When You Need Financial Advice, Do You Know Where to Go?

Estimated reading time: 6 minutes

Before the Internet, recommendations for investing and managing your money were the exclusive purview of bow-tied stockbrokers, high-brow wealth managers and credentialed financial planners. The only free advice came from family members or friends who might occasionally share a hot (and potentially dubious) stock tip. 

Now, there are so many options — many of which are free or low-cost — that it’s hard to know how to choose or which ones to trust. 

There are robo-advisors and AI-driven investing and budgeting apps. There is free or low-cost advice from some financial institutions. And there are online resources: everything from investing courses to government tools to non-profit educational websites. Many people even look to YouTube “finfluencers” and rags-to-riches videos. 

In short, while technology has democratized investing and revolutionized consumers’ access to financial advice, it’s also complicated things. Americans looking for guidance must now judge not only which types of human input are valuable, but how important human input is at all. (And on social media, how “human” is the input from people you don’t know — and more importantly who don’t know you.) 

Determining where to turn for financial guidance can be overwhelming, and sometimes even paralyzing. But understanding your options — including potential pitfalls — is empowering. As you explore what’s out there, here are a few things to keep in mind, plus some tips for gauging whether the advice you’re getting is worthwhile. 

The Advent of Finfluencers

Social media platforms like TikTok, Instagram and Youtube have become popular sources of financial advice for the younger generations that use them most. 

Among U.S. adults seeking advice, 43% of millennials (people born between 1981 and 1996) and 49% of Generation Z (people born between 1997 and 2012) get it from social media, making it their most popular source after friends and family, according to a 2023 Bankrate survey. Conversely, baby boomers most commonly rely on financial advisors, with just 6% turning to social media for guidance.

Social media often resonates with younger people who are looking for affordable ways to make money or accessible answers to gaps in their financial knowledge (more on that later). Many may also feel marginalized or intimidated by more traditional advising models — or even skeptical of them, experts say. 

On platforms like TikTok or Instagram, the personalities are entertaining and approachable, the posts and videos are relatable, and financial influencers (or “finfluencers”)  — real estate investors, financial advisors, or lawyers who sometimes have millions of followers — post plenty of stock trading recommendations, tax advice and other tips at no cost. 

But there are risks to getting advice this way. For one, the guidance is a one-way street.  Finfluencers don’t know your situation or circumstances. They often make money through sponsored posts and affiliate marketing, and they have little reason to feel loyal or accountable to you.

Plus, unlike credentialed investment advisors and financial planners, finfluencers don’t have to pass tests or adhere to specific standards. This can be particularly dangerous if they have a hidden agenda.

“There is little monitoring or regulation governing finfluencers’ activities, even when they make half a million dollars a year and their identities are hidden behind pseudonyms,” three business professors wrote in a Harvard Business Review article last month. 

In fact, in 2023, more than a third of investors younger than 55 said they had acted on financial information they got online or on social media that turned out to be misleading or incorrect, according to a survey conducted for the insurer Nationwide.

An Evolving Definition of Financial Advice

How we get financial advice is one aspect of the changing landscape. But even what counts as financial advice is morphing. 

Traditional guidance has revolved around things like investing, buying a house, or planning for college or retirement. But a 2024 PolicyGenius survey found that those who turn to social media are often looking for “finance hacks” on topics like day trading or so-called infinite banking. 

The Timing of Financial Advice 

Financial advice can take on greater urgency later in life, once your wealth has had more time to grow. 

But Americans can only correctly answer fundamental financial knowledge questions about half the time, and younger people tend to have even fewer of the basics mastered, according to TIAA Institute, which measures the nation’s financial literacy every year. 

That means guidance on topics like saving for retirement can be even more valuable earlier on. (For instance, waiting an extra 10 years to start means you’ll need to invest much more to get close to the same result.) 

How to Gauge Credibility 

The plethora of options makes it hard to gauge when you’re getting financial advice you can trust. You may encounter certain things that don’t pass the smell test, and other things that give you comfort. Here’s how to know if you’re on the right track. 

Red flags

• Promises of guaranteed or exceptional returns. Outside of CDs, they don’t really exist.

• Suggestions that you can avoid paying taxes. Legal strategies to minimize your tax bill are fine. Hot “tips” on how to skirt your bill are not, and will attract attention from the IRS.

• Complaints on FINRA’s BrokerCheck database. FINRA, the regulator of brokers and the firms they work for, exists to protect investors from unscrupulous actors, so checking their records is key. (Just know that not all complaints make their way into the database.)

Good signs

• Transparent, easily readable disclosures about fees. 

• Calculators that let you model various financial scenarios. 

• Advice to take the long-term view — after all, markets go up and down. 

• Prudent guidance on a diversified portfolio across low-cost funds, stocks and bonds. 

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