In this week’s episode of Retirement Readiness, Tim Regan and Katie Umland discuss the differences between advice given from social influencers and financial advisors – including why individuals should be wary of taking financial advice from strangers online.
When it comes to financial guidance, it’s essential to know who you can turn to with confidence – especially when your future retirement is on the line. That’s why online financial advice via social influencers is so tricky:
On the one hand, it can make money knowledge more accessible to more people – all you need is a mobile device and an internet connection to watch those TikToks about saving money and optimizing returns.
On the other hand, you don’t have a simple way to verify that the advice being given is accurate, or even if the people doling out that advice are legitimate sources.
Moreover, financial advisors are often held to certain legal standards for advice, with many financial professionals falling under the category of “fiduciary.” Fiduciaries are legally required to act in the best interest of their clients, even if it means the advisor makes less money overall.
With social influencers, it can be tough to parse out true intentions: Are they trying to help you save money, or are they trying to get the most views possible? Are they promoting a specific brand or product because they actually believe in it, or because they’re being compensated?
In this episode, Tim and Katie dive into the nuances of digital financial advice, including tips on how to verify a person’s financial advisor status with just a few clicks. Hit “play” above to hear more about the differences between social influencers and financial professionals, or browse our other episodes to learn more about preparing for retirement.
Key Timestamps
- 00:02:30 – Many social media influencers give opinions rather than advice since they have not gone through extra training or education.
- 00:05:12 – Tim and Katie discuss why someone should work with a financial advisor instead of curating advice from social influencers. They compare it to trying to self-diagnose symptoms through WebMD.
- 00:07:47 – Social media influencers make money from views and commission from product reviews.
- 00:11:37 – Tim and Katie acknowledge that social media is a useful medium for advice, but people need to be careful with what advice they decide to take.
- 00:15:10 – Tim and Katie emphasize the importance of verifying the information shared by social influencers.
- 00:15:44 – Tim and his team encourage viewers to scrutinize TikTok and Instagram accounts before following them.
Key Takeaways
- Social influencers giving financial advice can make money knowledge more accessible to the masses – but viewers should be wary that internet advice from non-qualified sources isn’t always correct.
- Some social media influencers may be receiving money for endorsing certain products or advice, while a fiduciary advisor is legally required to give objective financial advice.
- There are tools available to verify someone’s advisor status, such as BrokerCheck, which is regulated by the U.S.’s Financial Industry Regulatory Authority (FINRA).
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