Personal Finance Guru Ric Edelman Says Wall Street's Complex Products Take Young Investors 'Hostage': 'Many Are Getting Their Financial Education From TikTok...'

Personal-finance guru Ric Edelman says the United States is "failing its youngest investors," claiming that despite years of effort, "we spend a lot of time trying to improve financial literacy — we stink at it."

What Happened: Edelman, speaking with CNBC's "ETF Edge" argued that inadequate schooling leaves new graduates chasing zero-day options and crypto hype instead of long-term plans.

The Edelman Financial Engines founder points to a market that now sees retail traders driving roughly 45 percent of all U.S. options volume, per NYSE up from 34 percent before the pandemic, with half of that action concentrated in contracts that expire within five days.

A Wall Street Journal snapshot shows those ultra-short bets helped push overall options traffic to record highs in 2024, stoking what regulators call "gambling-style" risk.

Younger Americans are also the group most likely to lose money to online-shopping fraud, reporting losses 86 percent more often than seniors, Federal Trade Commission data show. "When so many are getting their financial education from TikTok, that's a little scary," Edelman said, urging novice investors to seek vetted advice instead of social-media tips.

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Part of the fix, he insists, is early classroom instruction. Twenty-seven states now require a stand-alone personal-finance course for high-school graduation, up from 11 just four years ago, but millions of students in the rest of the country still learn about credit, insurance, and investing only "through the school of hard knocks."

Edelman also faults Wall Street for "complex, expensive" products that "make you a hostage rather than a customer" — an industry tilt he says pushes young savers toward get-rich-quick plays instead of diversified portfolios. To that end, he urges regulators to keep shining a light on steep-fee offerings and for employers to expand no-cost retirement counseling.

Why It Matters: While Edelman’s comments were directed at young investors, its safe to say that most Americans still stumble over basic money skills. FINRA's latest National Financial Capability Study found only 4% aced all seven questions on its financial-literacy quiz, and modest gains on topics like inflation did little to lift the overall grade. The results reinforce calls for stronger classroom and workplace instruction.

That knowledge gap is costly. Consumers who don't understand interest often carry credit-card balances they can't afford, a dangerous habit with average rates near 20%, according to Bankrate. Personal-finance star Suze Orman pressed the point on TV in early 2024, estimating that "probably 95%" of Americans are financially illiterate.

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