Smith reacted angrily when he was asked about the possibility he might join the breakaway series after he won the Claret Jug at St Andrews on Sunday, saying his management team dealt with "that stuff".
"I know that they're talking to him and to many others, I hope he doesn't because I think he can leave a great legacy by winning major championships and becoming the best player in the world," Baker-Finch told Melbourne's 3AW radio.
"I don't think he needs the money, I don't think it's going to be something he should do. It's his decision, he'll be a $100 million guy or more if he did go. Does he want to win more majors or does he want the money?
"I'm hoping that he stays and leaves a great legacy. I think Justin Thomas and Rory McIlroy and a lot of those guys that still compete and play well in majors and want to win majors and want to leave a legacy, they're the guys I'd be following."
Baker-Finch, who won his only major at the 1991 British Open at Royal Birkdale, also slammed the divisive way the new series had taken on the establishment.
While some critics say the new series amounts to blatant 'sportswashing' by a nation trying to improve its reputation in light of a history of human rights abuses, Baker-Finch was more concerned about the potential impact on young golfers.
"The guys who go join LIV are going to miss out on the grind, what it takes to be a champion, to play in the great tournaments against the great players," he said.
"It's hard work and you're not going to be a better player by going and playing 54-hole exhibition matches and getting paid 150-grand to finish last."
