Americans are being led astray at an alarming rate by proliferating misinformation about money online, the CFP Board is warning.
More individuals are going on the internet for financial advice, and while most doubt its credibility, 57% regret financial decisions they’ve made based on misleading online information, according to Steering Clear of Financial Misinformation: A Survey of Americans, the CFP Board’s latest research report.
Fewer than 2 in 5 Americans (39%) believe that the vast amount of financial content online serves their best interests. Additionally, 62% are taking more time to verify information than was the case five years ago.
“Americans are drowning in online money advice, much of it misleading,” CFP Board CEO Kevin R. Keller. Keller said in a news release. “That gap between easy access and reliability puts financial futures at risk. CFP professionals offer a trusted alternative: personalized guidance backed by rigorous training, high ethical standards and a commitment to put their clients’ best interests first.”
Free Information Can Be Costly When’s It’s Wrong
Financial misinformation can do more than confuse people; it can cost them money. According to the report, 39% of Americans have lost $250 or more by following to bad advice, and 18% have lost more than $1,000.
About 20% have avoided such losses by reconsidering questionable advice before acting. But among those who regretted their actions, consequences include:
Delaying major financial decisions (33%)
Acting without professional input (29%)
Incurring unnecessary fees (28%)
Sharing inaccurate information with others (28%)
Experiencing increased financial anxiety (21%)
Younger Americans Are More Easily Duped
There’s a notable generational divide among Americans in both trust and consequences, the survey found. Almost half age 25-45 (48%) say online financial content serves their best interests, nearly twice the rate of those 46-64 (25%). There’s also a greater likelihood that younger adults will act on misleading information, with 64% saying they made regrettable decisions, compared to 45% of those 46-54.
Only one-third (33%) of the younger group report having never made mistakes based on online financial advice, compared with 54% of the older group. Additionally, younger Americans are almost twice as likely to trust financial advice from AI (44% vs. 26%) and information on social media (44% vs. 24%).
“Many Americans mistake popularity for credibility when turning to social media and AI for financial advice,” Kevin Roth, Ph.D., Managing Director of Research at CFP Board, said in the release. “That misplaced trust can lead to costly mistakes. Working with a CFP® professional helps avoid those pitfalls and build confidence in financial decisions.”
Most Trust CFP Professionals
Most respondents to the CFP Board survey said they trust financial advisors, including those with the CFP designation, with 74% saying they’re confident following their advisor’s advice without further verification.
