There are so many people posting things online, and I don't know who to trust. People on social media are telling me that I need to do my own research when I'm making decisions about what to do with my money. But how do I go about that? Who am I supposed to listen to? Who can I trust out there?
Sincerely,
You are getting at the crux of a major issue with the recent democratization of financial information thanks to social media. There is a lot of information out there, but not all of it is made equally. There is no vetting being done on social media for quality content regarding financial education, meaning that anyone can pose as an expert, which can lead to disastrous consequences.
At worst, this can lead to unqualified people sharing their "money hacks" which are nothing better than fraud. One great example of this is the "money glitch" that some "finfluencers" (financial influencers) claimed to find. They deposited a check from an overdrawn account. While the transaction was pending in their own account, their account balance read the increased value of the check. During that time, they went to an ATM and withdrew that money, thinking they'd found a way around the system.
No, they'd simply committed check fraud.
There are other more benign forms of danger that come from entertainment masquerading as expertise. One well known financial entertainer is a big proponent of "zero debt," and has created a media empire around the belief.
However, digging deeper, his "zero debt" actually leads to unrealistic strategies for growing wealth, and his advice is often condescending and dismissive of the challenges that many people face. While he claims to be a financial expert, he does not actually have any professional credentials aside from a real estate license. And this is reflected in the investment advice that he gives on his shows - none of which reflect sound investment strategies.
All of which is to say: There is definitely danger in listening to the zoo of content creators out there.
Some people posting information on social media will actually hold professional credentials. Look at the letters behind their name (these will probably be prominently displayed) and then look those letters up.
These people might also be licensed financial advisors, which means that they have a fiduciary duty when giving financial advice - which simply means they have a level of legal responsibility to you that a mere entertainer would not have.
If a person's sole income comes from selling their social media channel, beware. They have more of an incentive to create content that gets clicks rather than robust and sound financial education.
Likewise, beware if their income comes from selling a course. Anybody can create a course, but that doesn't mean that it's actually been vetted by experts.
A better alternative would be to look for someone who makes money as an investment advisor, financial planner, or tax planner. These folks become experts by dealing with their area of focus every day, and they make money by creating lifelong clients rather than clicks from an algorithm. These folks also have higher legal responsibilities for information they share.
Emotions cost money. If someone is trying to make you feel excited, scared, happy, or frustrated, beware. They want your clicks.
Real experts usually want you to feel calm, to think dispassionately. They know that if you're thinking without emotions clouding your judgement, you'll listen to them. Flee from emotions. Run towards peace.
Above all, however, I recommend everything you find on social media with a grain of salt. No, a barrel of salt. With so much fake information proliferating the internet, beware first, and approach any "expert" with suspicion. Now, more than ever, we need to fall back to relying on certifications and licenses in order to combat against the dangerous upswelling of harmful information out there.
I hope this helps!
Your Friend in Finance