7 signs you're taking money advice from the wrong people
1. The information you're getting is out of date
Financial planner John Pak of Otium Advisory Group in Los Angeles, California says a cue that someone is taking money advice from the wrong person is that the advice is out of date.
"You would not believe how many people came into my office quoting someone else, something they read, or something they heard on the radio. I'm thinking to myself, 'wow, I haven't heard that 2014 or 2015,'" says Pak.
Markets are always moving and the economy is always changing. And that means that money advice changes quickly, too.
2. You're not fact-checking your information
If you're making money moves without doing your own research first or consulting a professional, you might be taking advice from the wrong people.
"It's hard to tell what is fact or fiction, updated or outdated," says Pak. He finds that, generally, people who are taking the wrong financial advice aren't doing their due diligence, or don't know where to start.
"They don't know how to filter what's correct and what's not correct," he adds.
3. You're trusting blindly
Just because someone is a close friend or family member doesn't mean that you have to take their money advice, says Pak.
The logic he sees generally involves trusting someone blindly. "It usually goes like, 'you're my friends or you're my family member, And if you're doing it, hey, why not me? I'll join you.'"
Just because you trust your family with other parts of your life doesn't always mean that it's a good idea to trust them with your financial decision-making.
4. You haven't consulted a financial planner
If haven't consulted a financial planner, you should do so before taking money advice. And, you're afraid to tell your financial planner what you've been doing or are keeping secrets, that's a big red flag that you're listening to the wrong people.
There's a lot to consider before making big money decisions, and it's worth getting the third party opinion of a financial planner. "Contact a financial professional that you trust and talk it out before you do anything," says Pak.
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5. You're following the trends
Hearing advice about money that's trendy or suddenly hot might be a sign that you're listening to the wrong people. These "flavor-of-the-month" ideas, as Pak calls them, might seem like a good idea at first. But, the problem is that they might change in the future.
If it sounds too good to be true, Pak says that it probably is.
6. You're taking advice impulsively
If you're taking advice on impulse, it may not be from the right person. Understanding what you're planning to do, and why it's recommended, can be a big help.
Pak suggests taking your time and doing thorough research before being certain. "Before you jump in, take a pause, talk to a financial professional, sleep on it, and then make a decision," says Pak.
7. You wouldn't trust that person as a financial planner
Pak has a unique way of telling clients that they might be taking advice from the wrong person.
"I challenge my clients," says Pak. "I say, 'Whoever you're getting advice from, tell them Otium Advisory invites them to be a part of our advisory committee at the firm,'" says Pak. "And you would not believe it, but I've had zero callbacks."
SmartAsset's free tool can help you find a licensed financial professional to help you build wealth »
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