Magazine

UpFront | Published in June 2017

Avoiding Reactions to Fake Financial News

Fake news is nothing new, but increased awareness of the threat it places on financial decisionmaking can help

By PLANSPONSOR staff | June 2017

Unreliable financial news is affecting Americans’ ability to make retirement, investment and health care decisions, according to a survey of 1,018 adults conducted in March for the American Institute of Certified Public Accountants (AICPA) by Harris Poll.
 
Kelley Long, a CPA/PFS [Personal Financial Specialist] and a member of the AICPA Consumer Financial Education Advocates group in Chicago, explains that financial news media employ scare tactics, warning every day about something happening that investors should not react to. She notes that defined contribution (DC) plan design intends to discourage participants from playing the market.
 
“There are people who are afraid of losing all their money and feel they can’t retire. They invest too conservatively for their timeline,” Long notes. “In addition, pre-retirees move everything to cash, but when the market doesn’t fall, they move back to equities. This does them harm, and accidentally delays when they can retire.”
 
Fake news is nothing new, but increased awareness of the threat it places on financial decisionmaking can help keep Americans from being lured into making decisions that will hurt them financially.

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