3 Red Flags about “Finfluencers”
The internet is now full of financial “personalities” and financial “advice.” Some of these have actual credentials and actual experience as financial professionals. Most do not - including the most popular and best selling ones.
How do you tell who is legit and who is not?
Is their advice good or bad?
Well, as a Federally Licensed Investment Advisor, I wanted to point you to an article that summed up 3 “Red Flags” to look out for with this new wave of financial influencers aka “finfluencers.”
Can we pause and recognize the genius of that term?
There is quite the variety of recognizable faces when it comes to popular finance advice. If you want to know if any of the people you follow have Federal Licensing, you can head over to the following site.
https://brokercheck.finra.org/
Type in a name and see if they show up. If they do not, they have no financial licenses and are not regulated by FINRA (Financial Industry Regulatory Authority). Every professional financial advisor should show up here. Does this mean that someone that does not show up is a bad actor? Not at all, but it should be one aspect of consideration.
CNBC wrote about the growing trend of getting financial advice in bite-sized pieces when financial matters tend to be more complicated than that. They highlight the following 3 things to look out for.
Their advice sounds too good to be true
They promote extremes and absolutes
They have the same solution for every problem
I couldn't agree more!
Generic advice is meant for marketing, not exactly your particular financial situation.
Too good to be true - this is a good one because those of us in the industry know that everything comes with a dash of risk, even the “safe” stuff is at risk from inflation or taxes or something else. “Get Rich Quick” is very rare and “Get Rich Slow” does not exist. Good advice is in the middle.
Extremes and Absolutes - this is a good one because the stuff on social media tends to be high risk and high leverage (debt) paths to wealth. Most of that is not appropriate and will ruin most people. The other side is that most entrenched finance guru’s say things like “Do this and you will win 100% of the time.” No, you won’t. It is not that simple.
One Solution for Everything - this is a good one because people often tout what worked for them as what everyone should do. This misses the nuance and the millions of individual factors for that particular person and situation. I often say you need the right tool for the job and these “finfluencers” operate a one tool approach. If you get in a car accident, it is your car insurance and not your rental property that saves the day. No one financial approach or tool does it all.
If you’d like to learn more about the different types of money and what works, check out the Magic Circle and take these cautions to heart. They may save you from an undesirable financial outcome.
Here is a link to the original article.
https://apple.news/AQgcUOwRdQCy8RSe0tyhjfA
As always, if you come across a financially related article you’d like to send my way please do!
Best place to send them is to me.
More next time!
Jonathan