Gen Z's Financial Future at Risk from Social Media and AI Advice, ASIC Warns
Young Australians are putting their financial futures in jeopardy by turning to social media and artificial intelligence for money advice, according to a stark warning from the corporate watchdog. The Australian Securities and Investments Commission (ASIC) has raised alarms that this trend is leading to riskier financial decisions based on limited or unverified information, as many struggle to find more trustworthy sources.
Survey Reveals Alarming Trends
A YouGov survey commissioned for ASIC's Moneysmart platform, set for release on Monday, has uncovered concerning data. Nearly two-thirds of Gen Zers are using social media, and about one in five are tapping into AI to make critical financial decisions. Specifically, among respondents aged 18 to 28, almost two-thirds rely on social media for financial guidance, with 30 per cent using YouTube and 18 per cent turning to AI platforms.
More than half of Gen Z report some level of trust in financial information from social media (56 per cent) and so-called "finfluencers" (52 per cent). Even more alarming, 64 per cent say they trust AI platforms for financial advice, highlighting a significant gap in financial literacy and source verification.
Double Whammy for Young Australians
ASIC commissioner Alan Kirkland noted that Gen Z faces a challenging environment, trying to build wealth during a cost-of-living crisis and rising inflation while navigating "an environment of unprecedented digital influence." He emphasised the need for those using social media and AI to balance such sources with credible, evidence-based information.
"While Gen Z value credibility when seeking financial advice, what they see on social media is usually shaped by algorithms designed to drive clicks and views rather than providing accurate information," Mr Kirkland said. "Financial information on social media and accessed through AI tools can be incomplete, promotional, or misleading. Relying on it alone increases the risk of making a decision you may later regret."
Cryptocurrency Investments Under Scrutiny
The survey also shed light on volatile markets like cryptocurrency, where ASIC urged vigilance. Almost one in four Gen Zers are now invested in cryptocurrency, a sharp increase from 9 per cent just three years ago. Two-thirds of these investors take a short-term or speculative approach, with 30 per cent basing their decisions on social media or influencers.
In the past year, more than seven in 10 Gen Zers have seen social media ads encouraging crypto investments, and two in five have been contacted with offers to help invest. ASIC warned that short-term trading based on online popularity carries real risks, urging caution.
Positive Signs Amid Concerns
Despite these risks, the watchdog found some encouraging signs. Sixty per cent of the over 1,000 survey respondents reported using formal or professional sources for financial advice, and half turned to family and friends for trusted guidance. Additionally, 34 per cent of those polled had net savings exceeding $10,000, though 14 per cent had already accumulated over $10,000 in debt.
Social Media's Influence on Big-Ticket Purchases
The release of ASIC's results coincides with another survey highlighting social media's growing role in major purchases. One in five people have bought a big-ticket item through platforms like TikTok, Instagram, or Facebook Marketplace, with common purchases including cars (10 per cent), holidays, artwork, expensive jewellery (each 5 per cent), and collectibles (4 per cent). Surprisingly, 3 per cent of respondents in a Finder survey of 1,003 people said they have even purchased a house through social media.
Finder spokeswoman Rebecca Pike noted that social media has become a powerful sales engine, accelerating spending decisions through targeted advertising and influencer endorsements. However, she warned consumers to look beyond the gloss and do their homework to avoid costly mistakes.
"Social media can be a legitimate marketplace, but it can also be a hunting ground for scammers," Ms Pike said. She advised verifying sellers, checking contracts carefully, and avoiding large payments without proper protections. To combat impulse buying, she suggested the 24-hour rule, evaluating if an item is a "want" or a "need," and unsubscribing from tempting alerts.
"While social media can create FOMO, it can also create buyer's remorse, so consider whether you're being influenced in a way that helps or hinders your finances," she added.
