The Problem With Online Financial Influencers → Spot RED Flags

In a world saturated with personal finance advice, the rise of financial influencers on Instagram and TikTok, also known as FinTok influencers, has introduced a new wave of information. In this blog post, I'll explore the dangers of bad financial advice, help you decode financial red flags, identify good money advice, expose grifter tricks, discuss finance credentials, and recognize MLM signs.

I've spent past episodes and blog posts talking about what the old guard of personal finance got wrong (you know, the "one size fits all" approaches, the heavy shame-based language). This time, the spotlight shifts to the new guard – the FinTok influencers. As a financial therapist, I'm all about creating accessibility to education and information, so I'm generally excited to have more voices in the personal finance space. However, it's important to make sure you can discern between the helpful content, the iffy content, and the downright dangerous bad financial advice.

Understanding Misleading Financial Content

In a YouTube Short, Chelsea Fagan of the Financial Diet flagged that not every online expert is (surprise!) an expert! She went on to talk about a study that found that 1 in 7 online posts about finance is misleading and the importance of doing a bit of digging before taking anyone's advice at face value.

Being the data nerd I am, I found the referenced study, and that 1 in 7 number is probably low, because in order to be categorized as "misleading," it had to meet two pieces of criteria: 1) it had to omit a disclaimer, and 2) it had to offer language about guarantees (as in "if you buy this, you'll make 200% ROI). As a person whose scrolled on TikTok, there are lots of people who DO include disclaimers or people who don't make financial guarantees who offer garbage advice.

Finance Credentials and Critical Thinking

Let's talk credentials. The same study found that only 1 in 10 people sharing financial advice on TikTok have any credentials to offer that information. That means that 90% of financial advice shared on TikTok is coming from influencers without any sort of credentials in the financial industry.

Now, let's debunk a myth. I don't believe that credentials such as a license or education mean a person is somehow smarter or prevent them from being harmful. What it does do, though, is mean that not only does that person have to be trained in the first place, but for finance credentials such as a Certified Financial Planner (CFP) or Accredited Financial Counselor (AFC) there is a level of continuing education and a professional code of ethics the CFP or AFC needs to report to. Having a credential is helpful, but it isn't an end-all-be-all mark that means everything a person says is good.

Conversely, someone without a license or degree can offer incredibly smart and sound financial advice. There is a lot of value in a person who can break down complex financial terms or plans into understandable bites and share their lived experience. The key is to consider credentials as an additional layer of protection, recognizing that wisdom and expertise can come in various forms.

Financial Influencer Red Flags

Now, red flags – the danger zone. These are full-on personal finance personalities who are grifters. They are usually preying on your financial anxiety by touting the "guarantees" of doing things their way. This isn't just "bad" financial advice, these red flag creators are dangerous. They include any creator who talks about getting rich quickly, offering wildly unreasonable promises, refusing to consider other avenues, or selling you on the perks of owning your own "business." Grifters will trick you by preying on your fears, and harnessing your money anxiety.

Some financial red flags of online creators:

Anyone advocating an all-or-nothing approach. It sounds like, "The best" or "the only way" to make money or build wealth is through [fill in the blank with whatever they are selling] owning a bunch of rental properties, house hacking, or going all-in on crypto. Often, they are not only selling you on the "way" to make money, but they are usually selling you into a membership, course, or mentorship program where they teach you the "secrets" of making money their way.
Day traders or oracles. People who think they can sell you on beating the market or giving you access to "guaranteed" stock picks. According to the Wall Street Journal, up to 93% of stock pickers failed to beat a plain-old index fund. “Particularly since the Great Recession, passive funds have handily beaten actively managed funds. . . Meanwhile, dozens of hedge funds have closed up shop, unable to defend their two-and-twenty compensation structure — that is, you pay them 2 percent of total assets and 20 percent of profits — when essentially doing nothing is a better strategy.” Bill Saporito, NYMag
Promoters of MLMs as a legitimate business. An MLM (multilevel marketing scheme) is a pyramid scheme where 99% of people who enter into it fail. These schemes are about recruiting others instead of selling a product or service. Need some MLM signs? I don't blame you! They've gotten mighty craft! Ask yourself, "Is the end goal to sell a product or service, or is the end goal to recruit other sellers?" If it's the latter, it's an MLM

Financial Influencer Orange Flags

Proceed with caution when it comes to orange flags. These people offer advice that might be ok, as long as you filter it through a lens of "does this apply to me?" before implementing. Be wary of those selling life insurance as a retirement plan, folks who lack proper training, or are constantly jumping between endorsements. Sponsored content can be a double-edged sword, so watch out.

Orange Flag examples:

Insurance sales. YES, we need insurance. And often, we need life insurance. But life insurance is NOT a retirement plan, and anyone telling you that a policy can act as a retirement plan is selling you on the myth (aka their very nice commission cut when they sell the policy) that it can be. Remember, a life insurance policy is paid out upon the policyholder's death--a retirement plan doesn't really work if you're gone, right?

Financial Influencer Green Flags

On the bright side, green flags mean "this information is worth listening to." These folks provide good money advice in the form of nuanced information. These green-flag content creators empower you to make decisions that suit your unique situation. They aren't making decisions for you, trying to sell you on schemes, but they are offering insight and education on understanding how money works, while including lots of disclaimers around making sure that the information is applicable to you. Look for people transparent about their education, training, and credentials. Certified Financial Planners (CFPs) and licensed therapists are solid choices.

Green flag examples:

Nuance. Someone teaching a household budgeting method that offers lots of examples of how it might work for different income levels
Systems Lens. A person who includes how the systems we live in impact the financial education, products, and services we have access to
Caveats. A creator who shares an example of how they paid off their debt and includes caveats about how their approach may not work for everyone

Safely Navigating the FinFluencer Space

Navigating through online personal finance influencers can be overwhelming, but armed with knowledge, you can make decisions that truly work for you. While credentials are a plus, they don't guarantee safety. Watch out for hidden agendas, navigate with skepticism, and recognize red flags, orange flags, and seek those green flags. Check in with your wisest self, stay informed, and approach financial information with a healthy dose of skepticism.

If you’re ready to help your community or organization use critical thinking and discernment to talk about money, consider hiring a seasoned financial therapist to speak. This act of an educational and engaging presentation, keynote, or workshop can help empower your team the tools they need to navigate the complex landscape of personal finance–including spotting those graffiti influencers–confidently. Let’s talk about how I can tailor an event for your organization’s unique needs.

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