March 29, 2022
“If freedom of speech is taken away, then dumb and silent we may be led, like sheep to the slaughter.” ―
You might’ve heard about the crackdown on financial content from ‘unlicensed’ people like myself. And I understand why.
Apparently, there are clowns out there pumping up penny stocks and various crypto shitcoins to cash in and sell when the price rises.
Or, telling people precisely what to invest in for monster gains and charging for unquestionably harmful advice.
The regulator feels compelled to take action. But as I’ll explain, the new rules are heavy-handed and go as far as suppressing freedom of speech for anyone with an online following.
In this post, I’ll share my thoughts on these new rules and explain what this means for my content going forward.
After numerous reports of dodgy content creators, ASIC (Australian Securities & Investment Commission) has created some interesting new guidelines.
The new guidelines are far broader and wide-reaching than many will assume. And these laws need to be followed or content creators risk large penalties and apparently, even jail time. Pretty exciting, right?
Before we get into the details, if you want to read more about these issues, you can find more information below:
Here’s the short version: If a content creator says anything that could possibly ‘influence’ someone’s decision about using a financial product or making an investment, then it’s illegal.
If you think that sounds all-encompassing, you’re right. But let’s flesh out some examples of what ASIC has said and what this means in practice.
Wow. Writing almost anything could influence someone to invest or use any financial product.
So, if someone asks who we insured our house with, I can’t answer that. If someone asks what super fund or bank I use, I can’t answer that either.
If someone comes to me and says “there are so many brokerage accounts to start investing, do you have any recommendations?” I now have to say, “sorry, go see a professional.”
And I can definitely no longer share what I’m investing in or give thoughts on certain options and approaches.
Bank accounts, insurance policies, brokerage accounts, superannuation, home loans and investments are all forms of financial products and are now off limits.
You probably think I’m being over the top. I’m not.
Any comment I make on one of those things could influence someone’s decision to invest or use a financial product.
So, sharing my opinion on those things is now illegal. Anything else?
We’re not even talking ‘which stocks to buy’ type stuff. This covers general classes of products. That means any investments, index funds included.
So I can’t even do simple comparisons and make vague and general suggestions on what a sensible choice might be. Nor can I help narrow down the options by suggesting certain choices are worth avoiding.
What is acceptable to say? Luckily they’ve defined it for me.
Ahh, excellent. So basically, I’m allowed to be a walking PDS or a robotic fact-sheet.
I can talk about investments and financial products, as long as I make absolutely no indication whether I think one is better than another.
Why would I bother parroting what you can read elsewhere? How does that help you wade through the sea of information and nonsense out there?
It’s looking a little restrictive so far. Surely there’s some leeway for those who are genuinely trying to provide reasonable and sensible information?
Because apparently being a licensed professional is so attractive that thousands are leaving the industry, due to the mountain of compliance and legalities they have to wade through.
Despite not having a license, the amount of people who’ve written to me expressing gratitude for the simple information on this website… well, there’s been a lot.
Add to that, the emails I’ve received from a surprising number of disgruntled ex-advisor clients who were frankly being taken for a ride:
So I should go through a comprehensive training program, pay thousands each year in licensing fees, compliance and running costs, jump through countless administrative hoops, only to turn around and provide exactly the same information as I do now for free?
My writing and the thoughts I share wouldn’t change. The financial products and services I recommend wouldn’t change. And nothing I speak favourably or unfavourably about wouldn’t change.
Of course, I could then offer high-priced courses, coaching and all sorts of other fancy stuff. But the idea behind starting this blog was to provide helpful information by sharing my journey, and what I’ve learned (and continue to learn).
The whole point is to have people NOT pay for it.
And sure, if I can make a few bucks along the way by recommending things I use and genuinely like, then great. But that’s just a bonus.
If you think this helps stop people receiving poor advice or being scammed, think again.
There’s enough stories of both licensed and unlicensed operators misleading and screwing people over in recent years. We should know better than to think we can eradicate bad behaviour, or fix the issue with ever-more regulation.
It also creates another problem. The newbies who are just starting and want to learn about investing and do it themselves. Where do they go now?
People want to do it themselves to be self sufficient and master of their own destiny. Because traditional advice is too expensive and they’re interested in managing their own finances.
And because the trust is broken in the financial industry. Why do you think people are trusting bloggers and content creators in the first place?
They want to learn how finance works from someone who seems more approachable, more transparent, and more forthcoming with helpful information and sharing experiences.
None of this is to speak badly of advisors. It’s to highlight the reality of underserved people who benefit from sensible financial discussion online.
Financial literacy is already a problem. Among society in general, not just young people.
The new rules make it harder, by effectively gating off investment knowledge and any form of guidance on what a decent financial product might look like, to those in suit-and-tie holding a magical license.
People should be able to learn about this stuff from simple online content.
Why? Because this shit is not that difficult. Sensible long term investing is not complex.
But no, let’s have people wade through the murky sea of garbage financial products and funds (which somehow get the green light), and figure it out on their own.
Unless they pay up for help that is. Which is likely to be out of their budget if they’re just started out and trying to learn.
One of my readers came up with a great analogy: “It’s like telling someone who loves to bake that they can’t share their recipe because they haven’t been through years of culinary school and someone could end up with a cake that they don’t like. Ultimately, it’s oppressive.”
By all means, if people are pushing dangerous recipes with clearly dodgy ingredients, shut them down! But for the sake of sharing opinions, healthy discourse and maintaining free speech, there shouldn’t be a problem.
Some parts of the legislation actually make for a good laugh. Here’s a cracker:
So, tips on saving money and budgeting that don’t involve financial products considered “unlikely to be financial product advice.”
Unlikely! So it could be… somehow?
Now, there are some helpful examples. But overall, the guidelines have been scripted with a nice blend of all-encompassing sentences and uncertain generalities (may be, could be, probably) to provide maximum leverage for the regulator over the interpretation of the rules.
One supporter of the changes is Stockspot CEO, Chris Brycki. Unsurprisingly, Stockspot is a robo-advisor who’s business model is hardly helped by a growing number of do-it-yourself index fund investors like those in the financial independence retire early (FIRE) community.
The more people that learn to confidently start investing on their own, the less they need a robo-advisor. So the muffling of content creators who share examples of do-it-yourself investing is a convenient win for Stockspot.
Brycki has also been a long-serving member of ASIC Financial Advisers Consultative Committee (FACC) and member of ASIC Digital Finance Advisory Committee (DFAC).
I can only imagine the unanimous echo-chamber of agreement among Aussie advisors, as they celebrate what a great idea this is.
But yeah, the only conflict of interest is with the content creators 😉
Of course, all this is done “in the best interest of the consumer.” But isn’t it better when the consumer has more access to information? More insights and ideas to draw from? More examples of what others with similar goals are doing? And more people sharing their personal experience and what they’ve learned?
I guess not. Apparently it’s better if the gatekeepers control the information flow. But that hardly seems in the ‘best interests’ of Australians in 2022, does it?
I’m sure if ASIC reached out to a bunch of online creators, most of us would’ve been happy to talk to them about it. There could’ve even been a Online Content Creator Committee (OCCC) to balance out the opinions on the advisor side.
We could all come to a healthy middle-ground on what is and isn’t okay to say. But apparently it’s just easier and cheaper to simply shut the conversation down. Especially since we don’t have a fee-paying relationship with ASIC.
Curiously, this ruling seems to be unique to whoever is deemed an ‘influencer’.
If you’re a journalist covering stocks and market moves, you reporting on and interpreting company results can easily influence whether someone invests in that stock.
What you report about a new trading platform, investment offering, changes to bank home loans or super funds will also influence whether people sign up or avoid those things.
Then there’s stock forecasts and market commentary by analysts and banks. Neither of which are considered ‘advice’ but both can have a huge influence on what actions an investor might take.
What about investment newsletters and chat forums? Prominent writers or commenters can potentially influence thousands of people.
Do we pull Barefoot Investor books off the shelves for mentioning certain super funds, bank accounts and investments? Where does this end?
While the idea might make sense on the surface, we’re now on a slippery slope to stomping out free speech.
Shouldn’t we be able to read and consume freely, then decide what to do? Where’s the personal accountability for making our own decisions?
Crypto and property. These assets seem to fall outside the scope of ASIC and these new guidelines. So it’s only the little corner of the internet where we talk about share investing that’s under the microscope.
It’s alright, I’m sure there’s nothing suspect going on in crypto-land or with the property spruikers.
The taboo topic. There’s no issue with content creators of any other kind providing tips and sharing their stories about every other aspect of life we deal with. Health. Home buying. Cooking. Cars. Travel. Fitness. And so on.
But somehow when money and investments are involved, we want to rope it off like a secret part of society.
Aussie only. Interestingly, these guidelines can only apply to Aussie-made content. The US has no such restrictions on free speech and investment content and can say what they like. So the Aussie population is able to get guidance from American content but not from locals.
That will make it even more confusing when they can’t get access to the same investments they’ve seen mentioned in the content they’re consuming.
Don’t get me wrong, I can totally see why ASIC has chosen to take action.
But these deliberately broad and expansive rules seem a bit lazy and heavy-handed.
Let’s zoom out for a minute.
In the last five years, there has been a growing number of people educating themselves by reading, watching, or listening to financial content creators.
These people are getting started investing when they otherwise wouldn’t have, due to lack of accessible and relatable information.
Think about it this way. There’s likely only a small percentage which are dodgy content creators. A few bad guys, lots of good guys.
The ‘followers’ of the good guys would have created tens of thousands, even hundreds of thousands of dollars in wealth. Just by learning simple principles and a few general investment ideas. I know because I hear from people like this all the time.
The ‘followers” of the bad guys may end up losing thousands, then become jaded and likely give up. So, the overall wealth generated in society would absolutely dwarf the losses from poor ‘advice’.
Anyone who stops to think about the big picture for a minute would agree. To shut it all down is like forgoing $30 to save $1.
I love writing about what I’ve learned and trying to help others.
I want to provide value and help people navigate the world of finance and investing.
But if I can’t be as helpful because I’m restricted in what I can say, then this becomes less enjoyable. And if it’s less enjoyable, I’ll naturally want to do less of it.
If I sound mildly annoyed, it’s because I am. Take away the affiliate links, that’s not a problem. But don’t take away the ability to share opinions and have open discussions about money for everyday people.
These rules impinge on my freedom to say what I would say to a friend. Which is what I consider my blog readers. It feels like I’m just a friend who’s maybe a little further along the financial journey, who you can ask questions and get some insights and ideas from. But the restrictions start making it a weird and unnatural conversation.
So at the moment, I’m not really sure how I want to proceed. I could retreat back into anonymity, which is actually pretty appealing.
It would also be nice to free up time for other activities. I can think of a few things I’d enjoy doing. At the same time, I like writing and I don’t want to let anyone down who enjoys my content. I’ll keep thinking about it.
I’ve said enough for today.
I’ll leave the last words to the Minister for Financial Services, Jane Hume. In a recent article on this issue, Money Magazine reported:
Jane Hume said the government will not help those consumers that do fall victim to a finfluencer’s advice, saying that would be “perpetuating a nanny state culture”.
“There’s never an excuse for that [misleading or scamming]. But the existence of a small number of unscrupulous actors doesn’t justify wholesale constraints and policing and freedom of expression for everyone.”
Let me know what you think of the new rules in the comments below. In the meantime, I better go see what I look like in orange!
If you would like to take action on this issue, the only thing I can think of is reaching out to the Minister for Financial Services. Explain how online financial content has helped improve countless lives. Urge that these guidelines are re-considered.