Andy Hart in Barron’s: How Advisors Help Investors Avoid Bad Tips from ‘Finfluencers’

Apr 27, 2023 | News/Media

A new type of content is overtaking TikTok, Instagram, Twitter, Reddit and other social media channels: investing advice from financial influencers, also known as “finfluencers.” With their claimed wisdom so easily accessible, many young investors are listening, with some even following their guidance. However, these finfluencers typically do not hold the necessary qualifications and can lead investors down a path filled with financial and legal consequences. Fortunately, financial advisors can help their clients steer clear of these difficulties. Barron’s recently spoke with Delegate Advisors CEO Andy Hart to find out how.

According to Hart, one tactic he has used to steer investors away from bad financial advice is to suggest other options. For example, Hart had a business-owning client who wanted to place some of his assets in Roth IRA accounts for his two young children, who were 3 and 6 years old. The motivation for this endeavor? A post this client saw on social media. Hart quickly explained to the client that the children needed to be earning their own income to open this type of account, and it would be a long shot to argue that they were working for him at such young ages.

Hart instead suggested it would be more realistic to hire them once they turned 12 and were old enough to complete odd jobs. By waiting until a more appropriate age and putting them on the books, opening a Roth IRA on their behalf would be more defendable. His client, who did not want to raise any eyebrows, thought this was an excellent idea. “The IRS might actually look under the hood and decide that isn’t right,” Hart told the publication. “I don’t know that many 6-year-olds that make $6,500 a year doing chores.”

Subscribers to Barron’s can learn more about how to avoid bad tips from “finfluencers” by reading the entire article here.