Where do you turn for investment advice? Your parents? A financial adviser? Or that charismatic guy on TikTok who claims he's making a fortune trading stocks?
Long before TikTok, Reddit and YouTube became popular sources of investment advice, my wife and I spent many Friday nights watching Wall Street Week with Louis Rukeyser on PBS. It was entertaining, educational and a great introduction to the sometimes confusing world of investing.
Years later, I was fortunate to work at Fidelity Investments, where I spent 17 years interviewing financial experts and writing about investing, retirement and personal finance. I was surrounded by colleagues who understood how money works, the importance of managing risk and the value of investing for the long term.
I'm thankful for that experience. But I wonder where younger investors are getting their financial education today.
Increasingly, the answer is social media. And while there are plenty of knowledgeable financial professionals sharing useful information online, there are also people whose investment advice can do more harm than good.
Welcome to the world of finfluencers — social media personalities who offer financial tips, investment recommendations and sometimes promises of quick riches.
When popularity is mistaken for expertise
A recent study suggests investors have good reason to be cautious.
Estonian legal services firm Legalaes analyzed 1,764 finance-related videos across YouTube, TikTok, Instagram and Facebook, representing more than 692 million views. It classified 29% as misleading under its criteria, which included questionable investment claims, guarantees and certain promotional practices*.
Even more concerning, those videos averaged roughly 556,000 views, compared with 326,000 for videos without those warning signals.
The Legalaes study also found that only 2.2% of the 1,266 creators sampled had demonstrable relevant financial qualifications. Fewer than 12% of the videos included disclaimers or had them on the creator's profile.
Trading tips and technical analysis had the highest incidence of misleading signals, at 40.6%. YouTube had both the highest percentage of misleading videos and the highest percentage of content classified as accurate.
Closer to home, a FINRA Investor Education Foundation study (pdf) found that 61% of investors ages 18 to 34 had made an investment decision based on a recommendation from a social media personality. That compares with 31% of investors ages 35 to 54, and just 6% of those 55 and older.
Social media is clearly influencing how Americans invest. The question is whether investors know enough to distinguish useful financial education from advice that could cost them money.
Here are seven ways to protect yourself.
1. Don't confuse a good story with good investment advice
Remember the old Wall Street saying, "When the ducks quack, feed them"?
Scott Hanson, co-founder of Allworth Financial and longtime host of the Money Matters radio show and podcast, says investors should beware of people promoting the latest hot investment, including triple-leveraged exchange-traded funds.
"The most dangerous advice is not always obviously false," Hanson says. "It often begins with an accurate fact, removes the investor's personal context and turns it into a universal recommendation."
Before following someone's financial advice, find out who's giving it and whether they're qualified.
An investment might make sense for someone with decades until retirement, considerable savings and a high tolerance for risk. It might be entirely inappropriate for someone saving for a first home or preparing to retire.
Hanson also recalls a neighbor who once sold investment products, dropped his financial licenses and continued selling anyway. "It took the financial regulators a couple of years, but he eventually got caught, and it's likely that a few clients got burned in the process," Hanson says.
The lesson? Before following someone's financial advice, find out who's giving it and whether they're qualified.
2. Check credentials — and make sure they fit the advice
Financial certifications can be confusing. But a few respected designations are worth knowing.
A Chartered Financial Analyst (CFA) typically has specialized investment analysis and portfolio management training. A Certified Financial Planner (CFP®) focuses on comprehensive financial planning, while a Certified Public Accountant (CPA) specializes in accounting and taxation.
Credentials alone don't guarantee good advice. But they provide a useful starting point.
You can verify an investment professional's registration and disciplinary history through Investor.gov, the Securities and Exchange Commission's investor education website, or FINRA BrokerCheck. The CFP Board and CFA Institute also maintain credential-verification resources.
Keep in mind that someone providing general financial education online may not be required to register as an investment adviser. But if that person offers individualized investment recommendations or wants to manage your money, understanding their regulatory status becomes especially important.
And remember: A large following, polished videos and impressive testimonials are no substitutes for professional qualifications.
3. Follow the money: What's the finfluencer selling?
There's nothing inherently wrong with financial educators earning a living from newsletters, advertising, sponsorships or online courses. Plenty of credible experts do.
But consumers deserve to know how those experts are compensated.
Ernie Wingard, an adviser at Capital Choice Financial Group in North Richland Hills, Texas, says investors should be suspicious when a financial personality talks almost exclusively about one product.
"If they are only talking about indexed universal life or whole life insurance and not providing alternatives, that may suggest they're only licensed to sell in one area," Wingard says. "They may be pushing those products because they're the only ones they are licensed to offer."
"You should see what the source gets if you follow their advice. Someone earning money from a newsletter or article may have different interests than yours." - Ernie Wingard, an adviser at Capital Choice Financial Group
The same applies to trading strategies.
Wingard says someone who focuses exclusively on day-to-day trading decisions, without discussing taxes, retirement planning or investment alternatives, may primarily be promoting a trading newsletter or educational course.
That doesn't automatically make the information worthless. But it should prompt another question: Is this person trying to educate me, or turn me into a paying customer?
Vignesh Coumarane, founder of Richmond, Virginia-based InvestEd, recommends a simple test: Look at the incentives.
"What's their motivation?" he asks. "You should see what the source gets if you follow their advice. Someone earning money from a newsletter or article may have different interests than yours."
4. Don't let FOMO become your investment strategy
One of the biggest threats to investors, young and old, is FOMO, or fear of missing out.
You've probably seen the pitches: Don't miss the next big thing. Get in now. This investment could change your life.
The excitement is contagious, especially when social media feeds are filled with screenshots of extraordinary returns.
"People want to latch onto shiny investments. It makes them feel good. They are told that now is the time to get in," says Michael Schramm, author of the forthcoming book Emotional Finance.
Schramm, a CFA, points to speculative investments, including cryptocurrencies, that can attract intense attention on platforms such as Reddit but may not make sense for every investor.
His advice is refreshingly simple: Take a deep breath. Ask yourself whether the recommendation feels legitimate. If it feels like a scam, it may well be one.
I'd add another suggestion: Give yourself 24 hours before acting on an investment idea discovered on social media.
A legitimate long-term investment strategy generally won't disappear because you took a day to investigate it.
5. Beware of guaranteed returns and secret strategies
There are few guarantees in investing. And if someone promises unusually high returns with little or no risk, that's a warning sign.
Investment disclosures routinely remind investors that "past performance does not guarantee future results." It's a message worth remembering when you encounter someone boasting about spectacular trading profits.
Be especially cautious about strategies involving borrowed money, highly leveraged investments or putting a substantial portion of your savings into a single stock or cryptocurrency.
There are few guarantees in investing. And if someone promises unusually high returns with little or no risk, that's a warning sign.
Bridge Jackson, founder of Seattle-based fintech startup OUIvest, believes one of the biggest problems with financial advice on social media is that visibility can easily be mistaken for credibility.
A large following, sophisticated graphics or screenshots showing profitable trades tell investors little about whether the creator is qualified or whether the investment is suitable for them.
Jackson encourages investors to ask three questions: Who is giving the advice? How do they benefit if I follow it? And can I independently verify what they're telling me?
Those are good questions to ask before putting your hard-earned money at risk.
6. Do the math before you invest
One of the best ways to evaluate financial advice is to ask the person giving it to explain the numbers.
Coumarane says his first test is whether a creator shares the reasoning, assumptions and calculations behind a recommendation.
If someone suggests buying a particular investment, paying down debt or changing your savings strategy, you should be able to understand how the recommendation applies to your financial situation.
"If you cannot see the math, it is a sign that it may not be genuine," he says.
For example, someone might recommend paying off a low-interest mortgage rather than investing. But what's the mortgage rate? What's the expected investment return? What are the tax implications? How much emergency savings do you have?
Without that context, the advice is incomplete.
You don't have to be a financial analyst to ask reasonable questions. And if the person offering the advice can't explain the assumptions in plain English, consider that another warning sign.
7. Use social media to learn, but verify before acting
Despite these warnings, social media can be an excellent resource for younger investors who are just beginning to understand money.
Jackson believes financial education needs to meet younger people where they are.
We need more accessible, engaging financial education, especially for people who may not have parents, teachers or experienced advisers to turn to.
"Newbie investors, age 20 to 30, don't want to go to Fidelity or Schwab. So they go online," Jackson says. "But they need basic financial literacy education, so we're making it more fun with gamification and AI."
That's an encouraging development. We need more accessible, engaging financial education, especially for people who may not have parents, teachers or experienced advisers to turn to.
But education and individualized investment advice are two different things. A video explaining how compound interest works can be valuable. So can an introduction to index funds, retirement accounts or the risks of borrowing money to invest.
A stranger telling you to put half your savings into a particular stock is another matter.
Before investing, compare claims with independent information from the SEC, FINRA, established financial institutions and primary company disclosures. If you're working with a financial adviser, ask how the idea fits into your overall plan.
The bottom line: Be curious, but be careful
I'm glad younger generations have so many ways to learn about investing. It's certainly more convenient than waiting until Friday night to watch Wall Street Week.
But access to financial information doesn't automatically translate into financial knowledge.
The best financial educators help you understand risk, evaluate alternatives and make thoughtful decisions. They're transparent about their qualifications, compensation and the limitations of their advice.
The ones to avoid rely on urgency, exaggerated promises, get-rich-quick schemes and a steady drumbeat of recommendations that always seem to lead to another product or subscription.
So keep learning. Follow knowledgeable financial professionals. Ask questions and build a network of trusted sources.
Just remember that having a million followers doesn't make someone a financial expert. And before you invest a dollar based on something you saw online, do your homework.
When it comes to your money, buyer beware.
*Legalaes methodology: The study relied on rule-based text analysis rather than individual manual fact-checking. Its misleading classification therefore should not be equated with proof that every flagged video contained false information. The Legalaes study classified 29% of sampled videos as misleading under its own criteria, which included certain promotional practices — not necessarily factually incorrect advice.