4 Signs You Should Unfollow a Financial Influencer

How do you know if a finance guru is shady?

Key points

• More than one-third of Americans receive their financial advice from social media or online.
• YouTube and TikTok are some of the top platforms people are turning to for financial advice.
• Top red flags are financial influencers with get-rich-quick schemes, trying to sell a secret formula to becoming wealthy, or are coming across as desperate salespeople.

According to a recent survey, more than one-third (39%) of Americans receive their financial advice online or from social media. The most popular place to get financial advice is YouTube for Generation Z (63%) and millennials (71%). TikTok is quickly gaining ground as a platform for financial advice, especially with Gen Z (56%).

Further, more than 60% from the survey stated that they have acted on the advice they have received online. While social media and online advice have made it easier to access financial advice, there are scammers or supposed financial experts giving bad advice. Here are four signs you should unfollow a financial influencer.

1. Too good to be true

If a financial influencer is giving information that is too good to be true with a get-rich-quick scheme, then that is a huge red flag. All investments have some sort of risk involved. You should stop listening to anybody that guarantees a high return on investment. This is especially true if the strategy focuses on fast short-term gains; you should click the unfollow button. Any legitimate financial advisor will tell you that there is no foolproof way to become rich.

2. They have a secret formula to become rich

You should unfollow anyone who is willing to sell you their secret formula to making money quickly. First, if they really have this secret, they wouldn’t be selling it. They would use their secret way to become rich themselves and keep it quiet. The more that people know about any secret, the fewer opportunities you can use it to become rich. Chances are, you can get everything in that ebook or video course for free.

3. High-pressure sales tactics

Many financial influencers, especially those with a large number of followers, are sponsored to sell certain products or services. Many of these people use affiliate marketing. Not only should they be transparent about how they make money and their monetization techniques, but they shouldn’t be coming across as desperate salespeople. There is no “limited time only” for good financial advice.

4. Online social groups

You can find some financial gems in online groups. But often people will be subject to groupthink and anyone presenting alternate views can be berated by the group. During the GameStop and AMC craze, everyone only wanted to hear advice about “diamond hands” and comments that these two stocks in particular were only going up!

These meme stocks have now fallen back down to earth, erasing the rally that made them famous. Both GameStop and AMC were up more than 350% from the start of 2021. They are now down 73% and 81% from their 2021 highs and many unwitting investors were left holding the bag.

According to the survey, 54% of Gen Z aren’t preparing financially for retirement. Social media has helped pique the interest of people who normally wouldn’t have been interested in financial planning. Social media also has democratized access for certain financial advice that in the past, only a certain group of people may have gotten. Social media can be a double-edged sword. While helping to spread knowledge and awareness, many social media financial influencers focus on short-term get-rich-quick schemes. You should be wary of any influencer or group that exhibits these types of behaviors.