All types of people love to give advice.
Some advisors may be professionals who watch the market on a regular basis. They may have a background in business and finance or be certified or licensed as financial planners. But there are also people who may want to give you advice with no financial background and/or who don’t understand your particular financial position.
Here are some people you shouldn’t be getting financial advice from – and how to choose a good financial advisor instead.
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1. Family members
Your family may be well-intentioned when they give you advice on where to save your money or where to invest it. They may have had their own successes by doing things a certain way and they think you should follow them.
But family members may not have the financial understanding that you need to review your portfolio and offer sound advice. And they might not have the professional training to know the specific details that help – or hurt – your investments.
Friends can be another great asset when it comes to bouncing around ideas for stocks you may want to invest in or for different options for your savings and spending cash.
But like your family, your friends may have their own plans that might not fit your particular financial situation. They may also be wrong about the flashy stock or get-rich-quick scheme that they’ve invested in and need you to be a part of if they’re ever going to get that money back.
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3. Financial product sales associates
Do you know about the latest way to get rich or the best new investment strategy that you haven’t heard of? There may be a reason you haven’t heard of them even if you are a sound investor.
Sales associates trying to sell financial products may make their brands sound flashy and cool in order to get you to buy in. But they may also get a cut of the sale or earn a commission if they can talk you into buying it. Remember to always think about a seller’s motive when s/he is trying to get you to buy something.
4. Social media experts
Meme stocks like GameStop became popular in 2021 on the advice of users on the Reddit website and social media sites like Twitter and Facebook. But you have to be careful about taking advice from random people on the internet.
Some social-media investors may be trying to prop up a stock to boost their own interests or they may have other ulterior motives. And remember that it can be difficult to verify whether a random social media user has a good grasp of the market or sound investment plans.
5. A bad financial planner
It’s important to do your own research about what to invest in, and it’s also important to do your research when it comes to trusting who should manage the money you’re investing.
Do some research on financial planners and ditch the ones that may have shaky reviews or unhappy customers. A bad financial planner could damage your current and future investments, so taking a chance on a planner who is cheaper or a name you find randomly online isn’t going to keep your money safe and help your investments grow.
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6. How do you find a good financial advisor?
So now that you know who is not to listen to, where are you supposed to turn to for sound financial advice?
There are some things you should consider when trusting your investment portfolio to a financial advisor who can help you make decisions.
7.Do your research
It’s a good idea to research several different financial planners to find the one that’s right for you. You may want to consider customer reviews or other online research. This may also be a good time to actually take advice from your family and friends, asking them about who they use to help with their investments and how that advisor has worked for them.
8. Ask about their qualifications
Financial planners can have different qualifications, and you have to decide which ones you value when looking for a planner. Perhaps you appreciate someone who has a college degree in finance or business. You may want a planner who has licenses or certifications. And it’s also important to ask about their previous work experience and current work situation, including how many clients they may have and if they have specific affiliations with certain financial companies.
9. Understand their financial plans for you
Every financial planner should have a specific approach for each client depending on the client’s needs and goals, such as no longer living paycheck to paycheck.
Be sure to explain your particular situation to a financial planner and your specific goals such as planning for retirement, saving money for a home, or investing in college tuition funds. Make sure your financial planner explains—in a way that you can understand—what the approach is for your specific situation and what you want to do with your investments. And you can walk away if you feel like you’re not being listened to or your goals aren’t being met.
10. Ask about their fees
Financial planners may be paid a flat fee if they work for a specific institution or financial company. They may also take a commission or a flat fee to manage your portfolio.
Before you sign on with a financial planner, get a good idea of what kind of fees they charge and how much you may be spending for their services on a regular basis. You don’t want to be surprised by hidden costs or fees to set up or manage your investment portfolio.
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There are ways to save money and relieve financial stress if you’re trying to invest to buy a big-ticket item like a house or car, pay for your kids’ college education, or retire early. Remember to do your research to get a financial advisor that best understands your portfolio. And it’s also a good idea to put some work in on your own and create some plans for short-term and long-term goals that you understand moving forward.
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This article 5 Types of People You Should Never Take Financial Advice From originally appeared on FinanceBuzz.