Younger generations are increasingly turning to social media and other online sources to get their financial advice. A recent GOBankingRates survey found that 36% of those ages 18 to 24 get financial advice on social media, as well as 31% of those ages 25 to 34 and 24% of those ages 35 to 44. And over half of Americans ages 18 to 44 get financial advice elsewhere online. Unfortunately, not all online sources are reliable.
“The internet is a great tool to find information — the problem is most people don’t know how to use the tool correctly when it comes to financial advice,” said Howard Dvorkin, CPA and chairman of Debt.com. “CPAs like me talk all the time about listening to financial advice from experts with your best interests in mind — not their own — and if you don’t know what red flags to look out for, you may end up taking advice that will end up costing you.”
Research Your Source
Know a source’s credentials, specialty and years in business. If a source is a certified public accountant or a certified financial planner, this is a good indication that they are trustworthy.
“[Becoming] a CPA requires an accounting degree, passing a four-part test with at least 75% in each part and continuing education each year,” Dvorkin said. For certified financial planners, “besides passing a test that can take six hours, there’s also a continuing education requirement. Then there are fiduciaries, which require a one-day training course. The harder your [source] had to work to get credentialed, the easier your life will probably be.”
Be Wary of Sponsored Content
Not all sponsored content is bad, but be mindful that it may not be the best advice out there if the source is getting paid to share it.
“In this day and age, you always have to proceed with caution,” Dvorkin said. “Always assume people want to sell you something. The best way to feel comfortable is to read and research — then ask questions.”
Get a Second Opinion
Don’t rely on a single source for advice about any given financial topic. You should always take the next step to see what other people are saying.
“Never, ever believe any advice that only one person is telling you,” Dvorkin said. “Financial advice is nuanced, but it’s not new. Cross-reference that advice with other experts, government agencies, nonprofits and associations. If they’re all saying about the same thing, then you know it’s reliable. Of course, there will be differences of opinion, but as long as what you’re hearing doesn’t contradict what everyone else is suggesting, you’re probably on firm footing.”
Don’t Be Blinded by Followers or Views
Being popular on the internet doesn’t necessarily qualify anyone to give financial advice.
“I counsel people all the time — never believe anyone who says they’re awesome, believe other people who say they’re awesome,” Dvorkin said. “That’s why I recommend checking online reviews from independent sites, the Better Business Bureau and media coverage from reputable outlets. I even suggest checking to see if they partner with any major charities. None of this guarantees you’re dealing with ethical professionals, but it does massively improve your odds.”
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