Nowadays, there is a growing tendency of younger people seeking financial advice on social media. Platforms such as TikTok have evolved into financial information hubs, with a significant number of users participating in debates using the hashtag #FinTok.
However, while social media can provide useful insights, it also presents concerns due to the frequency of disinformation. Brian Walsh, a licensed financial advisor, emphasises the necessity of distinguishing between trustworthy advice and dangerous scams. He identifies three red indicators to look for before following the advice of a financial influencer:
- Unrealistic Promises: avoid schemes to get rich quick or advise that looks too good to be true. Walsh advocates caution when confronted with such claims, since they frequently contain higher risks than rewards.
- Extreme Views: Influencers advocating extreme financial positions or absolutes, especially regarding debt, might not provide comprehensive advice. Personal finance involves nuances, and blanket statements may not apply to everyone’s situation.
- Same solution regardless of the problem : Influencers promoting a singular solution for every financial problem, like suggesting life insurance as a fix for all issues, should raise concerns. Personal finance is diverse, and a singular approach may not address individual needs effectively.
Walsh advises checking an influencer’s credentials, looking for indications of being a financial professional. Regulated professionals typically have more accountability and credibility. Additionally, investigating their background using resources like BrokerCheck can reveal any past issues or complaints.
He also emphasizes understanding how influencers earn money, as this could influence the advice they provide. Whether an influencer is a financial professional or not, it is fundamental to investigate their background before relying on their advice. Finally, it is important to keep in mind that receiving personalized guidance from a financial specialist, for specific financial decisions, is always the better move.
Author: Simona Merlo