New social media app is a hotspot for personal finance conversations

If you haven’t had a chance to visit the Clubhouse yet, you may have never been invited. Yes, this new social network and app is invite-only, so it’s a bit more exclusive than, say, Instagram or Snapchat. Clubhouse is also made up of audio-based chat rooms instead of text-based, meaning you can show up and “hear” what people are saying instead of reading their thoughts in the written word.

Like TikTok and other major social networks, Clubhouse is filled with all kinds of people, from voyeurs to aspiring influencers to true professionals trying to build their brands. And like other social media platforms, Clubhouse features its share of money experts and “influencers” who use the platform to explain their financial philosophy or share get-rich-quick tips.

Conversations about clubhouse money are definitely reaching new audiences, but is that a good thing or a bad thing? Generally, that depends on who’s listening, who they’re listening to, and what they’re taking away.

The problem with social media and money

All social media platforms have the same problem when it comes to the financial tips they host, and that’s true whether we’re talking about YouTube, TikTok, or Twitter. Virtually anyone can claim her expertise and suggest any financial strategy they want. They don’t really have to back up the claims they make, and people often misrepresent themselves to garner influence.

Clubhouse enthusiast Michael Freeby says he has seen and experienced the “hyped” financial advice firsthand. While Clubhouse leans toward the older demographic, there are buzzwords that draw people in.

Where the younger generation is inundated with veneer-wearing influencers offering teeth-whitening services, Freeby says older Clubhouse users are more likely to fall prey to snake-oil salesmen with a click-bait title telling them who will become millionaires quickly.

In any case, it is very likely that the Clubhouse “influencer” is lying or at least exaggerating the truth.

“I’ve been to so many rooms that I’ve seen a lot of Clubhouse users make these claims and say they’re millionaires offering advice in one room and discussing how turbulent they are in the next,” says Freeby.

Financial advisor Julian B. Morris of Concierge Wealth Management says it all boils down to the fact that very few licensed financial professionals and planners use Clubhouse and other networks. That becomes a problem since an influencer’s job is to influence rather than give real, actionable advice that people can use and benefit from.

Not only that, but Morris points out that an influential person in the Clubhouse does not have a fiduciary responsibility to the participants in the room.

“There’s no reason to trust advice preached in a chat room or TikTok video to be your best influence,” he says. “I have yet to see an influencer who is a fiduciary, someone whose job description means that the client’s interest trumps their personal financial gain.”

When to Take Clubhouse Money Advice

While Clubhouse presents the same challenges as other social media platforms, financial planner and senior manager Brian Walsh of SoFi says these non-traditional platforms have opened the door for millions of people to be exposed to topics that are crucial to understanding. In addition, there are rooms for beginners, specific interests, and certain affinity groups.

Walsh says that, as a result, a beginner I might Use this as a safe way to learn about the basics of personal finance without all the jargon used in the industry. In the meantime, investors can use this as a way to learn about the different strategies that others are considering before doing their own research.

Having said that, Walsh says it’s important to look for qualifications and experience, which should be easy to do if the person sharing financial information on Clubhouse is established in their career.

“While you don’t need to fire someone without credentials right away, a lack of credentials indicates that you need to do more research and make sure the person is trustworthy and fits your financial needs,” he says.

For example, if you come across a Clubhouse finance expert like Bobbi Rebell, Jason Vitug, or Dr. Brad Klontz, you can immediately identify their professional credentials with a quick Google search.

Once you take the time to seek out the person you’re listening to, you also need to make sure the advice aligns with your life, says Walsh. He adds that many engagement-driven topics aren’t appropriate for most people. For example, new and exciting investment strategies like NFTs sound amazing, but most people need to make sure they know the financial basics before spending time learning about alternative investments.

“If you’re early in your financial journey, skip the investing approach and look for one that focuses on the basics of financial education,” says Walsh.

For example, Jason Vitug hosts a weekly room called “What The Finance (WTF)” where he and others discuss financial education topics. Bobbi Rebell also hosts a weekly room called “Money Tips for Adults” that covers a wide range of financial education topics.

final thoughts

Remember that general financial advice is rarely ideal for your individual situation, says Arielle Kimbarovsky of M1 Finance. And personal advice isn’t something you’re likely to get from Clubhouse, TikTok, or any other social media platform.

At a minimum, you should listen to Clubhouse influencers who are credible and honest about the fact that their advice may not apply to you.

“The best investment strategy is the one that suits you, your finances, your life goals, your risk tolerance and even your values, and the best people to follow Clubhouse advice, in my opinion, are the ones that are open to that concept,” he says.

“Look for experts who recognize that your success may have worked for them and not for you, and who spend more time explaining their thought process than just listing a handful of actions.”

Finally, financial advisor Cody Garrett of Measure Twice Financial recommends remembering the difference between financial information and financial advice.

When financial education provides objective foundations and shares information from trusted sources, such as the IRS or academic journals, financial advice provides actionable recommendations.

Garrett says to listen to influencers who focus on financial education rather than opinionated advice. She also recommends looking for phrases like “always do this” or “never do that.”

“This is a key sign that the message ignores the personal side of finances,” he says.

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