Blog Highlights
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Be Informed: Know the difference between a finfluencer and a financial professional.
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Watch Out: Keep a close eye on financial red flags.
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Stay Cautious: Be aware of every detail relating to your finances.
Knowing the Basics
In this blog we’ll explain the differences between financial professionals and finfluencers, highlight key red flags, and emphasize why it’s important to stay cautious when managing your finances.
Financial Professionals Explained
A financial professional is trained to help people make informed money decisions using education, experience, and proper credentials. Some credentials that financial professionals have are:
- CFP (Certified Financial Planner): Focuses on full financial planning which includes budgeting, investing, retirement, taxes, and insurance. Being certified requires exams, experience, and ethical standards.
- CFA (Chartered Financial Analysist): Deep expertise in investments, portfolios, and financial analysis which is common among investment managers.
- Series 65 (Investment & Advisory License): Required for investment advisors who give paid advice.
- CCUFC (Credit Union Financial Counselor): Emphasizes financial education, budgeting, and member support.
There are a lot of credentials that make a financial professional seem more legit. That's why doing your research matters before making big investments, purchases, or building a budgeting plan. People who work in finance usually have hands on experience that’s not always found online. If you ever feel like you need professional help, don’t be afraid to use our FREE financial education tool Balance Financial Fitness or also contact us with any financial questions you may have.
Key Things to Know About Finfluencers
- Most of their advice comes from their own personal experiences and may not work for everyone.
- Some earn money by promoting financial products or services, like investing apps, crypto platforms, or online courses.
- They make money through referral bonuses, ad revenue from videos, and/or affiliate links.
- They typically don't know your specific financial situation like income, debt, credit, or goals.
Because of this, it’s important to stay cautious. Some advice you see can be helpful, but other tips could lead to serious credit damage, debt, or financial loss. Always remember that sensitive financial information should not be shared publicly, and it’s always critical to verify advice with financial professionals before acting on it.
Watch Out for Red Flags
Not all money advice online is safe or reliable. Here are some red flags to watch out for when following finfluencers:
- Urgency, Fear of Missing Out (FOMO), and Pressure: Healthy financial decisions require time and research. If you hear phrases like, “only smart people are doing this” or “do this now before you miss your chance forever,” it pushes you to make decisions based on FOMO that are guided by emotion rather than logic. Remember, finfluencers know that triggering high emotions results in viewers takingaction which means more clicks on their affiliate links.
- Paid Promotions, Affiliate Bias, and Hidden Disclosures: Many influencers earn money when you click a link, sign up, or buy a product. This sometimes creates a bias leading their advice to favor services and products that earn them commission – not what’s best for your unique situation. Also keep an eye on hidden disclosures and if the paid partnerships are not clearly labeled.
- One-Size Fits All Advice: Remember that money decisions depend on income, credit history, debt, and financial goals. Finfluencers can’t assess your personal situation or unique circumstances.
- Encouraging Distrust of Institutions: If finfluencers are making statements such as “financial institutions are scams” or “never trust them,” it’s meant to isolate followers and position the influencer as being the only person that’s creditable. Every financial institution is different with varied services and products. When choosing one to bank with, it’s about finding the best one that fits your goals and has multiple resources available to you.
These are only some of the red flags to keep an eye out for. Remember, if something causes you to feel uncomfortable, don’t be afraid to reach out to your financial institution for help and guidance. If you truly want to follow some advice from finfluencers, create a list of pros and cons, talk to trusted individuals, and be sure to lay out all possible scenarios.
Slay and Stay Cautious
Not all finfluencers are disreputable or untrustworthy people, there are some who want to share advice and are clear on all the potential risks that come with what they are sharing - which is a green flag. Be sure to stay alert and aware of the financial tips you see online and think or ask questions before you follow them.
At Peach State, our purpose is putting people first – not profits. We aim for financial inclusivity for everyone to have access to the necessary resources as they embark on their financial journey and achieve their goals. For more information about finances and money, check out our other blogs or contact us today!
