Getting financial advice on social media can be tricky. Here’s how to navigate it

Young investors are flocking to social media platforms like TikTok, Instagram and Reddit for financial advice.

In fact, one-third of Americans trust social media to help them make financial decisions, and 32% trust social media influencers and celebrities’ financial advice, a survey from investment firm TIAA found.

Navigating the slew of recommendations can be tricky.

“The key is to remember that bad advice is much more costly than good advice,” said Winnie Sun, co-founder and managing director of Irvine, California-based Sun Group Wealth Partners.

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While you can do background checks on investment and financial professionals through regulatory agencies, it’s harder to know the motivation of someone telling you to buy some purported up and coming hot stock.

“On social media, everybody can jump in, regardless of who they are, what their background is, what their experiences are,” said Sun, a member of the CNBC Financial Advisor Council.

If you are getting financial advice, especially on investing, through social media, here’s what to do.

To verify a certified financial planner’s background, go to the CFP Board’s website. For other professional designations, go to the FINRA page that lists them, along with links to the designation organizations. That may lead you to a way to check out an individual.

Sun is one of those who has embraced social media. She does a live stream every day on several platforms, including LinkedIn, Facebook and Twitter.

While she gives out financial advice, Sun doesn’t recommend specific investments. Those should be customized for the individual, she said.

“If you’re gathering your investment advice on social media, there’s a good chance that person isn’t regulated, isn’t licensed,” Sun said.

“It could just be someone out there sharing an opinion, but you have to take that with a grain of salt.”

And just because an influencer has more than 500,000 followers doesn’t mean they have the training or credentials to give financial advice.

“A lot of influencers use their personal experience and stories to base their advice on, but that doesn’t mean their situation is exactly the same as their followers’,” said Caishalynne Echols, a certified financial planner with Austin, Texas-based Gen Y Planning.

“Trained financial professionals have studied the legislation around taxes, retirement planning, etc., and are equipped to guide people in a million different scenarios.”

There’s nothing wrong with getting excited about an investment or financial tip you are hearing about on social media. The key is to supplement it with your own research.

“You should consult established, reputable and trusted resources before making any financial decisions,” said John Elton, senior vice president and chief information officer for TIAA Bank.

It also helps to consult a financial professional about your ideas. If you don’t have one and want a do-it-yourself approach to your investing, it still wouldn’t hurt to have a free consultation with one for a second opinion, Sun added.

If you decide to start investing on your own after getting social media advice and then researching it, do it with money you are willing to lose, Sun said.

“Separate your serious investing from your play money,” she said. “Your serious money is money that you really want to be there for you for those important goals that you have.”