The internet has made information on almost any topic easily available. While this is great, it also means we must sort through a lot of data to find reliable and accurate information. This is especially important when making big financial decisions.
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Rob Williams, Managing Director of Financial Planning at Charles Schwab, said, “A blessing of the internet and modern world is the amount of information available on any topic we can imagine. A curse and challenge, though, is sorting through all of it to bring order to the noise, especially for issues—and decisions—as important as our finances. Financial planning is a profession with a process.”
Financial planning is a complicated job that requires a specific knowledge base and a clear process. It’s not something you can learn from an online course, a quick search, or an online guru.
Here is why it’s important to get financial advice from accredited professionals instead of online gurus.
Expertise and Education
Financial advisors go through rigorous training and education to get their credentials. 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 ethics and are responsible for the advice they give. They must act in your best interest. Social media influencers and uncredited individuals don’t have to follow these rules, and personal biases or commercial interests might influence their advice.
Brian Preston, CPA, CFP®, PFS, author of Millionaire Mission and founder and host of The Money Guy Show, warns about the prevalence 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 real wealth building requires discipline, consistency, and time. It is simple but not easy. I would caution against many of the tactics you see that make promises that sound too good to be true -– because oftentimes, they are.”
Personalized Advice
Financial planning is different for everyone. Accredited financial advisors take the time to understand your unique financial situation, goals, and risk tolerance. They create customized strategies to help you reach your goals. In contrast, advice from social media is often general and might 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. Social media advice is often scattered and doesn’t offer this level of integration.
Risk Management
Investing and financial planning involves risk. Accredited financial advisors are trained to assess and manage these risks effectively. They can help you build a diversified portfolio that balances risk and reward according to your risk tolerance. Unverified advice from social media can lead to unnecessary risks that could harm your financial future.
Preston also highlights the importance of being cautious about who you follow online, “I also recommend doing a quick check on who you follow for financial advice on social media these days. Anyone can create an account, go viral and amass a following. It’s important to check their background, experience, and credentials. For all you know, this person has no credentials or real-life experience of helping other people build wealth. Be cautious about where you get your advice.”
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 vary throughout your life with altering situations needing to be addressed. A known and trusted advisor will be your best recourse, especially in fluctuating markets. You’ll want a credible, proven advisor who can quickly pivot when needed. Influencers and uncredited individuals don’t provide this level of commitment, continuity nor support.
Loss Of Time
Preston warns about the time cost of social media.
“Social media can cost you your most powerful resource – time. The key to investing is doing it early and often because the most powerful thing when it comes to building wealth is compounding growth. If you get distracted chasing trends and making unplanned, impulse purchases because of social media, you’re not just losing the money you spent on those purchases. You’re losing out on the power that dollar had to grow over time if it had been invested instead. I will never be the financial advisor telling you never to spend or have fun with your money, but be cautious of impulse buys. Remember that they cost you more than what you spent.”
While social media has 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. With an accredited professional, you will get reliable, personalized, and comprehensive advice—the advice you need to secure your financial future.
By Jaime Catmull, Contributor
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