Where do you turn for trusted advice on managing your money or investing?
A growing number of people are looking to each other.
In community groups on financial Web sites, they confess their peccadilloes with credit cards or seek advice on what's a reasonable fee for a professional planner. At some of the more sophisticated investing sites, people discuss details of a company's finances or let everyone see what's in their stock portfolio.
It's like talking finances with people you meet at a party. Except, in this case, you probably don't know who you're chatting with, and there might hundreds or even thousands of them.
Some call it the "wisdom of the masses," meaning if we all put our heads together and share our knowledge, we can make better financial decisions.
The sites aren't meant to replace professional advisers. And you should never make major financial decisions or tax moves based on what someone suggests online. Even well-intentioned advice among peers can be wrong. And you want to be on the lookout for someone with a hidden agenda, like pumping up a loser stock so he can dump it.
But as a forum to debate investment strategies, exchange reference articles or get moral support as you straighten out your finances, the sites can be useful.
"I do like them, particularly for the younger generation," says Jim Bruene, editor of Online Banking Report. Bruene says the sites fill a niche for those who need a financial question answered but don't have someone they feel comfortable with or readily available to ask.
Online Banking Report recently noted that there are more than 50 companies in North America involved in online investing communities, including Zecco, StockPickr and the Motley Fool CAPS. A number of money management sites geared toward younger consumers also have sprung up, such as Wesabe and Geezeo.
Canada-based Stockhouse.com is one of the more established sites. It launched nearly a decade ago as a place for people to learn about investing, says Marcus New, chief executive officer. Stockhouse started with message boards, expanded into blogs and then into more sophisticated forums.
It's still evolving. The quality of commentary on online communities remains an issue, with some offerings better than others, New acknowledges. Stockhouse recently introduced a rating system that's based on what peers think of the quality of your comments and how well your publicly posted portfolio performs.
Canadian Kevin Graham, a die-hard do-it-yourself investor, says he uses Stockhouse as one more source of information.
"It's not the end of your investigation, by any stretch," the 51-year-old says. "You have to be very careful in an anonymous environment to whom you are listening to and what they are saying."
Connecticut-based Geezeo.com is a budgeting site that launched about a year ago. The site has discussions on hiring a financial adviser, buying a first home and money-saving travel tips. It recently added a Money Confessions feature where you can fess up mistakes or make an observation.
A recent anonymous user revealed: "I just spent $135 on my hair (and it basically looks the same.) I'm nervous about what my husband is going to say!!"
Another observed: "Wondering when the hell the price of sneakers went over 100 bucks. ... No wonder everyone is fat."
Jasmine Davila, 32, is a newcomer to Geezeo who recently posted a comment to celebrate that her credit cards are now paid off.
The Chicagoan says she would never act on advice that seemed too risky and never trusts everything she reads. "I take everything with a grain of salt, mostly because I like salt," she says.
But tips on Geezeo are mostly common sense, Davila says.
"I liken it to flossing," she says. "Nobody likes to do it, but flossing is not expensive or difficult. You know you should do it."
Geezeo co-founder Pete Glyman says users are quick to spot and challenge anyone giving slanted recommendations or pitching a product.
New York financial planner Gary Schatsky says the sites can be beneficial if they get you thinking about issues to research. But be wary of taking the advice, he says.
"The Web is anonymous," Schatsky says. "This could be a 10-year-old" giving you tips.
Gerri Walsh, vice president of investor education for the Financial Industry Regulatory Authority, warns: "You just don't know the motive behind the advice you are getting. You have to have a healthy dose of skepticism."
And be careful about how much you reveal about yourself online because you can open yourself to investment fraud pitches if someone uncovers your identity, she adds.
The sites are having an impact on how we invest.
Cogent Research recently surveyed more than 1,000 high-end investors and found that the sites influenced the investment purchases of nearly two-thirds. About a third reduced their stake in a fund or company based on peers' opinions. And around half said the sites made them question the accuracy of information from official sources, including their advisers.