One Redditor’s view on the new-ish world of crowd-sourced financial advice

For this week’s MVP, we’re chatting with a frequent commenter on the Personal Finance for Canadians subreddit.

Fun fact: Almost a million people log into Reddit every single week to peruse more than 10,000 new posts and comments on the “Personal Finance for Canadians” subreddit. “Your one-stop shop to discuss personal finance within Canada,” as it describes itself, has endless anonymous users spilling their financial details and personal situations and asking for help:

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• Just reached credit score of 800; what are my options? 
• Recently received $200,000. What should I do to make this money last? 
• Is $70k/year enough to live comfortably in Ottawa?

The responses to each of these include some good and some not-so-good advice. Now here’s a question from us at The Get: Who is answering back and can you trust them? What’s happening in this community?

We found a redditor to explain—anonymously to keep inline with his online persona. By day, he’s a partner at a financial planning firm, but when he has an extra minute or two, he logs into Reddit to watch how this particular community is seeking and sharing (free, anonymous, often wrong) money advice. Here’s his expert take on anonymous financial crowd-sourcing on Reddit.

You’re surely busy at work with lots to do. Why spend time on Reddit?

Part of my job is business development, marketing and operations, so I have to keep my eye on what’s happening in the field. For market research, I follow a few different financial subreddits and was pretty shocked by how many people are asking for advice there. I’m not soliciting clients; that’s not allowed by these subreddits and would get me kicked out. And I’m not there in the middle of the night just answering questions, but I do want to see the kinds of questions people ask when they’re anonymous. It gives us a better sense of what people’s concerns are so we can serve them better.

Meanwhile, I made my own post that got 125,000 views in less than 24 hours. When that many people are people using different niche communities online to seek finance advice, we need to be paying attention.

What kind of person is getting money advice on an anonymous subreddit?

From what I see, they’re a passionate community trying really hard to try to get out of the corporate world. Lots of them want to retire early and find financial independence. I don’t think it’s necessarily because they don’t trust their bank or their financial advisor, but that people just like posting on all social media platforms about what’s rattling around inside their brain. They use Reddit the same way people use Google or ChatGPT. But the draw of Reddit is that there’s a higher likelihood you’re speaking to a human being rather than a bot.

Every subreddit has its own rules, and users can pick and choose where they post and converse. Lots of people just don’t want to spend the money to hire a professional, which I can understand to an extent. And other people want answers from many kinds of professionals until they decide which kind they will hire.

Is anyone moderating the answers?

Typically there are volunteers who are just passionate about the community, so they donate some of their time. I wouldn’t say that nobody is using a subreddit for business purposes, but most aren’t and seemingly have no motives or conflicts of interest. Unlike, say, a financial advisor who would prefer you invest or a banker who thinks your money best belongs in the bank. Theoretically, you’re getting objective advice. That said, you’re also going to get a lot of overconfident people with strong opinions and limited information, giving advice to people in vulnerable situations.

Can you give me an example?

I saw one thread recently about a woman with a $100,000 salary that was going through a divorce. She asked, “Should I buy an $800,000 house?” But, on Reddit, most users don’t identify themselves, so we don’t know anything about this person, really.

There are endless variables here that should be accounted for before anybody buys a house. Still, some responders told her something along the lines of “Go for it!” For all we know, this person has already been to the bank and been advised against buying the house. What if that’s not what she wanted to hear, so she’s turned to Reddit? Even if 98 of 100 people responded to say she should not buy the house, the poster might focus on the 2% who said to do it. They could be looking for confirmation bias. In a crowd-sourced space, you can probably find whatever you’re looking for.

When is taking advice on Reddit a good idea? Should I be doing this?

If you need a completely objective opinion, or if you want hundreds of opinions to get an idea of what other people would do, I don’t think posting on social media is a bad idea. There are certainly some very knowledgeable professionals there, including people who work in finance who seem to absolutely know their stuff. Many responses will begin with “I’m an investment banker” or “I’m a financial analyst,” so you’ll get answers from different perspectives. But of course you can’t assume people always are who they say they are.

It’s like diagnosing yourself on Google; it’s probably fine to Google your symptoms but when you’re actually sick you should see a real doctor.

Read more from this issue of The Get:

1. How to negotiate bills in Canada when you have no leverage 
2. DIY your way into Canada: what it really takes, from the people who did it
3. How to invest while in school: A guide for students in Canada
4. Retirement savings (and spending) strategies to beat inflation