It’s good practice to moderate comments made on your posts, including deleting any that could be scams or don’t meet your own community guidelines.
Always act responsibly and consider your audience, including any people who, due to their personal circumstances, may be considered vulnerable.
At the FMA we promote good conduct which means thinking beyond just what is required by law and putting the customer (or in this case a social media follower) first.
Influencers should approach paid, unpaid or gifted partnerships for financial services and products with caution. Think carefully before promoting a financial product or service. There are rules and guidelines around advertising financial products and services, so work closely with the person or company paying you to ensure your content meets all legal requirements.
Don’t promote a product you don’t understand, and be extremely cautious about promoting high risk products like cryptocurrencies and derivatives – not only do they have a high risk of people losing money they are also often used as bait in scams.
Remind your followers to seek regulated financial advice on money matters. If you’re talking about money or investment online, remind your audience of the importance of seeking their own financial advice from a financial advice provider operating under a FMA licence when making money decisions.
Promises of financial success can be alluring. The damage caused by choosing an unsuitable financial product or being scammed can be long lasting and have a big impact on someone’s life.
If you start providing regulated financial advice you will fall under the FMA’s regime. You must have a Financial Advice Provider Licence.
So, don’t call yourself a financial adviser unless you are legally entitled and qualified to! To use the term Financial Adviser, you must be registered on the Financial Service Providers Register (FSPR) and engaged by a licensed financial advice provider (FAP) or authorised body. If you hold yourself out as a Financial Adviser and if that is not the case, as an individual, you could be held liable for a penalty of up to $200,000.
Read more about the financial advice regime and recent changes to the law.
If you see someone giving regulated financial advice improperly, you can tell us about it.
We encourage you to seek your own legal advice where necessary. This guide is not intended to provide legal advice or provide a complete summary of the Financial Advice regime.