Don’t Bet Your Nest Egg on a Financial Investment Blog

By Sam Thacker

A recent study by global financial services giant, ING indicated that investors over 40 years old trust financial blogs more then financial brokers.

The study published by Business Insider indicated that 48% of those over 40 trusted financial blogs while only 36% said they trusted securities brokers.

When I look at that statistic I am puzzled. Have bloggers become really good at instilling trust of their readers or have brokers as a group lost their reputation for honesty and fair dealing?

Perhaps the answer is a little of both.

Anyone regardless of experience, training, licensure, or regulation can write a blog and write anything they want. A glossy website, a nice photograph of the blogger and a catchy website name is all that is required to become a financial personality.

When reading financially related investment blogs you should keep these tips in mind:

• While some bloggers may be real experts at discussing investments, it is better to consider a blog entertainment than a place to go for serious advice.

• Bloggers may not have any real expertise or training in analyzing stocks, bonds and mutual funds.

• There is no regulation of most financial bloggers. There are a few unscrupulous bloggers that may recommend investments because they are trying to run up or down the stock price so they may benefit.

Securities brokers are regulated by the National Association of Securities Dealers (NASD) and must pass licensing exams and adhere to strict regulations about what they can say about a stock, bond or mutual fund.

You should pick a securities broker like you should a doctor.

• How experienced is he or she in the type of investment you are interested in?

• How long have they been in the securities industry?

• Are they paid based on you individual trade or a flat percentage of the assets of yours that they manage?

• What kind of continuing education does your securities broker attend?

• Does their overall philosophy of financial risk match yours?

Picking an investment advisor that charges a percentage of your total assets under management is often the wisest approach because they are not incentivized to “churn” your portfolio.

If a financial advisor does their job right, they will sit down with you and listen to your investment goals and learn about your risk tolerance. They will understand your tax status so they avoid recommending securities that have high tax implications and they will help you plan your long term investment strategy to grow your investments at a pace that balances risk and return.

Since your investments are so important to your financial security, take your time in picking a licensed securities advisor and read financial blogs for entertainment and overall education, but don’t bet your investments on the word of someone who doesn’t know your specific investment goals and risk tolerance.

Sam Thacker is an Austin, Tex based freelance writer.