Don’t Get Hurt by Fake News

Here’s how to spot it and ensure that it doesn’t harm you.

This Kind of Fake News Has Real Consequences

We’ve been hearing the term “fake news” a great deal since the beginning of this year. Some may argue the validity of the term in a political context, but there’s no argument that fake news exists in a financial context.

Financial fake news isn’t all that new. It has been a growing issue the past few years — and has reached the point where more than half of Americans (58 percent) responding to a poll conducted by the American Institute of CPAs say it’s a serious threat to their financial decision-making, and 33 percent called it “very serious.”

It’s serious enough to draw the attention of the SEC, which announced enforcement actions in April against 27 individuals and companies it said were misleading investors into thinking they were reading unbiased, independent analyses on investing websites. Instead, according to the SEC, writers on those sites were being secretly compensated for touting various stocks.

“Investors looking for objective investment information should be aware that fraudsters may use these websites to profit at investors’ expense,” said Lori Schock, director of the SEC’s Office of Investor Education and Advocacy.

The AICPA poll showed 63 percent of Americans believe the spread of fake news makes it more difficult to make financial decisions specifically in the following areas — ranked by percentage of respondents (out of the total pool of respondents) who cited them:

● Health care decisions (44 percent)

● Investing in the stock market (40 percent)

● Retirement (36 percent)

● Starting a business (35 percent)

● Changing jobs (29 percent)

Most respondents don’t expect the problem to diminish anytime soon. In fact, 51 percent said they believe fake financial news will become even more prevalent in the next two years.

The AICPA’s Financial Literacy Commission offers these tips for helping you identify fake news:

● Look for telltale signs of a hoax, such as headlines that make questionable claims or articles that contain several grammatical errors or typos.

● If you’re unfamiliar with the source, investigate the author and look around for reports from trusted sources that substantiate the claims.

● Ensure that the news came from a legitimate website and not a spoofed or counterfeit site designed to resemble a real one.

● Watch out for sponsored content and advertorials. These can look like standard news articles but are not part of a real news organization’s editorial content; instead, they’re written to sell products.

● Learn to spot the difference between fake news and satire. Do your research to learn whether the source is known for spoofs — especially if the news was shared on social media rather than a website.

If you’re tempted to react to breaking news about the market, remember that you’re invested for the long term, so what happens in the moment isn’t that important. Do your due diligence, and if you have an urgent financial question or wonder whether something you saw on television or a website is real or fake, simply call your Financial Planner. We have the knowledge and experience to evaluate the matter and will advise you on what — if anything — to do about it.

And if you have family members or friends who don’t have an advisor, we’ll be happy to do the same for them.