If you’re in the market for financial advice, you might be listening to everyone who opens their mouth. Especially if you’re new to the financial world. After all, it can seem complex. Stocks, bonds, savings accounts and real estate: how can you know what the best moves are?
It may seem like a good idea to cast a wide net. But here’s a tip: If you want financial advice, go to a professional.
From well-meaning relatives to know-it-all colleagues, there are seven people you should never go to for advice about money.
1. The Friend Without Two Nickels To Rub Together
The fact that your friend has $0.07 in his checking account doesn’t mean he’ll refrain from offering you financial advice. Maybe it’s a condo complex that’s a sure thing or a mutual fund his aunt recommended. If your friend is skirting poverty all the time, he doesn’t know that much about finance. Part of having money for financial security is saving some.
If you take anything away from these friends, it should be how not to manage your finances.
2. Your Uncle Bob
We’ve all run into that relative who considers himself a financial know-it-all. “Bonds are a sure thing!” he says, or offers to give you a deal on investing in a new town center ice rink. Be careful. Evidence shows that 70 percent of investment fraud victims were set up by relatives or friends. Not that Uncle Bob would do that intentionally, but his collection of “rare” stamps isn’t exactly an investment goal mine.
3. Social Media Mavens
As you look through social media, chances are you’ll see investment or financial pitches. Don’t fall for anything you just happen to see on social media, whether you know the person or not. Again, just because someone is on Facebook or Snapchat doesn’t mean they know about finance. Also, with the rise of fake news, it’s becoming increasingly clear that information on social media isn’t fully credible.
4. Your Neighbor
Neighbors might be especially full of advice about real estate. After all, you live in the same neighborhood, so your own real estate situation might be similar. But what if Neighbor Sally thinks a swimming pool or more square feet will always raise your resale value? It won’t.
Many new parents see a swimming pool as a potential danger. Many empty-nesters see more square feet as a headache. There’s no substitute for solid real estate advice from a professional on what provides resale value and what doesn’t.
5. A Self-Described Financial Expert
Think that people advertising themselves as financial experts need to be certified? It turns out anyone can hang out a shingle proclaiming themselves a financial expert, whether or not they’re certified. It’s not illegal for them to call themselves advice professionals or financial planners.
The best way to find a broker or financial planner is to do research and make sure they are credentialed and certified.
6. Financial Advisers With Poor Reputations
A good financial adviser will give prudent advice to his clients. He will know his clients’ financial situation and act in his clients’ best interests. But there are bad apples in every group. Financial advisers are no exception. They can do everything from give poor advice to run away with client funds. Be sure to research any financial adviser carefully. It’s a good idea to ask for references.
7. Your Colleagues at Work
Finally, people at work may give you financial advice, whether over post-work drinks or at a conference. Be skeptical when your colleagues offer advice. These people don’t necessarily know your financial goals, circumstances or comfort zones.
All of these elements need to be taken into account as you put together your financial plan. Plus, even the most successful colleague isn’t necessarily a financial wizard. More than one CFO has gotten there by being related to the boss.
As you go through life, many people will offer you financial advice. Always consider the source of this advice, and run it by someone in the know. Stick with professional advice from people who know your goals and circumstances, whether the subject is real estate or financial planning.
[h/t CheatSheet]
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