Many clients enjoy looking up news and information about personal finance online, even when they have a financial advisor. Educating yourself is great! However, not all sites are equal. Some have false information, and others are simply designed to sell you something. They’re not always obvious.
How do you know which sites on finance are credible, and which aren’t?
Background on financial industry rules
Have you ever noticed that every chart you’ve seen from the mutual fund company has paragraphs and paragraphs of disclosures on it? All the indices used for comparison are spelled out. The time period of the performance is also detailed.
That’s not an accident, and it’s not because mutual fund companies enjoy making their charts look small and surrounding them with words. All of the disclosure is an industry requirement; the regulatory agencies are very picky about how performance numbers can be disclosed.
SEC (Securities and Exchange Commission) rules are strict, yet they are only for those who hold themselves out as providing financial advice, services or products.
If a company acts as a publisher or in some other way does not provide financial advice, then they can show performance in any crazy way they like. The SEC also binds financial companies from many different ways of advertising, but not other companies.
In other words, those who are not in any way experts in finance, have any credentials in finance, or know what they’re talking about, can put anything they like on their websites. You can sell anything you like, as long as you don’t claim to be a financial advisor.
We have seen some websites that trick a lot of people, because they look reasonable at first glance. There are some warning signs and red flags that you need to pay attention to when you’re studying an unfamiliar website.
It costs nothing, or very little, to run a website yourself. Depending on who’s hosting it, you can get decent-looking templates that you simply fill out with your own information.
It’s very easy for someone who knows absolutely nothing about the topic, and who is not a legitimate source, to set up a website that appears to be reputable. Don’t be thrown off by a nice-looking website, because they’re easy to do even if you don’t have a graphic designer.
Some people still have their old Geocities websites up! If the site looks old and the navigation is hard or impossible, don’t bother with it. Whatever information you’re searching for, you can find on a modern website. One that is run by a financial services person or company, and that you can easily navigate.
What does the site look like?
Chances are, if the financial site you’ve landed on has lots of bright primary colors and lots of moving ads and popups and looks interesting instead of boring, you’ve landed on an unregulated site. Therefore none of their information can be taken seriously or assumed to be true or factual. Is there a “Buy now” button on the site? Fake news! Stay away.
If, on the other hand, it’s a little on the boring side, and all of the charts and graphs have plenty of disclosures along with them, congratulations! You’ve probably found a reputable site.
However, there are no guarantees. Just because the site isn’t gaudy and bright doesn’t necessarily mean that it belongs to a credible authority.
Are there a lot of spelling and grammar mistakes? A credible financial site has the resources to spell-check and hire contributors and/or editors! A poorly written site points to someone who doesn’t know what they’re doing.
In general, when you’re websurfing for anything and you come across a site with too many mistakes, move on. The information you want is out there, and it’s spelled correctly.
Whose site are you looking at?
A good website will tell you exactly whose website you’re looking at. Wherever you go on our site, for example, you’ll see our name, logo and contact information. We’ve tried to make it very clear as to who we are and what we do.
It’s the same with mutual fund companies, trading platforms like Charles Schwab or e*trade, or financial planning associations such as NAPFA or CFP board, etc. The regulatory agencies such as FINRA and the SEC have some good information for investors on their websites as well.
Sites that are trying to trick you may hide the information about the owners or the company. Or make it difficult to figure out how to get in touch with them.
What kind of financial information or product is being sold?
Mutual fund and trading websites are up-front about what’s being sold. There may be a featured fund or product, but more often not. Financial planners and advisors usually won’t sell you anything on their websites, but will encourage you to come in for a consultation. (Like so!) That way you and the advisor can both determine if the relationship is right.
If you see a site where the owner isn’t obvious (or it’s a company you’ve never heard of), you may very well see all kinds of products and services for sale! We would advise against buying any of them, because they’re most likely a ripoff.
How often is the site updated?
As you’re aware, the financial markets move fast. A credible website should be fairly current. Avoid ones that are out-of-date. We try to blog every week, so we have fresh content consistently.
Is there a lot of click-bait?
If you’re not familiar with the term, “click-bait” is used to refer to a sensational headline that doesn’t match up with the content of the article or the post. It’s a headline that baits you to click on the site.
Not all sensational headlines are click-bait. Sometimes they’re just attention-grabbing! The content will answer the question posed by the headline. On a reputable financial website, you shouldn’t see too many sensational headlines.
See a lot of click-bait on a website? Don’t trust it.
Who’s engaging with the content?
Not all sites enable comments, and not all sites have a lot of comments. But if you see a lot of commentary by financial professionals who have alphabet soup after their names (CFP, ChFC, CDFA, CFA, etc.) then the site is likely trustworthy.
If there are comments and none of them are from professionals, think again. This rule isn’t as cut-and-dried as some of the others, because there may be good reasons that you don’t see a lot of commentary from professionals. However, best practice is to treat a site with lots of amateur commenters with suspicion.
Be skeptical out there
Unfortunately, when it comes to financial services, it’s the relatively boring websites that provide you with good information. The above rules work well for any kind of websites, not just financial information. The rules about what you can and can’t say may be different for other industries, but you need to be careful about who’s putting up the site, and whether they’re credible or not.
Interested in talking to one of our planners? You can email us or call 619.255.9554.