Personal recommendations are only part of financial decision making
In addition to personal recommendations, look at independent experiences that are similar to your needs. (File photo)
Everyone appreciates personal experiences, but some may overestimate them — especially when they are drawn from one or two experiences in money issues.
In the past when people didn’t have access to the wider online community feedback, anything from managing money to buying property and investment was discussed with family, friends and coworkers, and reviewed against a bank recommendation The limited experience and feedback were all the guidance that you can get to make a decision — even about some of the most important, and largest, investments in your life.
Today, you have a lot more resources that can help you. In fact, the amount of information that is available online dwarfs any personal experiences of individuals whom you know personally. But in many cases, you still see people who go ahead with key choices based on recommendations from their closed, face-to-face network members. It may be because they are still comfortable with the old way, or because a personal recommendation seems to save them from the research required to explore the matter, make a decision and take full responsibility for the consequences.
Good and bad intentions aside, your few friends and family members can’t compare to the amount of knowledge that you can acquire online. Here is why you should seek more than the feedback of your small network, especially when it comes to money issues.
Experience length and variety
Seeking overall customer reviews and independent experiences can be a good idea because it allows you to get information that spread over months or even years, as well as feedback from a larger sample of people.
A co-worker may have had a good experience with a bank or an insurance company — so far — because there hasn’t been an event where things got complicated. This person probably was never late on a payment or filed a claim. So the fact that the experience has not been challenged makes it less valuable. If you’re doing a serious about finding out about a potential insurance provider’s practices, an online search can yield numerous sources with various experiences that show you how the company responds when things get tough — and that is what you need to know. Some websites also may give you some information about the reviewer, in terms of age, location, etc. Using this information you can draw comparisons to what you’re looking for.
Not everyone you know has similar expectations and requirements. If you’re asking others, for example, to recommend a financial adviser, someone may be raving about a past experience that was truly a success in his/her scenario because the adviser specialised in the particular area of this person’s need. Working with this adviser doesn’t guarantee the same results unless you verify that your situation is comparable to your friend’s.
Similarly people may have different priorities, like being prices-sensitive, service-oriented, speed-conscious, etc. A person who is price-sensitive may be happy to bank where low rates, no-annual-fees cards, and no ATM charges, for example, are offered. That doesn’t mean that this same bank will offer you the best mortgage or wealth-management tools. In addition, if you’re more service-oriented, you may find the level of service that you’re seeking doesn’t come at the same low cost.
In short, to compare apples to apples, look at the different facets of any situation. Otherwise, you are simply buying based on another person’s criteria.
If you come across a know-it-all type of person, you may be getting feedback that is less than substantiated. The person may have limited to no experience with what they are talking about, but still recommend it based on assumptions.
In this case, you are really giving up a great opportunity to do your own independent research and your decision accordingly. If you walk into a major purchase — say a home — without all the right information, you may be risking your investment.
If you see someone who is just agreeing with you without adding much out of their own experience, check again. Read more online feedback, ask around and check for any warning signs. Don’t just based a major financial decision on someone’s validation of your point of view.
By Rania Oteify
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