Many people have enough problems figuring out where to invest, how to avoid fees, whether to refinance mortgages and a slew of other money topics without fake financial news adding to the mix.
Yet the trend toward inaccurate or slanted personal-finance reports could make things worse.
A new survey by an accounting group suggests that deliberately false or misleading news articles have the potential to impair Americans’ ability to make wise decisions in investments, retirement planning and other areas.
“Having accurate, reliable financial information is the basis for deliberate and rational decision making,” said Greg Anton, who chairs a national financial-literacy commission for the American Institute of CPAs, in a prepared statement.
Reacting to fake news, without verifying the content, is a clear hazard, yet 77% of more than 1,000 respondents in a recent AICPA poll said they believed it’s important to react quickly to breaking news.
The accounting group noted that hasty responses often don’t allow enough time to think decisions through, including tax implications.
“With few exceptions, making snap financial decisions is usually not a good idea,” said Anton. “Americans should proceed cautiously until they’re able to parse the facts.”
Many people do say they’re cautious and aware that fake news is out there, with 58% agreeing that it’s a serious threat to their ability to make sound decisions.
Top financial issues that people said they’re grappling with include those tied to health care (44% of respondents), stock-market investing (40%), retirement (36%) and buying or selling homes (35%).
“It can be difficult enough to understand the financial impact of proposed changes in laws and regulations without having to deal with a sea of disinformation,” Anton said. “Social media can serve to amplify the impact of fake news, particularly when many people are sharing articles that come to the same conclusion.”
The accounting group offers these common-sense suggestions:
- Be suspicious of headlines making bold claims and articles with poor grammar, multiple typos and unnamed sources. These can indicate the writer isn’t a professional or hasn’t had an editor read the material first. Research the website or company source if you’re not familiar with it. Check some of the author’s prior work.
- Make sure the website you’re reading isn’t spoofing a legitimate site. Such websites are similar in appearance to credible sources but are designed to mislead readers. Examine the website’s “about us” section and look for reader comments.
- Check to see if certain articles are labeled as sponsored content or advertorials. These stories might not be fake but often will present a favorable slant on a financial topic or product.
- Watch for pranks. Some fake news is designed to elicit laughs, as satire. This might be the purpose of an article you read, especially if shared on social media.
A key hallmark of fake news is that it contains just enough elements to be believable, such as a plausible yet inaccurate story last year that Pope Francis had endorsed Donald Trump for president.
In the financial field, discerning the factual from the false requires at least an elementary knowledge of how things work. If you’re not familiar with a particular product or service — whether precious metals, options, annuities or bitcoin — steer clear until and unless you’re willing to brush up.
The Internet and social media are catalysts behind the proliferation of fake news, but they also can be helpful in conducting legitimate research.
Poke around to see what credible companies and agencies — Vanguard, Morningstar, Charles Schwab, Fidelity, the Consumer Financial Protection Bureau, FINRA and many others — have to say about a particular topic. There’s a good chance they have covered that ground already.
Trade and research groups also can be sources of solid information, such as the Investment Company Institute on mutual funds and the Employee Benefit Research Institute on retirement plans and policies.
Consider your own perspective and biases in distinguishing real news from fake. You might be more receptive to a story touting hefty yields if your own accounts are generating meager returns or a story on loan forgiveness if you’re grappling with debt. A common ploy of con artists is to pitch messages that people want to hear.
Above all, you should never feel rushed or pressured to make any financial moves — a key point gleaned from the AICPA survey. Even if a promising investment is legitimate, there usually will be time to weigh your decision. If not, wait for another opportunity to come along. Very few fortunes are amassed overnight — they invariably take time, patience and healthy doses of skepticism and common sense.