By John Csiszar
Many Americans don’t really know where to turn to get financial advice, and that’s completely understandable. Financial literacy courses, although on the rise, are not yet generally a part of the core curriculum at many schools. This leaves many adults underprepared when it comes to handling their money.
As a result, many turn to the internet or other media-based sources. According to a recent survey by GOBankingRates, more than 47% of respondents indicated they take financial advice from influencers and personalities on social media, TV- radio- and podcast-personalities or other financial experts in the media at least some of the time. With this approach, many people could be missing out on valuable expert advice.
This begs the question, how can you decide who is worth listening to and who isn’t? Here are some options to consider when you make that decision.
• Look for Credentials — Just like you wouldn’t go to a doctor without a medical license, it’s not usually a good idea to entrust your finances to someone without accreditation. Exactly what type of qualifications you should look for depends on you. Some investors only want to get advice from trained experts with certifications like the certified financial planner (CFP) designation or a chartered financial analyst (CFA) accreditation. Others prefer experts with more real-world experience than academic qualifications.
The important thing is that you don’t fall into the trap of listening to financial advice that is sensationalized or part of a marketing plan. In other words, be wary of YouTubers and Reddit “experts” who claim to have made millions of dollars from day trading or buying cryptocurrencies. While it’s possible this may have happened, it’s not the basis of a long-term wealth creation plan.
• Find Experts With a Proven Track Record — Regardless of the credentials of a media expert, you’ll only want to take advice from someone who has a demonstrable record of success. In other words, it’s all well and good for someone to say they have a financial road map that will lead you to untold riches, but unless they can back up their assertions with verifiable, real-world data points, you might want to give their advice a pass.
This doesn’t mean you should only listen to advice from millionaires, but it does mean that you should see evidence that the information you’re hearing has paid real-world dividends.
• Seek Someone With an Understanding of Your Personal Situation — Since financial advice in the media tends to be generic, you’ll want to look for someone with experience that’s relatable to your personal situation. For example, the financial advice you want to listen to may vary based on what sex you are, whether or not you are working, your age, your marital status or other variables.
Someone with a low income and five children, for example, might want to follow a different expert than a millionaire with international real estate holdings and multiple businesses.
• Get a Second Opinion — and a third one — No one has all the answers in the financial world — otherwise, everyone would just use the same playbook and their financial worries would be over. The truth is that financial planning is part art and part science.
While the most basic concepts will always be helpful — have an emergency fund, save as much as you can, don’t get emotional about investments and so on — even experts can have different opinions about how to implement a financial plan. This is why it’s always a good idea to cross-check advice you plan on taking with how others view it. While two or three different financial personalities might not agree, you should be able to draw some wisdom from how and why they differ as well.
• Take Everything With a Grain of Salt — At the end of the day, no one is going to care more about your personal financial situation than you. Although experts often give sound financial advice, almost by definition it has to be generic in nature. Financial personalities in the media are looking to build the biggest audiences they can, not just to reach the most people with their advice but also to earn the most money. With that in mind, understand that solutions you hear in the media may work for you on a general level, but you’ll have to tailor them to your specific needs.
The bottom line is that everyone’s personal financial situation is unique, so the best approach is generally to take bits of advice that apply specifically to you from a variety of sources. Just like you’d never want to put all of your nest egg into a single investment, you shouldn’t generally source advice from just a single person — and you should always do at least a little of the legwork yourself.
This article was published by GOBankingRates.com. Reprinted with permission.