What Finfluencers Get Wrong About Financial Advice on Social Media
Your social media feed is full of financial “experts” telling you to take CPP at 60, refinance your real estate for free money and get out of your RSPs. And it’s getting into people’s heads.
In this episode of Heart of Your Retirement, Zena Amundsen CFP and Nicole Putz CFP react to the exact posts making the rounds right now and break down what’s actually going on behind the viral financial advice on social media. From the CPP at 60 debate to the Smith Maneuver “loophole” to the RSPs are bad trend, they cover the three biggest myths circulating online right now and what Canadian retirement planning actually looks like when you know someone’s full financial picture.
If your gut has been flipping when you scroll your feed, this one is worth your time.
Show Notes: What Finfluencers Get Wrong About Financial Advice on Social Media
Zena: Hey there. Thanks for joining us again. Today’s just a quick one, actually. It’s more of a rant. We’re in the middle of a workday right now and we’ve got a few things that have come up today. We want to talk about what are called finfluencers.
Nicole: Yep.
Zena: Experts that are giving advice on social media.
Nicole: “Experts.” Big quotation marks.
Zena: So I picked a few, and this is a live-time surprise for Nicole. I made our notes and printed some off for her, but I wanted to get her reaction on the first clip I have here. She’s going to turn it on and then we can stop, pause, or talk for a minute. It’s a post called “Why You Should Take Your CPP at Age 60.”
Nicole: Okay. So I’m going to watch this. I haven’t seen this yet, so you’re going to get my candid reaction.
Zena: Canadian content, and I did do a little bit of research.
Instagram clip: The person taking the Canada Pension Plan at age 60, and why you’d be insane to not at least listen to these four reasons. I have yet to find a single person who can logically tell me otherwise.
Nicole: Anyone?
Zena: Oh my God.
Nicole: Okay, he can’t find anyone.
Zena: Can’t find anyone to tell him otherwise. I’m going to pause here and say, maybe it’s because you’re not a certified financial planner. You’re not part of any of our associations.
Nicole: So this is your deep-dive piece? You had gone in and looked?
Zena: Yes. And so then I did some research and I’m like, please tell me you’re not a certified financial planner.
Nicole: That would be worse.
Zena: Yes. It’s not. It’s an investment salesperson.
Nicole: Oh gosh. Okay.
Zena: And what you can’t see on here is that he’s very young.
Nicole: No age-shaming here, but when we’re talking about CPP and someone has pretty strong opinions on it. Okay, let’s keep going.
Instagram clip: Number one: let’s use an average real-world example. If they take CPP at age 60, they’re projected to receive $653 a month, but if they wait until age 70, that check grows to $1,449 a month. So why not wait until age 70? Point number two: because you just fell victim to something. This guy would say you are selling the best years of your life for a slightly higher monthly income.
Zena: Selling the best years of your life for a slightly higher income?
Nicole: Coming from a 25-year-old.
Zena: I don’t know if you just rolled out of bed on the couch in your sleeping bag and decided this was a great idea. I don’t know, but I’m pissed.
Nicole: And also “slightly higher”? $653 versus $1,449?
Zena: That’s a big difference.
Nicole: That’s a big difference.
Zena: Not including the inflation index. CPP is one of the only guaranteed, inflation-indexed, lifetime annuity income streams you’ll have for the rest of your life.
Instagram clip: A spreadsheet doesn’t know what it’s like to be 60, healthy, and finally free.
Nicole: He doesn’t know what it’s like to be 60, free, and whatever. That’s the best comment. He also does not know.
Zena: Okay, so turning on your CPP at age 60, most people are still working. And this is where this guy, he might be a genius in other fields, but when it comes to retirement planning, most often people are still working at 60 or doing some form of contract work. Now, we do have some amazing planning happening in this office and we actually have some Freedom 55ers.
Nicole: Yep.
Zena: But we’ve been working on it for a long time. On a general level, this guy has 200,000 views.
Nicole: That’s wild.
Zena: 200,000 views. And it’s these posts that are going viral. I’m seeing it come across my newsfeed. I think if you’re not paying attention, you’re going to think that this is actually speaking to you, and then I can’t imagine the feeling of FOMO.
Nicole: Absolutely.
Zena: That happens. And then turning on the tap, I think after one year of taking your CPP, I don’t think you can turn off the tap. Once you take CPP…
Nicole: Yeah.
Zena: You can’t do the moonwalk back. Nope. Change my mind.
Nicole: There’s a very small window.
Zena: And so yeah, I just can’t believe this advice. I had to take a lot of it out.
Nicole: Well, let’s talk about this. CPP at 60, just in terms of what he mentions. And here’s the thing I didn’t love about that. He’s deciding what “a lot of money” means. The fact that he was saying this amount of money versus 10 years down the road, so if you took it at 60 versus 70, because there is a difference in the percentage.
Zena: Yeah.
Nicole: And we can talk about that too. This is a guaranteed increase in income.
Zena: He didn’t even talk about inflation. So $1,449 right now, in today’s dollars at age 70, but by the time you get to 70 with inflation adding on, which historically the CPI (Consumer Price Index) has been adding, let’s say two and a half percent every single year after that.
Nicole: Yep.
Zena: It’s way more than that in the future.
Nicole: So the present value of money does not equal the future value of money, which he does not talk about at all.
Zena: No. And I think that naivety of being young, thinking that age 60 means you’re done and retired. 60 to 65 is actually your peak earning years.
Nicole: Which we see with clients all the time.
Zena: You’re at the peak of your career, making the most amount of money. That’s generally why people will work a little longer because they’re at the highest pay grid they’ve ever been at and they’re like, you know, it’s not that bad, I’m going to work a little longer. But he’s just not seeing that. I don’t know if he thinks that at 60 you’re in the chair and not getting out.
Nicole: And I think in his mind too, it’s maybe more like, okay, if you can get money at 60, why wouldn’t you take it?
Zena: Yeah. And that’s the exact financial regret a young person would make. It reminds me of some of those decisions I made when I was 18, 19. I maxed my first credit card.
Nicole: Yeah.
Zena: At $500 on a tent and a sweater.
Nicole: Right.
Zena: And then spent a few years paying minimum payments on a credit card for that sweater. It feels like that is a version of what he’s saying, and the financial regret that would follow.
Nicole: Totally. And I think it’s the way he frames it too. This is something larger-scale influencers do. To your point, there’s always FOMO, and they always speak in absolutes.
Zena: Yeah.
Nicole: Which I can’t stand. The keywords are always “always,” “never”…
Zena: “Must.”
Nicole: “Must.” These words that create little urgencies in your brain. There’s a reason they’re doing it.
Zena: Yeah.
Nicole: Because with every kind of financial planning decision, there’s always nuance. There’s always your personal history, your personal picture, your everything. Yes, there are some generalizations and some rules of thumb, but that’s about as far as it goes. And even then there’s nuance.
Zena: My blood just boils.
Nicole: Oh gosh. And I haven’t even seen it all yet.
Zena: We’ll stop it. I won’t make you watch it all.
Nicole: You know what, we should actually say, just for people who are wondering: when could it make sense to take CPP at 60? We’re not going to speak in absolutes, but when could it make sense?
Zena: Health. If you’ve gotten a diagnosis where you know you will not have longevity past a certain age, if it’s five or 10 years.
Nicole: Yeah. I think that would be the biggest one.
Zena: Yeah.
Nicole: Or if there’s a major crunch in cash flow. And again, there’s even nuance with this.
Zena: Yeah. If there’s a serious cash flow or debt problem. Something has happened and then it becomes debt planning.
Nicole: Yes, exactly. It’s a totally different conversation from retirement or income planning. It literally flips.
Zena: Yeah. So that’s when there’s a crisis situation.
Nicole: Yeah.
Zena: But to tell the general masses, please, red flag. Don’t do that one.
Nicole: Yeah.
Zena: So the next one that hit a few things. The next one you haven’t seen either. It’s called “The Canadian Tax Loophole for Real Estate Investors.” I’ve seen a lot of things and there’s a term in this one called the Smith Maneuver. This episode is an absolute discussion about a loophole that we’re all missing and that everybody with a mortgage needs to look at or get into real estate investing.
Nicole: Right.
Zena: So if you pull it up and read the screenshot.
Nicole: Oh Lord.
Zena: Canadian tax loophole.
Nicole: Can we also touch on that? This is a trend right now. Not that they’re all bad, you know, there’s some good advice out there, but there’s this whole movement around the rich having secrets that the rest of us don’t have access to.
Zena: Especially with the conspiracy theories going around right now.
Nicole: So a lot of finfluencers are using that as clickbait.
Zena: Yeah.
Nicole: Anytime you see the word “loophole”…
Zena: Yeah.
Nicole: Or “quick win,” or “if you want $400,000…”
Zena: Right. So this one says: you buy a rental for $400,000, it doubles in price, now it’s worth $800,000. And instead of selling and paying capital gains, it’s saying, no, let’s refinance, pull out your money tax-free and repeat forever. So it’s talking about this strategy of reinvesting cash.
Nicole: And here’s the thing. It’s not to say that the Smith Maneuver specifically, or other strategies like it, can’t work. Theoretically, yes, they can. But there is so much complexity. You have to be watching so closely: your rates, how much you’re pulling from the debt side. There are so many moving pieces. And so, if this is speaking to you, if you see something like this and you immediately feel like you’re missing out, I would ask you to dig a little deeper and ask yourself: what is the real worry here? Because a lot of these are speaking to instant gratification and quick wins.
Zena: Oh yes. And what am I missing out on? I just saw a post about somebody driving a Lamborghini from real estate. And in this case, they’re assuming a real estate property has just doubled in value.
Nicole: Oh yeah.
Zena: Red flag. The odds of home values doubling like that, that’s just not realistic. Real estate doesn’t always double in 10 years, let alone in a shorter timeframe. There are market stall years, flat periods, all kinds of variables. And second, this one is talking about refinancing and calling it free money.
Nicole: Oh.
Zena: So now we’ve got a red flag around risk tolerance. Without even asking: can this person afford to take on more debt? What happens if there are no renters? It’s debt. Borrowed money is debt. Yes, it isn’t taxable when you pull it out, but now you have higher risk. And I think that’s the piece that’s missing here.
Nicole: And what else is going on in your life? That’s the piece too. When people are talking in absolutes, if you have kids, if you have other things going on, that all matters. And here’s the thing with influencers: there’s a lot of rhetoric around “if it worked for me, it’ll work for you.” That’s an easy tagline to hit. And sometimes there isn’t malicious intent. Sometimes it’s just, I was the 1% that it worked for, and so it can work for you too. But that’s the wrong message. Nobody has the same money scripts, the same access to jobs, the same family situation. Everything is different.
Zena: It’s the same with dietary advice right now, the workout industry. When you’re scrolling Instagram and someone’s talking about dietary needs and how to lose 10 pounds, something that worked for somebody is not actually talking to you specifically. They don’t know your story. It’s the same thing here. And refinancing is not a loophole. Taking on debt is not a loophole.
Nicole: Right.
Zena: Leverage is risk.
Nicole: Yeah.
Zena: Big risk. And I think we get sucked down the rabbit hole and forget to check ourselves before we wreck ourselves.
Nicole: Absolutely.
Zena: That’s it. I’m not going to share a whole bunch more. I mean, I saved a whole bunch of these on my Instagram late at night, so now you know what my feed is doing.
Nicole: Yeah, the algorithm is serving you up.
Zena: It’s giving me some nasty things. So we have had calls coming into the office, someone sending a link saying, “Check this out.” Another one is RSPs. The “RSPs are bad” trend is happening.
Nicole: That’s a big one.
Zena: We have too much in RSPs. And I’ll be honest, when I get those phone calls, I’m like, well, we’ve done your financial plan. That’s why you need a financial plan before you even invest.
Nicole: Yeah, totally.
Zena: And I look and I’m like, we don’t have too much.
Nicole: Right.
Zena: Not at all. We’ve done great tax planning. So be hesitant about what you read and hear, and think about why they’re putting it out there.
Nicole: And I’ll say too, we have a friend who is a CFP, a very smart and analytical guy, and he is literally on a crusade right now to show people why RSPs are great. Because there is all this rhetoric out there about why you wouldn’t want one.
Zena: And when I sat with this person and pulled up their financial plan, we looked at it together and said, you know, you make $175,000 right now in taxable income. When you retire, we’ve done such a great job of tax planning and income splitting with your partner that you’re going to be making $75,000 gross a year. So let’s do an RSP contribution for these next five or six years and get you way more money back in your pocket as a tax refund, which we then top up into your Tax-Free Savings Account. Because in retirement you’re still in a low enough tax bracket that it makes sense.
Nicole: Right.
Zena: And without being able to show the proof in the pudding, it’s easy to get sucked in. We all want a villain. And RSPs have become that villain.
Nicole: It’s just been an easy target for people to talk about.
Zena: So be careful.
Nicole: Yeah. I don’t know if “buyer beware” is exactly the right phrase, but just be careful what you consume. And if you’ve got a planner, if you are working with someone, check in if things are really hitting you or your gut is flipping when you’re seeing these things.
Zena: Or send us a note with the link.
Nicole: Right, yeah, totally.
Zena: We’ll record a podcast, talk about it and share why.
Nicole: Yeah, exactly. It’s the old adage: if something sounds too good to be true, it probably is.
Zena: Tune out the noise.
Nicole: Okay, guys.
Zena: That’s it. Bye.
