Malaysia's Securities Commission just drew a line in the sand. Starting now, anyone giving financial advice without proper licensing could face fines up to RM10 million or 10 years in jail.

Think about it this way: You wouldn't let someone perform surgery on you just because they have a lot of Instagram followers. Yet right now, 68% of Malaysians are taking investment advice from social media personalities who might have zero professional qualifications.

These regulations exist to shield you from the financial equivalent of medical advice from someone who once watched Grey's Anatomy, while leaving room for genuine financial education.

The numbers tell the story:

• 68% of Malaysians get financial advice from social media (RinggitPlus 2023)
• Only 49% of people verify if their source has proper credentials (Barclays 2024)
• DIY investors underperform professional portfolios by 8.48 percentage points annually (DALBAR 2024)
• Malaysia's financial literacy score sits at just 59.1 out of 100 (Bank Negara 2024)

Why Did Regulators Finally Step In?

You're at a pasar malam, and someone's selling "miracle investment opportunities" that promise 30% returns with zero risk. You'd probably walk away, right? It sounds too good to be true.

But dress that same pitch in a slick TikTok video with trending music and polished video editing, and suddenly it feels legitimate. That's exactly the problem regulators are trying to solve.

Here's what was happening:

• Unlicensed "gurus" were promoting complex financial products they didn't understand
• Young Malaysians were losing money to schemes wrapped in social media appeal
• Even well-meaning influencers were giving advice beyond their expertise
• The line between education and regulated financial advice became dangerously blurred

Malaysian Financial Planning Council (MFPC) International Development Committee chairman Anuar Shuib  was the one who said this: “Because when you are sharing about personal finance, it’s not just for fun,” Anuar said. “It can lift a person up, bring them down, or even destroy their wealth.”

What Exactly Counts as "Financial Advice" Now?

It can get confusing but here is the simple breakdown:

Still Allowed (Educational Content):

• "Here's how I personally budget my salary"
• "This is what compound interest means"
• "I learned about diversification and here's the concept"
• General financial education without specific recommendations

Not Allowed Without a License (Financial Advice):

• "You should buy this specific stock"
• "This investment will give you X% returns"
• "Put your money in this fund"
• Telling people to invest in a specific product or service.

You can watch YouTube videos to learn basic car maintenance like checking your oil or changing a flat tire. That's useful knowledge. But when strange noises start coming from your engine, you don't keep watching videos. You bring your car to a certified mechanic who can diagnose what's actually wrong. The difference is between general knowledge and solving your specific problem.

The penalties are severe:

• RM10 million fine or 10 years imprisonment for unlicensed advice
• Finfluencers must verify they're licensed before giving recommendations
• Consumers should check credentials before following any specific financial guidance

But Wait… Does This Mean I Can't Learn From Social Media Anymore?

Absolutely not. This is where people often misunderstand what's happening.

The regulations don't shut down financial education. They shut down unqualified people giving you personalized investment recommendations.

Here's a helpful analogy:

Learning about financial concepts online? Great. Getting specific investment advice from someone without credentials such as buying stocks abc because it’s going to go up 300% is dangerous.

• 94% of Malaysians say they actively try to improve their financial knowledge (RinggitPlus 2023)
• But only 22% have ever attended a proper financial education course
• 46% plan to take their first professional course soon
• Among students taught formal financial literacy, 77% showed high knowledge but only 17.6% demonstrated good financial behaviors

What's Really Costing DIY Investors Money?

The biggest threat to your returns isn't picking the "wrong" stock. It's your own behavior.

The "Behavior Gap" is expensive:

When markets drop 15%, professional investors rebalance according to their strategy. DIY investors tend to panic-sell, locking in losses. When markets surge 20%, professionals stick to their allocation. DIY investors chase the hottest stocks at peak prices.

This emotional whiplash cost the average investor 8.48 percentage points annually in 2024 compared to simply holding a diversified portfolio (DALBAR 2024).

Imagine you're driving to Penang. You have Google Maps showing the optimal route. But every time you see traffic, you randomly exit and try to outsmart the system. You end up adding hours to your journey and burning extra fuel.

That's exactly what happens when investors try to time the market based on emotions or hot tips from social media.

Professional oversight addresses this by:

• Removing emotional decision-making from your portfolio
• Rebalancing automatically when needed
• Sticking to evidence-based strategies regardless of market noise
• Preventing you from being your own worst enemy

So Who Should You Actually Trust With Your Money?

This is the RM10 million question (literally).

If someone's giving you specific financial advice, they need to be licensed by the Securities Commission. But what does that actually mean for you?

Here's your trust checklist:

1. Proper Licensing & Oversight

• Are they registered with Securities Commission Malaysia?
• Do they have qualified, certified professionals managing portfolios?
• Is there transparent regulatory oversight you can verify?

2. Systematic Process, Not Hot Tips

• Do they follow a documented investment methodology?
• Are decisions based on research and strategy, or trending topics?
• Can they explain their process clearly?

3. Alignment With Your Values

• For Muslim investors: Is there independent Shariah board verification?
• Are holdings transparent and regularly audited?
• Do they publish their screening methodology?

What about Wahed?

We built our entire platform around the regulations from day one:

• Licensed and regulated investment advisers
• Independent Investment Committee overseeing portfolios
• Global Shariah Supervisory Board certifying every investment
• Published audits and transparent holdings
• 450,000+ investors across 130 countries

What Should You Do Right Now?

The regulations aren't meant to scare you away from growing your money. They're meant to protect you from losing it to unqualified advice.

Your action plan:

If you're currently following finfluencers:

1. Check if they're licensed (search the SC Malaysia register)
2. Distinguish between education and specific recommendations
3. Never act on advice without verifying credentials first

If you're ready to invest seriously:

1. Choose platforms with proper regulatory oversight
2. Look for transparent processes, not personality-driven hype
3. Prioritize systematic strategies over trending opportunities

If you're Muslim and want Shariah-compliant investing:

1. Verify independent Shariah board oversight (not just self-declared compliance)
2. Check that screening methodology is published and auditable
3. Ensure the platform is regulated in addition to being faith-aligned

The Bottom Line: Intelligence Is Knowing When to Delegate

The final truth that the "do your own research" culture doesn't tell you:

Smart people don't do everything themselves. They know when to delegate to trained experts.

You don't fix your own car transmission because you watched a YouTube video. You don't perform dental surgery on yourself because you read a thread about cavities. And you probably shouldn't manage complex investment portfolios just because a 23-year-old with 500K followers said a stock "looked good."

The smartest investors aren't the ones who know everything — they're the ones who know what they don't know.

Malaysia's new RM10 million fine for unlicensed financial advice isn't about control. It's about protecting your wealth from people who are learning on your money.

The choice is yours: Keep taking advice from unqualified voices, or trust the system that's designed to protect you.

Ready to invest with qualified experts?

Wahed offers Shariah-compliant portfolios built by certified professionals, overseen by independent boards, in accordance with relevant regulatory requirements. Your money deserves more than social media tips — it deserves  guidance grounded in real expertise.

Start with Experts Today

Sources:

• RinggitPlus Malaysian Financial Literacy Survey 2023
• RinggitPlus Malaysian Financial Literacy Survey 2024
• DALBAR Quantitative Analysis of Investor Behavior 2024
• Bank Negara Malaysia Financial Capability Survey 2024
• Barclays Finfluencer Research 2024
• Malay Mail: Malaysia Finfluencer Regulations
• Financial Literacy Among Malaysian Students

Disclaimer: This page is provided for informational purposes only and does not constitute investment advice or a recommendation to invest. This content has not been reviewed by the Securities Commission Malaysia.his content has not been reviewed by the Securities Commission Malaysia.

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