Investors should be wary of Tweets. Here’s why


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The pandemic lockdown spawned an internet subculture obsessed with investing in meme stocks. It’s now commonplace to turn to influencers on Twitter, Reddit and TikTok to find out what to invest in next.


The stock market is confusing, after all, and turning to a stranger (or even a friend) who claims to have the answers can feel like the easiest path to making money. In reality, it can be an expensive mistake.

Last week, the New York Department of Justice announced the arrest of an investor for allegedly operating a pump and dump scheme through Twitter. According to the federal complaint, the man shared “false and misleading information” about penny stocks with his 70,000 followers so they would purchase shares. The investor would then allegedly turn a profit — $1 million in total — by “secretly” selling his own shares at a higher value, leaving the other investors with significantly devalued investments.

Here’s how to protect yourself from bad investing advice on social media and where to find good advice instead.

The trouble with following investing advice online

General financial advice on social media, such as why you need an emergency fund or how to pay off high-interest debt, is often good practice regardless of your financial specifics.

The problem with taking investing advice from a stranger is that it isn’t one-size-fits-all. Not even close. A successful strategy is built on an investor’s unique financial picture, including risk tolerance, risk capacity, time horizon and goals. For most investors, a good long-term strategy doesn’t include frequently buying and selling individual meme stocks. It’s time-consuming and can be more expensive than investing in index funds or mutual fund.

Someone may use social media to brag about their gains from buying a specific stock, for example, and encourage others to replicate their strategy. At best, their finances look different than yours, so the advice they are broadcasting might not be right for you. At worst, they’re not sharing the full picture, failures and all. Or they’re trying to get rich quick at the expense of other investors.

The SEC says aggressive stock promotion on social media, in newsletters or in advertisements can be a red flag for fraud.

“Pump and dump stock schemes cause mistrust in the market and have real victims who often invest large sums of money, only to have their hopes shattered by a fraudster’s greed,” said Ricky J. Patel, acting special agent-in-charge of the New York Field Office of Homeland Security Investigations. Never take a stock recommendation in one of these mediums at face value. Always do your own due diligence.

Social media’s favorite investment topic, cryptocurrency, is especially vulnerable to pump and dump schemes. The crypto market isn’t regulated, so ill-intentioned investors can run amok and the people who follow their advice have no recourse. Most recently, the New York Times reported that a new cryptocurrency inspired by the Netflix series “Squid Game” mysteriously crashed minutes after hitting a more than $2,800 valuation.

Whether investing advice on social media is pushed by would-be scammers or well-intentioned investors, it should always be filtered through your own values system and cross-checked with credible sources. Any investment worth having in your portfolio will still be there tomorrow.

Social media can still be a good starting point for financial advice if you follow reputable sources. Financial planners, advisors, and other experts often share sound, albeit bite-sized, guidance on Twitter, Instagram and TikTok.

Before acting on any advice, make sure the source is who they claim to be. Use tools like the CFP Board’s verification check for financial planners or FINRA’s BrokerCheck for investment advisors and brokerages.

Anyone who is giving reasonable and unbiased advice probably won’t hide behind a pseudonym or avatar. The man being charged by the SEC in the alleged pump and dump scheme didn’t use his real name on Twitter. He went by the name of a well-known criminal from the book and movie “A Clockwork Orange” — Alex DeLarge — and that’s probably not a coincidence.

Remember, there’s no shortage of smart and helpful books you can pick up to learn about building wealth in the stock market. Reputable news organizations are also a great place to cross-check your facts.

How to hire a professional

Of course, the best investing advice comes straight from the professionals. Certified financial planners and other advisors who are fiduciaries are legally obligated to put your interests ahead of their own. Random Twitter users and TikTokers are not. Advice gleaned from social media is free, and hiring an advisor will cost you, of course.

If you’re investing through a workplace retirement plan like a 401(k) or a taxable brokerage account, the retirement plan provider or financial institution can set you up with an advisor to craft a personalized investment strategy or at least answer any questions you have about investing.

During your first meeting with an advisor, which should be free, they should share their rates and explain how they make money. It’s best to look for a fee-only advisor who charges an hourly rate, project rate, asset under management (AUM) fee or some combination of those. Fee-only means the advisor earns money from client fees. They don’t earn commissions from recommending or selling certain financial products or investments, which ensures you’re getting objective guidance.

You can also use platforms like the CFP Board website, XY Planning Network, and The National Association of Personal Financial Advisors to find an independent fee-only financial advisor.

Despite popular belief, you don’t need a huge investment balance to hire a financial advisor. In fact, consulting a professional early in your investing journey can help you avoid expensive and regrettable mistakes.


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Hiring a financial adviser? Avoid these red flags at all costs


Bernie Madoff’s Ponzi scheme stole over $65 billion from 11,000 investors.

These were successful individuals and institutions with millions to invest, so how did they all miss the signs that Madoff, who died on April 14,  was a fraud who was stealing their assets?

The simple answer: they put trust over research.

The signs were obvious: Madoff’s FINRA report revealed he’d been censured three times for his trading activities, he’d received fourteen cautionary letters for technical/reporting violations, and was fined $45,000.

If Madoff’s investors did their research, many of them could have avoided him completely. But they didn’t. They trusted Madoff and he abused that trust.

It’s smart business to only ever trust a financial adviser after conducting an objective research process that properly evaluates them. This can be an involved process, but it’s imperative to secure your financial livelihood with the right person.

When doing your research, it helps to know who to avoid. Here are sixteen crucial red flags from our book, 5 Steps For Selecting The Best Financial Advisor, for you to consider when looking for a financial adviser.


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Some advisers might lie in order to give themselves additional years of experience or certain certifications they don’t actually have. Don’t just take people at their word, make sure they are who they say are, and that they have the proof to back it up.

Look for consistency in all the records you find, and cross-reference them to make sure everything adds up. Take note if anything looks off, or if you find conflicting information.



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Be wary if a financial adviser is omitting important information about his/her credentials, ethics, business practices, or services.

Keep in mind the following questions when researching the records of advisers across different mediums:

  • What services are they offering?
  • What credentials do they have?
  • What ethics do they claim to uphold?
  • How are they promoting themselves across different mediums?
  • Are there any discrepancies between their records and listings?


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Many investors believe being a fiduciary is the most important financial adviser characteristic. Fiduciaries are held to the highest ethical standards in the financial service industry. If your adviser will not acknowledge in writing that he or she is a financial fiduciary, it may be a warning sign.

A fiduciary is a firm or person who legally holds a position of trust to act in your best interest. Who holds a more important position of trust than a financial adviser who will impact when you retire, how you live during retirement, and your financial security late in life when you need it the most?


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It’s not a good sign if your adviser has one or more complaints, fines, censures, or suspensions on his compliance record.

When researching financial advisers, the FINRA website is one of the first places you should go because you can view their record of compliance.

In particular, you should look for any client complaints or disciplinary actions on their records. Complaints can be frivolous or serious, but any history of complaints should at least be a cause for further investigation.


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This is fairly straightforward, but it’s still important. Make sure the university they claim to have graduated from is real, and call them up to verify that the adviser graduated and has the qualifications and honors that they claim.



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For any certifications that an adviser attaches to their name, find the accrediting institution and verify their certified status.

This might sound paranoid, but remember that you could potentially be giving this person your livelihood. In this instance, it pays to be careful.


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This Madoff-type promise is a blatant scam. The bottom line is you cannot earn high returns with low risk.

You have to take substantial risk to earn high returns. Anyone who tells you otherwise is trying to cheat you.



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When the adviser uses a reference or mutual fund as a track record it’s wise to keep in mind he or she may have selected the mutual fund after the performance occurred.

Performance reports and track records should be produced by an independent accounting firm — preferably another name-brand firm.



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Be wary of any advieor who doesn’t have references, and be sure to check with references to make sure they vouch for the adviser that claims them as a reference.

Keep in mind that some references could have been coached by advisers to make the right comments.



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It’s wise to exclude advisers who are not willing to disclose in writing all of the expenses that will be deducted from your accounts.

Their job as an adviser is to act in your best interest, but you can’t verify that if expenses are not fully disclosed.


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It’s also wise to exclude advisers who will not disclose in writing how they are compensated, how much they are compensated, and who compensates them.

This helps you verify that the adviser is acting in your best interest, and isn’t disingenuously allocating your assets to investments where they’ve arranged a kickback.



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Avoid advisers who say they provide free advice and services as this can often mean they are being paid by third parties to sell you their products.

The third parties mark up the fees they charge you to recover their marketing expenses.


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Some advisers offer to buy lunch to create competitive advantage for themselves when they sell investment services. These advisers might even be trying to make you feel indebted to them.

For this reason, consider going to lunch only after you select an adviser.


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Avoid advisers who do not provide performance reports. You will always want to know how your assets are performing in order to gauge the efficacy of your investments.

For obvious reasons, any adviser who does not provide performance reports cannot give you the level of transparency that is crucial to making wise, informed, and topical decisions with your assets.

You should highly consider making consistent performance reports a mandatory component of your search for a financial adviser.


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The U.S. Securities and Exchange Commission recently issued a warning that the quality of a financial product is not impacted by a celebrity who is paid a substantial fee to promote it.

That’s straightforward enough. Therefore, you should not rely on public celebrity endorsements to determine your financial adviser either, because that endorsement was potentially only made as a pay-to-play.



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Be cautious when all of the information that is provided by the adviser is verbal. In these instances you will have no documentation for your records or your research.

If an adviser is unwilling to provide you with documentation or certification, there’s usually a reason why.



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