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Navigating The World of Social Media Financial ‘Advisors’

According to Business Insider, the younger generation appears to be turning to TikTok and Instagram Reels for financial literacy before reaching out to a tried and true financial advisor or financial planner. How can you tell the difference though?

Typically there are two types of financial influencers that you can find on social media. One is financial professionals, who have left the world of finance to make a larger impact online. Two, those who have accomplished a noteworthy financial milestone like paying off their student loans, building a large investment portfolio, or achieving financial independence as Grant Sabatier did in his book below (which was a great read by the way):

Business Insider spoke with Humphrey Yang, a personal finance influencer, and former financial advisor. With a following of 3.3 million on TikTok and 508k on Instagram, needless to say, Yang knows how to spot an influencer who knows a thing or two.

Yang offered up some of the best ways to spot if an influencer is potentially legitimate or not.

They Actually Respond

It may seem simple enough, but sometimes it’s all about a listening ear. “A green flag is listening to their audience and understanding their problems,” Yang said. Frequently on TikTok, it’s not difficult to see if influencers are creating new videos to respond to frequently asked questions within the comments section.

Yang warns though, “There are some financial creators who just hire an agency to post a bunch of content for them. They’ll chop up the content and that creator will not even be replying to the comments.”

They Think Long-Term

It might seem obvious, but it goes without saying that an influencer claiming they know how to get rich fast is a huge red flag according to Yang. “Make sure they’re not trying to sell you a product, like, ‘Check out my sales funnel, my course, my one-on-one consultations!’ Some people claim, ‘This is how you’re gonna make 10x your money today!’”

Instead, look for influencers with a long-term view on concepts, like planning for retirement with Roth IRAs or 401(k)s, or any habits that can help you become better with your finances.

The Past Experience Matches Up With Current Claims

Another way to double-check legitimacy is simply ‘Googling’ finance influencers and finding out what their past experiences are. Or you can take it a step further. “The first thing I’d do is probably look at their work history on LinkedIn,” says Yang.

For any financial planner or financial advisor that has left the industry to serve a larger audience, it shouldn’t be that difficult to take a peek at whether or not an influencer is lying about their expertise and credentials. On the flip side, influencers who might have paid off large amounts of debt, or self-taught investors will more often than not paste screenshots of their accomplishments as a means to prove legitimacy.

So whether you gain advice from social media, or even a professional financial planner or financial advisor, it can pay to do your homework.

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