Financial websites should be aware of trust requirements

I became active on the MyWOT community (again), and this post is inspired by one forum thread there, where financial consultant asks for re-rating of his website.

Now the problem with financial advice websites is following: they might result in large losses or gains for a single person. The more person invests, the more person risks. Thus each financial website should care about how they are perceived by the visitors.

First of all, noone should trust financial website without proper contact information on it. Noone should listen to advice of instructor that forgets to introduce himself and give away all contact information required to contacting or investigating him. And yes, I think people should investigate websites before using the financial advice they provide.

Secondly, it is quite important to know the terms of service and disclaimer of the website.

• Do they stand for what they preach?
• Do they have financial interest in the tools or methods they recommend?
• Are they affiliated with someone?
• Are they getting paid for reviewing particular stock? There have be a compensation disclosure present in such cases (it is required by USA law, and many others).
• Do they follow their own advice?

If the answer is not clear or is omitted, you can be sure that there is something hidden there. They might hide the fact that they have interest in promoting something, and they might not use particular methodology themselves. Then you have to stay away from the website, as quite often it is just a scam.

Thirdly, even if they preach and promise some things, they have to disclose that this is an advice only. They cannot guarantee the same results as in the past. They cannot guarantee that there will be no market crash in the future, or that situation changes completely. They cannot guarantee that there will be no changes in taxes, social security policies and stuff like that.

And lastly, if anything looks too good to be true, it is not. Investments is all about taking and managing some risks. If the promised gains are huge, the losses might be huge too. Do not fall for this trap.

Personally, I like Motley fool as they follow good practices (well, except lots of promotional mails).