(BPT) - When it comes to your finances, where are you getting financial information? Older generations received most of their financial advice from financial planners, family friends and print media, but more and more Americans are turning to social media as a trusted source for money matters.
According to the National Association of Personal Financial Advisors' (NAPFA) 2021 Consumer Survey, 39% of Americans under 65 found financial information online or on social media and 60% of those respondents acted on that advice. Social media as a source of financial advice is especially popular with the younger generations. One-fourth of Generation Z Americans receive advice from social media like YouTube, TikTok and Instagram.
For millennials, 38% said they feel unprepared for their futures, and many cite a lack of financial guidance as a challenge to preparing for retirement. With all these economic anxieties, it's no wonder that social media has become a popular place for millennials and Gen Z to learn and discuss finances.
While it's heartening to see people of all ages seeking financial advice, not all information found on social media and the internet is reliable. Not sure if you know how to spot quality financial advice online? Check out these five tips that can help you determine if your online source of financial information is trustworthy.
1. Do they have credentials?
Anyone can upload a video online on financial advice, but not everyone is qualified or legally able to give that advice. Investigate if the blog or social media profile you frequent for financial information is run by a certified financial planner™ professional.
While certification alone doesn't guarantee sound advice, it's a sign that the information you receive is likely from a reliable source. When searching for financial advice on social media, you can find plenty of current and former CFP® practitioners who likely have the most current and trustworthy information on financial matters.
2. Is their advice in your best interest?
Is your source of financial advice committed to the best interest of their followers? This can be tough to figure out because the information on social media is often unregulated and meant to be broad and not personalized to attract as many people as possible. However, depending on your financial situation, the advice may not suit your needs.
Unlike fee-only financial planners and CFP® professionals, most social media users are not held to a fiduciary standard of care. This means that they are not responsible for providing advice aligned with your specific situation or that's in your best interest. That doesn't mean that your favorite financial blog is trying to trick you, but that you should consider if the information applies to you or if it could harm you in the long run.
3. Are they compensated?
It's crucial to find out if the source of your financial information is receiving payment for what they're sharing online. Does the blog you visit have advertisements for specific money-saving or investment products or apps? Is your favorite social media influencer sponsored by a fintech app? Compensation itself isn't a red flag, but it does present a conflict of interest.
4. Take it with a grain of salt
No matter where you get your financial advice, you should do your own research to verify the information you've received online. If a social media user claims to be a NAPFA member or CFP®, you can verify their credentials using each organization's search portal. Does a financial product sound too good to be true? Government groups like the Consumer Finance Protection Bureau and the Securities and Exchange Commission have resources that can help you fact-check financial advice.
5. Ask a financial advisor
At the end of the day, the best resource for financial planning is a fee-only, fiduciary financial planner. Online financial advice isn't tailored to your goals and needs, especially long-term. You don't have to make millions of dollars to work with a financial planner. NAPFA-affiliated fee-only financial planners can help you understand your current financial situation and help you prepare for the future.
To find a fee-only financial planner, visit NAPFA.org.