Derek Cockrell · Watershed Wealth Management

A symmetrical black and white line art depicting an abstract design with a central diamond-like shape flanked by swirling lines and horizontal bar elements.

TRUTH VS. TREND: THE DANGERS OF SOCIAL MEDIA FINFLUENCERS

What's the "hottest" financial tip or "trade secret" you've seen on social media recently?

What about retirement hacks, crypto offers, or "cutting-edge" investing advice?

If you're a social media user (like most), the financial "expert" chatter is almost inescapable.1

So-called "finfluencers" are on nearly every social platform.

They tend to offer shortcuts and make grand promises and claims that seem too good to be true.

Yet many of us buy in without hesitation.2

More than ever, we're using social media to learn about money matters.2, 3

But that's risky.

And not the best way to receive balanced financial support and factual advice that is tailored for our unique lives.

Keep scrolling to learn why social media and financial planning––don't mix.

A symmetrical black and white line art depicting an abstract design with a central diamond-like shape flanked by swirling lines and horizontal bar elements.

Not receiving our newsletter?

Get insightful info on finances and more in your inbox every month with the

VISUAL INSIGHTS NEWSLETTER

3 BIG RISKS WHEN USING SOCIAL MEDIA FOR FINANCIAL GUIDANCE

An artistic photo affixed to a clipboard, depicting silhouetted figures with bullseye targets superimposed on their heads, with one figure's target highlighted in red.

RISK #1: BELIEVING THE (BAD) HYPE

Blindly buying in to what's popular, commonly referred to as "herd mentality," involves following the masses without thinking twice or making conscious decisions.4 This mob behavior can run rampant on social media.4, 5 It can also be easier to fall victim to when we have "FOMO" (fear of missing out) or when we rely on mental shortcuts.5

Example: Remember the GameStop debacle? Their stock shot up wildly in value in January 2021. And behind the roughly 20x rise in this stock's price was herd mentality, mostly drummed up on Reddit and facilitated by the new-age stock trading platform. After several investors got in on the action, the price of GameStop stock took a nosedive. Many individual investors and hedge funds lost big.5

RISK #2: IDOLIZING AN ILLUSION

Misinformation isn't new to social media, but under the guise of "advice" from a wealthy finfluencer, it can be much harder to spot. Sponsored posts from high-profile "celebrities" in finance or business can be even more persuasive, causing a rush to emulate what likely isn't real (or attainable). And many of us mistake high-volume shares, followers, and likes as evidence of distinction and integrity.6

Example: A few years ago, a well-known influencer with over 800K followers, made nearly $190,000 after charging almost $500 per student for a 12-week course on how to build your own travel-blogging business. Once the course began, frustrations started trickling in, stating that the content wasn't as advertised. The influencer then blocked those who complained, leaving most "students" at a loss. It's unclear if any money was refunded.7

A hand emerging from the shadows, gripping a smartphone with a red screen, framed against a contrasting backdrop of light and dark stripes, captured within a polaroid-style border with adhesive tape at the edges.
An exchange of mystery: two hands, one presenting a red, wrapped gift, captured in a timeless black and white photo with a hint of color.

RISK #3: SINKING INSIDE A SCHEME

Get-Rich-Quick (GRQ) schemes promise fast, unrealistic returns if you invest, sign up, become a member, and/or "act now." GRQ schemes seldom talk about risks, it's all rewards—and you're usually required to pony up a generous amount of cash or refer others to get started.8

The truth? Most GRQ schemes are a house of cards, conning the people who sign up and almost never making them rich. Instead, they likely end up "losing their shirts."8

Example: Multi-level marketing (MLMs) schemes are all over social media. "Work from home," or "Make $100,000 in your first month," or "Be your own boss," are some of their common promises. Most participants lose money in these schemes, and the few who find success typically have to invest and hustle for years. (Which, could've been the timeline for launching a successful non-MLM business.)8

"THERE'S NO WAY SOCIAL MEDIA CAN ADVISE OR GUIDE YOU ON A PERSONAL LEVEL."

A symmetrical black and white line art depicting an abstract design with a central diamond-like shape flanked by swirling lines and horizontal bar elements.

FINANCIAL LESSON:

RINSING AWAY THE SNAKE OIL

If you draw anything from this message today, let it be this: finfluencers are not fiduciaries.

Their incentive and allegiance is dedicated to a social platform's algorithm that will reward them for collecting as many VIEWS as possible––not for providing life-changing or fair financial advice.

Social media is not inherently bad, but finfluencers don't pay their bills by serving your best interests.

Thoughtful guidance isn't typically sensational enough to grab "likes," but heavily biased, outlandish, and polarizing information––usually is.

Bottom line? No one, whom you've never met, can offer the customized support you truly need and deserve.

A knowledgeable financial advisor who will meet with you one-on-one, however...

Sincerely,

 

    Derek Cockrell

    Watershed Wealth Management

    https://watershedwealthmgt.com

    (575) 769-3965

 

P.S. Sign up for my emails. My subscribers get my best insights!

A symmetrical black and white line art depicting an abstract design with a central diamond-like shape flanked by swirling lines and horizontal bar elements.

Derek Cockrell

Watershed Wealth Management

Not receiving our newsletter?

Get insightful info on finances and more in your inbox every month with the

VISUAL INSIGHTS NEWSLETTER

Derek Cockrell

Watershed Wealth Management

An icon of a planet, referencing an internet link.

https://watershedwealthmgt.com

An icon of a letter, indicating an email address.

Derek@wswmgt.com

An icon of a handheld telephone receiver, indicating a phone number.

(575) 769-3965

Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.

This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability, or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.

This information is provided for general informational and educational purposes only. The views expressed do not consider any specific individualized financial, legal, or tax considerations. As such, the information contained herein is not intended to be personalized advice, an individualized recommendation, or solicitation to buy or sell any security or engage in a particular investment or financial-related strategy. Nothing herein should be relied upon as such, and there is no guarantee that any opinion or forward-looking statement will come to pass. The information is obtained from what are considered reliable sources, but we do not guarantee the accuracy, completeness, or reliability of the information. Any examples provided are for illustrative purposes and are not intended to be reflective of results you can expect to achieve. Any opinions expressed are subject to change without notice in reaction to shifting markets and other conditions and should not be viewed as an indicator of future performance.

There is no assurance that any plan or investment strategy will be successful. Investing involves risk, including the possible loss of principal, and past performance does not guarantee future results. Please consult with your financial adviser before making any financial or investment-related decision. 

Investment advisory services are provided through Mariner Platform Solutions (“MPS”) or Mariner Independent Advisor Network (“MIAN”), both SEC registered investment advisers headquartered in Overland Park, Kansas. Registration as an investment adviser does not imply a certain level of skill or training. MPS and MIAN comply with the current notice filing requirements imposed upon registered investment advisers by those states where MPS or MIAN transact business and maintain clients. MPS or MIAN is either notice filed or qualifies for an exemption or exclusion from notice filing requirements in those states. Any subsequent, direct communication by MPS or MIAN with a prospective client shall be conducted by a representative who is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. Not all services mentioned herein may be offered by MPS or MIAN; affiliates or others may provide some services, which may be subject to additional fees.

For information about which firm your advisor is registered with, please refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov) or the Form ADV 2B provided by your advisor.

Certain MPS Investment Adviser Representatives (“IARs”) market under the AdvicePeriod name, a business name and brand MPS utilizes. 

IARs are independent contractors of MPS or MIAN and generally maintain or affiliate with a separate business entity through which they market their services. The separate business entity is not owned, controlled by, or affiliated with MPS or MIAN and is not registered with the SEC. 

For additional information about the IAR, MPS, or MIAN, including fees and services, please contact the advisor or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you invest or send money.