How to find financial advice you can trust #NewsUnitedStates

Financially Inclined October 4, 2024 Transcript

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Yanely Espinal: What’s up, everybody! I’m Yanely Espinal and welcome to Financially Inclined from Marketplace. We’re sharing money lessons for living life your own way. 

Now every time I log onto social media, there are so many people trying to tell me what to do with my money. It can feel overwhelming! And everyone is calling themselves something like “money coach” or “finance guru.” And you just gotta wonder, do these titles actually mean anything? Like, how are you supposed to know who you can actually trust? So, today I’m talking to Kevin Matthews. He’s a financial educator and author. He used to be a financial advisor, so he has a certificate in financial planning, and he knows a thing or two about managing money… and also how to make sense of all these so-called experts. Alright! Let’s get into it!

Yanely Espinal: Nowadays, there’s so much content on social media, it feels like everybody’s giving money advice left and right, but you don’t know who you can trust getting money advice from and who you can’t. So what are, like, some red flags to help you know who and what to avoid?

Kevin Matthews: So anyone who’s just throwing out the word “guarantee,” there are almost no guarantees when it comes to finance and when someone is guaranteeing you a return – “Hey, I’m gonna guarantee you 500% I’m gonna guarantee you $100,” or something like that – that is the first red flag. It’s a little too good to be true.

Yanely Espinal: So what are some ways that you can easily identify the quality financial content that you can trust versus what you can’t?

Kevin Matthews: So there’s an interesting thing when you listen to people talk about money on social media. There are two words that you want to listen out for when it comes to money, and those words are “It depends.” And when you are really dealing with someone who is quality, they will tell you that any situation is going to depend on who you are. When they’re explaining something, they will usually tell you what the situation and say, “It depends on x, y and z.” And that’s going to tell you, and be a green flag and the signal that, hey, this person does have a nuanced take, and they’re letting you know that there are going to be some situations where this is going to work for a certain group of people, and it’s going to work for to work for another group of people, and it’s usually a signal like, hey, this person is trustworthy. They do know what they’re talking about. And this may or may not work for my particular situation. 

Yanely Espinal: I love that, because you really do have to consider everyone is so different and unique, so it kind of like always does depend on your individual situation. 

Kevin Matthews: Mmhm.

Yanely Espinal: And in terms of the people that are giving that advice, is there any red flags in terms of, like, these types of creators versus those, or do you feel like it’s more so the content that they’re creating? 

Kevin Matthews: Yeah, it’s more so the content, the content, what they’re saying, you kind of have to dig into because it’s hard to judge by appearance, right? It used to be like, hey, this person’s wearing a suit and tie, and they just they’re more trustworthy. It’s what people felt like. But that’s not the case, especially now. Like, I can be wearing a polo, I can be wearing a t-shirt, a lot of times I wear hoodies. You can wear whatever you want, right? And be a trustworthy person. So it’s not necessarily like by appearance, but it’s really about the content, so you really want to be paying attention to those red flags. So what are they saying, how are they saying it, and then digging into what are their credentials, what is their history? And then, like, taking that and really applying it, and kind of putting that through your filter to see whether or not that person is trustworthy and can you believe what it is that they’re telling you.

Yanely Espinal: Right. And credentials are important. Like, you know, you can’t just go around calling yourself a doctor if you don’t have a medical degree. 

Kevin Matthews: Exactly. 

Yanely Espinal: And when it comes to finance, like, there’s, there’s a lot of, like, really important credentials out there that helps you to know, hey, this person is legit, right? So tell us what are some of the important ones that would stand out in the industry? 

Kevin Matthews: Yes, so there is an alphabet soup out there, but there are a few main ones that you want to pay attention to. So the most popular one is called the CFP. That’s the Certified Financial Planner. That means that you have been in the field for a minimum of three years, and you know several different areas of finance. Many people call this the the gold standard of financial planning. So that’s one of them. Another one is a CPA that is someone who primarily focuses on taxes. So those are two primary ones, and they are going to have that usually in their bio. If you have that credential, just like you would a doctor, they’re going to make sure that you know that they have that. And those are two things that you can kind of look and just verify, like, Hey, do you have those credentials? Are you sure that you know everything that you’re talking about? And just to just verify that that person is who they say that they are. 

Yanely Espinal: Yeah. And then when it comes to investing your money and getting advice about investments, are there credentials that are different and like special for that? Or would you also do that with a CFP or a CPA?

Kevin Matthews: So you can, you can do that with a CPA and a CFP, because, again, with the CFP, that counts across the board, so they’re certified in different areas. Investing does also have a tax component, so a CPA can also help you with your investments. There’s also something called a CFA. That is a charter financial analyst. Those people are very good at the investing side of things, and those are good people to follow, to help to understand the stock market and to listen to some of their knowledge and wisdom as well. 

Yanely Espinal: When you’re looking to work with financial professionals, there’s a term “fiduciary” that comes up a lot, and I know it’s very, very important, but a lot of people don’t understand why. So can you explain the term and why it is so critical to understand it?

Kevin Matthews: Yes. So a fiduciary and someone who has a fiduciary duty means that they are supposed to do what is in the best interest of you. For example, that means that if there is a an investment, right, and that investment comes with a fee, someone who does not have a fiduciary duty, they could just give you the thing that’s going to pay them the most money, but may not give you the best return. Sometimes we talk about like a car salesman. They may sell you something that has the best price, but it might not be the best, most reliable car, right? Versus the cheap car that’s going to last the longest and be the best thing for you. So you want to make sure that that person has a fiduciary duty. They’re going to make sure you are taken care of, even if it means that they are not going to get paid the most money. So that’s the first thing that I try and look for, and that is the first question that I’m going to ask when I sit down: “Hey, are you a fiduciary? Yes or no?” And then we can continue that conversation. 

Yanely Espinal: Interesting. So it’s like, if you’re sitting with somebody and they are a CFP or they are a, you know, a CFA or even a CPA, you can’t just assume that they are fiduciary. You actually have to ask because some of them are and some of them are not?

Kevin Matthews: So a CFP, if they have a CFP, they are supposed to be a fiduciary, because if you have their license, you have to sign off… to to hold it, you have to be a fiduciary. So CFPs, by having that credential, you automatically have to to be a fiduciary. Any other credential, in most cases, they don’t necessarily have to. Just kind of up to them, you know, based on where they are and what their business is. So in other cases, you may have to ask. I think, to be on the safe side, just always ask, right? So you want to make sure, in every situation, just ask, “Hey, are you fiduciary, yes or no?” And then you can continue the conversation and know for a fact that you are going to be taken care of, and they’re going to have your best interest at heart.

Yanely Espinal: Right. When it comes to working one on one with potentially a CFP or a CFA or somebody who is going to give you one on one advice, is that something that every one of us should be trying to do or like, how do you know if or like when it makes sense to go and seek out one of these financial professionals to work with you one on one? 

Kevin Matthews: Yeah, it really depends on what your preference is. So it is not 100% required for everyone to have to work with a planner. You don’t have to. Some people are more hands on and just more interested in this topic, where they want to do this themselves. I have an uncle that likes to work on his own car. That ain’t me. I just… No, not something I want to do. I don’t change my own oil. I just don’t do it! So some people really like that, and that’s totally fine. Other people don’t have time for it, and they just would rather hand that off to someone else. So it really depends on what you want to do and how complex your situation is. The more complex the situation is, the more questions you have to answer and and the bigger your life becomes, I would start to lean more towards getting a planner. For me, once my life got bigger and I started to grow our family and start to get a house like, yeah, all right, let’s bring somebody in so they can start to figure these things out. So I can go and focus on other things.

Yanely Espinal: That makes sense. So if you think that you might want to work with somebody one on one, do you need to have, like, a whole lot of money in order to get help from somebody who is a fiduciary?

Kevin Matthews: No, not anymore. Now, 20 or 25 years ago, before my time, the number used to be $250,000. Thankfully, you don’t need that any more. So nowadays, you can just walk into most financial planners, and they call these fee-only advisors, or fee only planners, where they charge a flat fee to work with you, regardless of how much money you have, which makes financial planning a lot more accessible for everyone. 

Yanely Espinal: Okay, I love this. It reminds me of just like going to see a therapist, and you just pay that flat fee, and you talk to them, you get the services you need, and you go on your way. You don’t have to prove to them that you have a certain amount of money or anything like that to get the service.

Kevin Matthews: Mmhm.

Yanely Espinal: So let’s say you decide that you do want to go and work with somebody who is a, you know, an expert when it comes to helping people one-on-one with money. What are the things that you really should be looking for in order to make a decision that this is a good person to hire?

Kevin Matthews: So we talked about the fiduciary piece. We talked about the credentials piece. There is one other thing that you do want to have: you want somebody that listens. When you walk into that appointment and you meet that person, they should be asking you questions. I would say that 70% of that very first meeting should be you speaking to them and explaining yourself and talking about what you like to do, what your future plans are, what’s been going on in your financial life, and just what you want to do with your money, and them writing notes, sitting down and then just asking questions and say, “Hey, tell me more about X, Y and Z.” That is what that first meeting should be like. It should not be them telling you what to do. And the reason is, when it comes to money and when it comes to being a financial planner, they don’t know what to do with your situation if they don’t know you, and they don’t know where you’re where you want to be, right? It is a personal financial plan, and it’s not a personal financial plan if I don’t know you yet, right? So I need to be able to listen to you, and if you’re not listening as a financial planner, then you ain’t the one for me. 

Yanely Espinal: Yeah, because you don’t want to feel like they’re using a template with you. Like you want to feel like it’s individualized, it’s customized to what you like and your goals and your situation.

Kevin Matthews: Exactly, exactly. So like, if I were to sit down with someone and they don’t know that, hey, I was gonna, I wanted to go to college at a certain place, well, then you don’t know I need to save this amount, right? That then my plan is completely different, right? If you don’t know that my you know, I want to do something for for my parents after I graduate school, I need to save X amount. You didn’t know that, so now you don’t know that I need to save X amount because you didn’t ask, right? So that’s going to completely change that plan, if you didn’t ask those questions, I know what I want to do, but unless you know, as a financial planner, you know, our our goals and our plan is going to be completely different. So I have to have someone that is willing to listen and ask those questions, to get everything out there in the open and put everything down in a plan so we can work together to make sure that we hit that goal.

Yanely Espinal: Right. So now we learned all about financial professionals that can sit with you one on one and and are qualified and credentialed to give us money advice. So should we all run home and tell Mom and Dad we need to hire a financial planner, like immediately? Is that like the action step? So what do you think as like a takeaway here?

Kevin Matthews: Well, the thing is, it’s going to depend. What I would do is run home and write down what your financial goals are. Because it comes down to this: it’s going to depend on how complex your financial goals are. So for example, let’s say my goal is just to save $10,000, that’s relatively easy. I can just take that and divide it by however long I want to save for, right? I probably don’t need to hire a financial planner to do that. That is relatively easy for anyone to sit down and do. But if it is, invest and become a millionaire in the next five years, right? That might be a little more complex. So that is something I may want to hire a financial planner for. But I would say this, there are a lot of financial planners out there that will sit down for a free one-hour conversation, or free intro conversation for 30 minutes just to explain what they do, how they do it. I think that is beneficial for almost everyone to have just to understand like, hey, let’s just sit down and talk, almost like talking to a doctor, just having a normal checkup, right? A checkup for everyone is usually a good normal thing to have. I think that is okay. There are a lot of cities in the U.S. that have free financial counseling and coaching that’s available just to have on a regular basis, and that may be a place that you want to start as well.

Yanely Espinal: Yeah, I like that a lot, because it’s really just about opening up the dialog and being comfortable talking about money. It doesn’t have to be so scary. We can be open and ask questions and learn that way, rather than avoiding the topic.

Kevin Matthews: Exactly.

Yanely Espinal: Alright, you heard Kevin! The industry is starting to change and we’re seeing some improvement, but still it’s your responsibility to do your research and make sure this person is legit. Even someone who seems like an expert on social media may not have the license or certification that makes them qualified to give out individualized investment advice. So make sure you look out for some of these credentials that Kevin mentioned, and especially look at whether they’re a fiduciary or not, because a fiduciary is someone who puts your best interest first. Alright, you got this!

If you have any questions for us, or you wanna share your own story, our email is: [email protected]  

Financially Inclined is brought to you by Marketplace from American Public Media, in collaboration with Next Gen Personal Finance. I’m your host, Yanely Espinal. Our Senior Producer is Zoë Saunders. Our Video Editor is Francesca Manto, and our Graphics Artist is Mallory Brangan. Our producer is Hannah Harris Green. And our intern is Marika Proctor. The podcast was edited by Courtney Bergsieker. Gary O’Keefe is our Sound engineer. Bridget Bodnar is the Director of Podcasts. Caitlin Esch is Supervising Producer. Francesca Levy is the Executive Director. Neal Scarbrough is the VP & General Manager of Marketplace. Our theme music is by Wonderly. Catch you next time!

Financially Inclined is funded in part by the Sy Syms Foundation, partnering with organizations and people working for a better and more just future since 1985. And special thanks to the Ranzetta Family Charitable Fund and Next Gen Personal Finance for continuing to support Marketplace in its work to make younger audiences smarter about the economy.