What to do about conflicting financial advice

It's come to our attention via a recent online back-and-forth with our partner site Kiplinger.com (see here and here if you'd like the juicy details) that while there is a lot of personal finance advice floating around out there, not all of it is always in agreement. With everyone from newspaper columnists to authors to bloggers weighing in on how to manage your money, it can get confusing, especially when one source tells you to do the exact opposite of what another, seemingly equally credible one, advises.

We consulted Linda Sherry, director of national priorities for the nonprofit consumer advocacy group Consumer Action in Washington, D.C. Her organization watches out for consumers and makes sure they're getting the truth from companies of all sorts. She had suggestions both about how to ferret out sound financial wisdom as well as how to evaluate advice you get from any person, article or website.

First, here are a couple of ways to track down good financial advice:

Go straight to the horse's mouth. Government agencies often have a list of frequently asked questions posted on their web site, and some have telephone hot lines you can call. If you don't know if there's an agency that relates to your question, try searching for the word "government" or the name of your state along with the type of advice you're seeking. One word of warning: Make sure the site you navigate to ends with ".gov." Some for-profit companies stick the word "government" in their name to try and fool you into thinking they're the real deal, but their website address will give them away by ending in .com, .net, .biz or something else.

Check industry associations. Accountants, insurance agents, brokers and other finance professionals all have trade associations that represent their piece of the pie. Many of these also will have FAQs on their websites. To be impartial, associations should feature more than just one or two companies. If you only see a few members highlighted, that could be a red flag that they have too much clout, which could mean you're getting biased advice from the organization.

Sometimes you can get conflicting advice from two reputable-seeming sources. What does this mean? Is one of them wrong? Not necessarily. You just need to do a little digging.

Consider the source. Some people will give certain suggestions because that's what they get paid to do. Not to say you should dismiss advice from an agent, broker or other professional, but do ask questions about how they get paid, such as whether or not they get commissions that could affect their impartiality.

Get a second opinion. Would you get open-heart surgery without a second opinion? Of course not. You should treat your fiscal health the same way. Don't be afraid to shop around, whether you're investing, buying insurance or any other financial activity. If you get the same advice from several sources, it's more likely to be trustworthy.

Learn the risks. A good source will address your personal tolerance for risk and lay out any caveats or drawbacks. Finance always involves some degree of risk; rely on sources that talk to you about this rather than glossing it over.

Ask yourself, "Does this sound too good to be true?" If you're being offered something much better, for much less money, ask, "What's the catch?" because there's bound to be one. Read the fine print -- all of it.
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