How to Protect Yourself from Bad Financial Advice
Reading time: 5 min
I’ve written many times that school doesn’t teach us enough about money — and most people don’t really seek out financial education either. Somehow, many assume that simply handing their money over to “professionals” is the solution. You know the type — the suited banker, the friendly insurance agent, or the young “advisor” offering to help you invest. They sound confident, they use fancy words, and they seem to know what they’re talking about.
One reason for this is the belief that all these people are smarter or know something we don’t.
But if you look closely, you’ll see that much of the financial services industry is built around sales. People working in banks, insurance companies, or retirement firms might be commission-based, or they might just be sitting there doing the minimum required — either way, their advice isn’t always based on your best interest.
Some of them are knowledgeable and well-trained, sure. But when there’s even a small sales component involved — when someone benefits financially from selling you a certain product — you should always question it. The financial industry is designed to generate profits, not necessarily to secure your financial freedom. That’s not evil in itself; it’s just how the system works. But you need to understand that what’s being recommended to you might not be the best fit — it could simply be what’s easiest to sell, or what pays the company or employee the most.
The same logic applies across industries — from car dealerships to electronics to real estate, and beyond. As long as people earn money through selling products and services, financial motivation is always in play. That’s why you have to stay discerning whether you’re talking to a banker, an insurance advisor, or a broker. Their goal may not fully align with yours.
Another example is when you are looking for advice on what to invest in. A lot of people will say you should invest in this or that. But when you ask them why, they often melt down — because they don’t actually know. Again, I’m not trying to dupe these people, but most of the time the answer is nothing more than “well, well, well,” and in reality, there is often no solid answer at all.
And here’s another important point: if you don’t realize that you’re a pawn in this game — as you’re the one generating money for others — you are the target.
When you’re earning money at a job, you are the target for the banks, you are the target for the insurance industry, you are the target for credit card companies, you are the target for the student loan business, you are the target for the realtor industry, you are the target for the retirement industry, and so on — basically, you are the target for everything, because ultimately, you are the consumer.
Many of these companies hire people in their early 20s to sell financial products. Of course, there are smart and capable young people who genuinely care about helping clients; an honest real estate agent who helps you find the right property, or a banker who genuinely has your best interests at heart. They do exist. But it’s hard to believe that someone with very limited life and investing experience truly understands what’s best for you financially, particularly after a single meeting. That’s not to dismiss them; it’s just something worth being aware of when you’re taking advice, and it might be wiser to speak with several representatives and sleep on it before committing to anything on the spot. That way, you give yourself time to reflect and avoid being pressured into a decision that might not be right for you.
So when it comes to financial products, take time to assess the knowledge and motivation of the person advising you. Ask questions such as:
* “Which experts or sources do you follow to stay informed?”
* “Who do you learn from or take advice from in your field?”
* “Which books, advisors, or resources do you rely on?”
If they just look at you blankly, that’s a red flag.
Here’s a simple trick: bring up an obviously bad investment and ask their opinion. If they say “That’s great, let’s check it out”, you’ll know they’re just trying to make a sale. But if they suggest exploring other options, that’s someone who likely has your best interest at heart.
The principle discussed above doesn’t just apply to financial professionals. Be careful who you take advice from in general. There are plenty of people who do very little with their own lives yet love to tell you what you should do. These are often the same people who say you should “live it up while you’re young,” or that credit scores don’t matter, or that you should go to a good college and get a good job to be successful, or that starting a business is too risky and you shouldn’t even try because you might fail.
The truth is, if you really want to build wealth, you have to go against the grain and do what most people aren’t doing. And that includes only listening to people who are where you want to be.
Don’t take advice from someone you wouldn’t want to trade places with.
Because at the end of the day, you’re the one responsible for your financial future — the person on the other side of the table won’t be there to deal with the consequences of your decisions.
