There is a lot of financial advice out there, but the majority of it is terrible. Relying on the wrong sources for financial advice can lead to huge losses. Good financial advice can change your life, and bad advice can ruin it. Hence, it’s extremely important to get financial advice from credible sources and people. Here is a list of the twelve worst places to look for financial advice so that you know what to avoid.
Social Media
More often than not, financial advice on social media is generic and wrong. Unfortunately, 79% of Americans get financial advice from social media. It must be noted that financial advice needs to be personalized; everyone has a different situation, and the advice should fit the person seeking it. When it comes to social media, the advice is either generic or something that works for one person; this doesn’t mean it works for everyone. Following the wrong financial advice can lead to severe losses; hence, every advice from social media should be taken with a grain of salt.
Unlicensed Advisors
Unlicensed advisors are the last place you should go for financial advice.
These individuals lack the proper certifications, licenses, and experience required to provide proper guidance. Trusting unlicensed advisors can have severe consequences, as their advice is most likely based on misleading information, outdated strategies, and schemes that will benefit them while burning a hole in your pocket.
Verifying the credentials of any financial advisor before listening to their advice and implementing them is very important.
Online Forums
Online Forums are one of the least credible sources for financial advice.
The advice is often based on individual experiences rather than professional experience or expertise. In most cases, the advisors there are not qualified and cannot give unique solutions based on unique situations.
Financial experts say that most online advice can be extremely wrong and harmful. Most advice is for the short term and never aimed at the long term, which can be detrimental as solid financial advice always focuses on the short term and the long term, mainly long-term wealth generation.
Email Newsletters
Newsletters are sent out for a purpose—marketing and selling something. They are not the source of financial advice. The information in these newsletters lacks proper research and vetting. Additionally, many newsletters make false promises and promote misinformation.
As a rule of thumb, always check the source of the newsletter and their qualifications before implementing any advice.
Cold Callers
Accepting financial advice from cold callers is one of the worst ideas ever. Cold callers are people who contact you unsolicited to promote a product or service. They use dodgy tactics like pressuring people or making misleading and downright false claims to manipulate people into making wrong financial decisions, which will gain only the caller.
Legitimate financial advisors do not rely on cold calling to generate business; any unsolicited call offering financial advice should be ignored.
Insurance Agents
Seeking financial advice from insurance agents is a bad idea mainly because of a single, most important reason—conflict of interest.
Many insurance agents prioritize selling specific insurance products that will benefit them and might not be the right fit for the client. Insurance agents are not qualified to give financial advice, and when they do, it might not cater to all of the client’s needs.
Investment Clubs
Investment clubs are a group of people who pool their money and invest it to share the profits. While this might sound like a good idea on paper, in practicality, it’s not. Investment clubs can often be misleading sources of financial advice, mainly due to their informal structure. There could also be conflicting advice from different people that could lead to wrong investments.
Podcasts and YouTube Channels
Podcasts and YouTube channels are great mediums to learn about finance, but they’re not the right place to seek financial advice. Most creators lack the qualifications and experience required to give financial advice. Additionally, these channels may promote financial products or strategies that could only benefit them. They could also spread misinformation, as most information is not adequately vetted, and viewers don’t always check the sources.
Following these channels or podcasts blindly could lead to huge financial losses.
Artificial Intelligence
Many financial institutions and organizations worldwide are actively using artificial intelligence; however, this has equal negatives. AI advice tends to be generic, without considering factors like long-term plans and unexpected events. AI advice needs to be vetted by a human financial advisor before implementation. Another primary reason AI is a bad source of financial advice is the perpetuation of bias and discrimination due to the data it was fed.
Self-Help Books
Self-help books might seem like an easy source of financial advice, but in reality, they should be the last place you should look for financial advice. This is mainly because most self-help books are authored by people who don’t have any formal financial training or qualifications. Additionally, these books are always based on personal experiences, and when it comes to financial advice, there is no one-size-fits-all approach. These books often paint a rosy picture of finance and investments and tend to encourage people to take unnecessary risks that cause them to lose their life’s savings.
Friends and Family
Our friends and family are great; there is no denying that; however, they are the worst place to go for financial advice unless they are qualified financial advisers. Most of their advice is based on their own experiences and financial situations. There is a lot of difference between your financial situation, goals, and expenses and that of your kith and kin. Emotional ties can also cloud judgments and can lead to biased recommendations. Hence, it is always better not to seek financial advice from friends and family and to go to a financial advisor.
Online Ads
Online Ads are the worst and least credible places to look for financial advice, mainly because anyone can run an ad, and online platforms don’t always verify them. Most online ads about financial advice promote “get-rich-quick” schemes or high-risk investments. There are very few ads run by legitimate financial advisors, but they are lost in the sea of misinformation. These ads could also be promoting a scam and viewers are often none the wiser and can lose huge amounts of money if they believe and invest according to online ads.