When I started this blog, I was new, extremely unfamiliar with the wold of blogging, and had limited experience with journalism.
My knowledge of journalism was mostly gleaned from the TV shows and comic books I read as a child. I had assumed journalists went to school, signed onto some form of ethical standards, and then when about the business of reporting as objectively and responsible as possible. Frankly, and naively I had this “Clark Kent” and “Louis Lane” image of reporters.
As a young man working in personal finance, I was surprised to learn my perception of journalism, was at best, a romanticization fo a bygone era. Clients would consistently bring in newspaper clippings of personal finance articles, that were so biased, and so factually incorrect they boarded on the criminal.
When I launched, several of my initial posts were explicitly written to address much of the dangerous and misleading information that is published. Exposing this information has connected me with several journalists and editors at major publications, most of whom do a great job of being objective.
However, it has also given me a peek behind the curtain, and the state of modern journalism and report has me scared!!!
As a result, I would like to share with you nine reasons the financial advice you are reading may be wrong.
Experience Isn’t Everything, but it’s a Lot More Than Opinion.
The Blogosphere is ripe with bloggers that have worked in finance for a few years before becoming a blogger. Indeed, a few years’ experiences in finance will give a blogger a leg up on the average, untrained individual.
However, the question remains on what is the quality and quantity of that experience???
Most firms and banks do not hand over the most complicated cases to rookie employees. Longevity allows for a perspective that is gained and refined over time. It’s about understanding that having met over 7,200 people throughout nearly 20 years for financial planning, you become aware every situation has to been considered or dealt with.
It’s about knowing that events that only happen a slim percent of the time will still occur hundreds of times and need to be planned for. There will be a learning opportunity, and it’s enough that experienced people appreciate the statistical nature of the business, and be more inclined to worry about it versus the rookie employee who doesn’t know the norm from anomaly yet.
Read all of the Print, not Just the Fine Print.
Personal finance reporters and bloggers are not regulated like financial advisors. Since most reporting is not considered financial advice, no one is checking financial blogs for accuracy or balance unless a financial firm or advisor write the blog.
We are becoming familiar with fake news. I’m sure you may have at one time needed to visit Snopes.com to verify some outlandish claim like “Hilary Clinton is really a reptoid.” Fake news doesn't just damage politicians; it can hurt your wallet.
I fear that we have become so divided politically, that many people will accept or even spread a lie, as long as that lie will damage the opponent. I worry about the weaponizing of fake news and the new jerk reaction that will be taken by governments and the media to counteract it.
Recently, I read a Tweet from a very vocal anti-Trump Twitter user. The tweet read “Trump golf scores under investigation .” implying that Trump was artificially faking his numbers. The tweet received hundreds of comments and tweets, all taking the headline for face value, and assumed Trump had falsified his states.
The reality was, Trump's account was falsified with fake and unflattering figures by anti-Trump hackers.
The real victim is not Tump; it was credibility. It does not matter if you like Trump, prefer Hillary Clinton, or have your heart set on another candidate. Fake news hurts us all because if we are constantly bombarded with it, we lose faith in its credibility.
As children, we are warned numerous times not to “cry wolf,” yet heading into adulthood, we seem to lose that lesson along the way.
The fallout is politicians demanding solutions to fake news. Facebook has taken a beating for its role in facilitating phony news; Facebook's kneejerk reaction has been to stifle free speech with overly aggressive spams filters.
I have numerous blogging friends who have had innocent posts flagged as spam on Facebook recently. The more fake news is weaponized, the more you will see regulators and the political elite move against it. The casualty will be our freedom of speech, so please read the fine print and think objectively before you share a post.
Caveat Emptor (Buyer Beware).
Several months ago, I had an email exchange with a prominent journalist who writes pieces for some of the more significant, more well-known publications. He was looking for validation on an opinion-based idea he had. I could tell from our exchange I wasn’t giving him the quote he was looking for.
I recall that I finally said to him, “Look, no broker-dealer is going to let their reps do what you’re proposing.”
I will never forget the response I received back: “It’s ok. My audience is do-it-yourselfers.”
I’m not sure producers of content should be advised that those tasked with protecting consumers wouldn’t approve. There are exceptions to almost everything, but it’s hard to fit all of those nuances into a short paper article.
The Game Might be Rigged.
Let’s say that a blogger wants to sell workout DVDs that teach how to get a body like a sprinter. The blogger’s premise is that sprinters are better athletes than long-distance runners. To prove their hypothesis, the blogger chooses to compare two athletes and test their athleticism by comparing how much weight each can squat lift, respectively.
The sprinter most likely will be able to squat lift more weight than the marathon athlete. However, the metric ultimately fails to support the hypothesis. A marathon runner and a sprinter, face different demands and will look to improve themselves in various manners.
The standard was set by the producer to stack the results. In other words, the game was rigged from the start. We see this in the financial context as well. Definitions and examples get used to stack the results.
Opinions are Not Facts, Either, no Matter How Loudly Stated.
One great thing about blogging is that people are free to share their views and insert their personalities into the content. Keep in mind, however, that opinions are not facts. It’s ok to have opinions. However, you should back up your opinions with facts.
It’s not ok to pass off your opinions or the opinion of others as fact.
Value and cost are subjective; what one person may consider an unnecessary expense; someone else may find a money-saving measure.
Note: The presence of a quote does not make content more ‘objective.’
Experts May Be Fake
Last year, the financial content community was set abuzz over finding out student loan expert, Drew Cloud, was fake. It wasn’t just small bloggers that were hoodwinked; Drew was quoted by the likes of The Washington Post and CNBC.
As it turns out, Drew was a fictional character fabricated by a student loan refinancing company, LendEDU. It’s not surprising that someone on the internet turned out to be fake.
The amazing part was the heroic efforts that the company had to use to pull off this ruse. Sadly, this is not an isolated incident.
Recently, Patricia Russel of Finance Marvel turned out to be some sort of ruse. Luckily, Casey Bond caught on and broke the news that Paricia Russel was fake.
Ironically, while Casey engaged in some awesomesauce investigative journalism, some of her conclusions only add to the problem. Russel had falsely claimed, among other things, that she was a Certified Financial Advisor (CFP), and based on that lie, journalists quoted her in various publications.
Casey goes on to mention if any of the journalists performed some due diligence and verified here credentials; they would have been wise to the ruse. The problem with Casey's reasoning it that it presupposes had Patricial had a CFP, she would of in fact been an “expert.” Sadly having a CFP or any credential doesn't mean you are an expert or that you give good advice.
The CFP Board has done an excellent job of marketing itself as the defacto preferred credential in the industry, however its really just intelligent marking.
The CFP Board is not a regulator; one does not need to be a CFP to become an advisor. Additionaly, there is no guarantee that a CFP will provide sound advice or even relevant advice. In fact, up until a few years ago, you didn't need a college degree to become a CFP, and the board has a long history of scandals and only recently started requiring members act as fiduciaries.
You should NEVER rely on any credential alone of anyone to make a decision. Had any of these journalists that quoted Patricia Russel had any relevant experience in personal finance, they would have known Patricia and Finance Marvel was a sham without the all the super-sleuthing.
Patricia reached out to Your Money Geek three times to try and get us to publish her posts. I took one look at her site and knew something was off.
The site was too perfectly designed, and the bio didn't make sense, given that everything she discussed was about credit. Most real CFP's don't devote there practice to credit improvement. I would imagine a CFP is to credit repair what a Ph.D. in Dentistry is to a Chiropractic practice.
To put it simply, the fact that not one journalist stopped to think why A CFP was so overly interested in credit repair is the real problem. Related, the fact these journalists felt a CFP was a suitable credential is another problem. Lastly, the fact they never checked out if she was real is an entirely different problem.
Why do I care if the mainstream media has egg on their face?
Well, the kneejerk reaction will be for media outlets to require every source for a quote in an article to have CFP and Ph.D. in finance. My concern is you don't need to have a fancy business school degree to be a money expert. The school of hard knocks to also a great teacher.
I think we can all learn from someone who has been bankrupt and rebuilt their life, just as must and possibly even more so that an Ivy League college grad. Innovation often comes from people with the experience and those who are in the trenches living it every day.
Who would you instead take bodybuilding advice from; an award-winning professional bodybuilder or a skinny guy with a Ph.D. in nutrition?
Flawed Research Methodologies
The success of online content in the search engines is dependent mainly on the number of backlinks and social media shares a piece of material receives. It is, in large part, for this reason, that the producers of financial content network together
When bloggers need sources for information, they will often reach out to their networking groups and ask for related posts. If anyone else in the group is guilty of the mistakes listed here, it may not be caught, and incorrect content can inadvertently get endorsed.
This can also fall under the Buyer Beware, but more so, “Blogger Beware.”
“You Don’t Know What You Don’t Know.”
When I was in the service, we used to use the mantra of “you don’t know what you don’t know” as a challenge to improve our plans. We used this concept to challenge our beliefs and assume some unknown event could occur that we would otherwise be blissfully unaware of.
The idea was to find a plan's most significant weakness and address it, and fortify the project until that weakness was no longer a liability. The objective was to not just settle at making a plan “bullet-proof”; instead, it needed to be “bazooka-proof.”
This concept of not knowing what we don't know applies to the internet today.
The internet is a wealth of information; however, at the end of the day, our access to information is limited to our own biases and experiences. You cannot search online for things you are unaware of.
Additionally, people rarely want to consider what might go wrong, seldom do people want to admit or plan for an unlikely divorce, disability, or lawsuit. People must build a financial disaster preparedness plan, to handle the curve balls life tosser your way. Developing a plan doesn't mean that you have to skip early retirement; in fact, having a preparedness plan is what will allow you to retire early.
When you know that you are prepared to handle an emergency, you will have the confidence and peace of mind to enjoy a worry-free retirement.
The Truth is not Always Popular.
Social media makes it easy for people to interact with online content in new and unique ways. We can leave comments on blog posts, upvote or downvote on Reddit, or share content on Twitter and Facebook. The issue is that authors of blogs can moderate comments and squash dissension.
Additionally, those that profit the most form misinformation has an economic incentive to distribute not only their opinion but the resources to attempt to defeat the counterpoint. There is a whole cottage industry of people who sell fake reviews, likes, upvotes, downvotes, retweets, and so on.
Reddit has a bunch of wonderful attributes; however, being supportive of the minority views isn’t one of them.
Ideas and concepts that are outside of conventional thought are not likely to get social media attention and shares. Because of that, many content producers have started adopting populist messages. This is a flaw with “group think,” or a herd mentality, to move forward. Eventually, someone challenges the status quo. It’s an unpopular opinion.
The problem remains that websites and blogs are monetized mostly by the volume of traffic received, which means that the unpopular opinion, even if based on truth, is uneconomical and, therefore, not a profitable stance to take.
Standing Apart from the Masses
I’m not sharing this information to criticize financial blogs or any blogs for that matter. I have two objectives in writing this post:
- I want people to get accurate and balanced advice that works for them and their situation.
- Secondly, I want to move the financial planning forward.
My goal is for financial planning to become a science similar to medicine. For life and financial planning to become a science, we have to challenge the status quo and hold our peers to a higher standard.