Why you shouldn't get financial or retirement advice on social media

The internet has made information on almost any topic easily accessible. While that's great, it also means we have to sift through a lot of data to find reliable and accurate information. This is especially important when making big financial decisions.

Rob Williams, Managing Director of Financial Planning at Charles Schwab, said, “One blessing of the Internet and the modern world is the amount of information available on every topic imaginable. A curse and challenge, however, is sifting through all that information to bring order to the confusion, especially on issues – and decisions – as important as our finances. Financial planning is a profession with a process.”

Financial planning is a complex task that requires specific knowledge and a clear process. It's not something you can learn in an online course, through a quick search, or from an online guru.

For this reason, it is important to seek advice on financial matters not from online gurus, but from recognized experts.

Expertise and training

Financial advisors undergo rigorous training to gain their qualifications. They must pass difficult exams and keep up with the latest financial rules and strategies. This means they can give you good, personalized advice based on your specific financial situation and goals.

accountability

Accredited financial professionals must follow a code of conduct and are responsible for the advice they give. They must act in your best interests. Social media influencers and unnamed individuals do not have to follow these rules and their advice may be influenced by personal bias or commercial interests.

Brian Preston, CPA, CFP®, PFS, author of *Millionaire Mission* and founder and host of “The Money Guy Show,” warns against the spread of misleading content: “Social media is full of get-rich-quick schemes and false promises to help you make money with little effort or work. The reality is that building real wealth takes discipline, consistency and time. It's simple, but it's not easy. I want to warn against many of the tactics that make promises that sound too good to be true – because often they are.”

Personal advice

Financial planning is different for everyone. Accredited financial advisors take the time to understand your individual financial situation, goals and risk tolerance. They develop tailored strategies to help you achieve your goals. In contrast, advice from social media is often general in nature and may not fit your specific needs.

Comprehensive planning

Professional financial advisors examine all aspects of your financial life, including retirement planning, tax strategies, investment management, and estate planning. Their thorough approach ensures that all parts of your financial plan work together. Advice on social media is often scattered and doesn't offer this level of integration.

Risk management

Investing and financial planning involve risk. Accredited financial advisors are trained to effectively assess and manage these risks. They can help you build a diversified portfolio that balances risk and return according to your risk tolerance. Untested advice from social media can lead to unnecessary risks that could harm your financial future.

Preston also stresses the importance of being cautious about who you follow online: “I also recommend doing a quick check of who you follow on social media these days for financial advice. Anyone can create an account, go viral and build a following. It's important to check their background, experience and credentials. As far as you know, this person has no credentials or real experience in helping other people build wealth. Be careful where you get your advice from.”

Long-term relationship

Working with a financial professional often means building a long-term relationship. This ongoing partnership allows your advisor to adjust your financial plan as your circumstances and goals change. Your lifestyle and resources will change throughout your life, and changing situations must be taken into account. A well-known and trusted advisor is your best resource, especially in volatile markets. You want a credible, proven advisor who can respond quickly when needed. Influencers and unknown individuals do not provide this level of engagement, continuity and support.

Loss of time

Preston warns about the time spent on social media,

“Social media can cost you your most powerful resource – time. The key to investing is to invest early and often, because the most powerful means of building wealth is compound interest. If you get distracted by chasing trends and making unplanned impulse purchases because of social media, you're not only losing the money you spent on those purchases. You're also losing the power that dollar had to grow over time if it had been invested instead. I'll never be the financial advisor who tells you never to spend your money or have fun with it, but be careful about impulse purchases. Remember, they're costing you more than you spent.”

While social media provides useful information, it is not a substitute for professional advice. Managing your finances and planning for retirement are too important to leave to unverified sources. By consulting a recognized professional, you will receive reliable, personalized, and comprehensive advice – the advice you need to secure your financial future.