I published the following article in March 2019 after a run-in with some of the FIRE bloggers. I decided to republish the post after even more arrogance reared its ugly head this week.
Steve Adcock, a good friend and business partner published an article on MarketWatch recently that lit up some crazy comments and criticism, both on the article itself and Twitter. The comments were full of judgment, falsehoods, and jealousy. It was crazy! You can read the article that ruffled so many feathers here on TMM.
I get so tired of people trying to discredit or tear down someone who does something they don't agree with. In Steve's case, he was accused of not really being retired. Oh really? What gives anyone else the right to define what retirement is and isn't? Or what is or isn't a high income? What income makes it easy to retire early, and what income doesn't? Seriously! Can't we celebrate the things people look at as successful, even if we don't agree with it? Has jealousy crept into our psyches so deeply that we have to tear others down to make ourselves feel good?
Fraud in Personal Finance
A few years ago, LendEdu got in hot water for creating a fictitious character, Drew Cloud, who they pawned off as an expert on all things finance. He got quoted in various major news outlets, including CNBC. The problem was, he wasn't real. They got busted in 2018. You'd think they would learn from that and change. They didn't.
This week brought more bad press for Nate Matheson and his company, LendEdu. As it turns out, Nate and his cronies “allegedly” set up a “pay to play” scheme that took money from companies to move them to the top of the rating list for their category. According to this CNN article, they settled the case for $350,000.
Nate aggressively reached out to bloggers offering to guest post on their sites. He offered nothing in return, just to give bloggers a post. Surely, this recent bad press would stop them, right? Well, not exactly. Just today (February 6, 2020), we got an outreach email to our TMM address from someone at LendEdu wanting us to put one of their articles on our site. Geez, people!
Aight! Today's rant is over. What follows is the article originally published in March 2019. Based on the recent events I've just described, it seems not much has changed.
What Gives Personal Finance Bloggers the Right to be Arrogant?
It seems I'm going through a period lately where things are bothering me. Today, I'm stepping into a hallowed ground by challenging the attitude of some of my fellow personal finance bloggers. I find a subset of them that is incredibly arrogant. For the life of me, I can't understand why.
Here's how the story unfolded.
Today's post (or rant if you prefer) came as the result of my financial advisory firm's routine audit, which wrapped up this week. Let's be clear. The only people to whom an audit is routine are the auditors. The one getting audited does not share that opinion.
When I got out of my audit and back to the office, I saw an article from one of my good blogger friends, Jimmy, over at The Physician Philosopher. You may remember Jimmy. He's an anesthesiologist who got through med school reading at the bottom 5% of his class. I interviewed him on the blog about his experience last year. It was an inspiring story. At the time of the interview, he was an anonymous blogger. He has since identified himself.
Anyway, the title of the article is Why Some Financial Advisors Are Better than Others. I agreed with much of what he said. I did, however, take issue with some of it. He welcomed comments and dialogue. I'm not sure he expected my responses. He was gracious in his response back to me. He listened to my arguments, voiced what he agreed with, and let me know the things he didn't. That kind of healthy exchange seems rare these days.
Jimmy is one of the bloggers for whom I have a great deal of respect. He's not afraid to mix it up, defend his positions, and take as much as he gives. As we debated topics with each other over the last year or so, our friendship grew. He reminds me of a younger version of myself.
And let me be clear. Jimmy is not one I'm putting into the category of an arrogant personal finance blogger. Like me, he has strong opinions. He does not let those opinions move into arrogance. Some of his brethren in the physician blogger space fall short of the arrogance piece.
Alright. With that background and my defense of my good friend Jimmy, let's have at it.
My Chippy mood
Have you ever watched a team sporting event (basketball, football, etc.) where the announcers said, “it's getting a bit chippy out there?” That's kind of where I am right now. I'm feeling a bit chippy.
Usually, I don't play the blame game. I'm going to make an exception this time and point to another one of my blogger friends, ESI Money. I love his blog and read it a lot. ESI made my top ten most of the most influential bloggers. He wrote a post last week about people wanting results but not wanting to change. He opened the post with the following: “OK. I'm feeling a bit ranty today.” So out of convenience, I'm going to blame ESI Money for me feeling a bit ranty lately. Or, if you prefer, a bit chippy.
In some ways, I may be calling out myself. I can be a bit opinionated at times (no surprise to those who know me). I do my best to be respectful and argue my points with passion backed by logic or data (see intro). Some people would say I fail at that at times. I'm OK with the criticism. Sometimes I deserve it, and it forces me to think about the way I'm presenting things.
After reading Jimmy's post and thinking about the hundreds, if not thousands of other posts I've read over the years, it dawned on me. These bloggers can say anything they want with no accountability to anyone for whether it's the truth or not.
And please. Let me be clear again in case you missed it. I'm not talking about Jimmy at The Physician Philosopher and or ESI Money. The audit reminded me that I'm accountable to the Commonwealth of Virginia for what I say and do around personal finance, investing, and other related topics.
And as hard as it was getting everything together for the audit, I'm glad I'm in a business that has accountability.
Herein lies my issue with the nonregulated personal finance blogger space. They are not accountable to anyone. I'm sure they would argue that they're accountable to their readers. True enough. If a visitor doesn't like what they read on my or any other blog, there are plenty of other options a click away.
Here's the difference. They won't get sanctioned or worse if they put out inaccurate information. Depending on who holds the firm's registration, that could happen to a blogger/advisor giving bad advice. Or even good advice that people acted on and had a bad result. At the very least, the violation will be noted on their registration documents, as are complaints from clients or prospective clients. That's why I recommend that people check the regulators as a starting point when looking for a competent advisor.
There is no vetting mechanism in place for bloggers.
Should the personal finance blogosphere be regulated? That's an argument for another day. I'm not a big fan of burdensome regulation. I do, however, think there should be some accountability for bloggers giving financial advice.
Other bloggers have written about this. Steve at Think Save Retire, (you can now find Steve here) wrote one last year saying we don't need any more personal finance advice. In another article, Steve talks about breaking through the relentless personal finance echo chamber. Both of these are great reads from a respected member of the FIRE (financial independence/retire early) community.
Steve and his wife, Courtney, retired from the corporate world in their early thirties. They now travel the country in a 200 square foot Airstream trailer. Steve, like many early retirees, will tell you he's not retired, just doing things he loves to do.
He's open and honest about the shortcomings of the community, of which he's an active member. That's rare and refreshing.
The Echo Chamber
Speaking of the echo chamber, it seems the vast majority of the personal finance space spends most of their time there. Many of them are Dave Ramsey's disciples. Dave Ramsey has helped thousands upon thousands of people get out of debt. He's the father of the snowball method used by his students to eliminate that debt. He advocates what he calls seven baby steps to get on the road to financial freedom. All of these seven steps are sound.
A few, not many, bloggers have challenged Dave on some of his ways. Some have talked about how he demeans and berates those who make mistakes outside of the Ramsey way. Others have challenged him on his investment advice. He advocates using load mutual funds (with sales charges) that most financial bloggers think are the closest thing to the devil himself. His asset allocation suggestions put conservative people at risk of losing more than they thought or could handle.
Challenge him at your peril. A couple of bloggers wrote reasonable, thoughtful posts challenging some of Dave's advice. The posts were well written, and the points well-argued. When Dave or someone in his organization got wind of it, they blocked these bloggers from Dave's Twitter account. Yup. It happened. I saw the Tweets that showed the block.
At last year's FinCon conference, which is the whos-who conference for bloggers and financial media, Dave Ramsey's organization was everywhere. He's like a deity in large parts of the community. His daughter was a speaker. Chris Hogan was the closing keynote speaker. I felt like I needed to genuflect when I was around them. It's crazy.
For the vast majority of the personal finance community, it seems challenging Dave is off-limits.
The Three-Fund Portfolio
Another sacred cow with personal finance bloggers is the concept of the three fund portfolio. The three-fund portfolio came out of the Boglehead community and has been enthusiastically adopted by many in the blogosphere. Bogleheads got its name from Jack Bogle, founder of the index fund giant Vanguard Funds. The three-fund portfolio consists of three Vanguard funds:
- (VTSAX) Vanguard Total Stock Market Index Fund
- (VTIAX) Vanguard Total International Stock Index Fund
- (VBTLX) Vanguard Total Bond Market Fund
All three funds are index funds. Vanguard funds are among the lowest cost funds available. The theory of the three-fund portfolio says that the vast majority of mutual funds underperform the market (that's true). The way to beat them is to invest in the market and get what it offers.
In my financial advice business, I implement a market-based investment approach. It is not, however, the three-fund strategy. There is little discussion of risk or how to allocate your money across the three funds or what kind of return one needs to accomplish a goal. Generally, the FIRE community uses a simplified goal of accumulating 25x your annual expenses so you can live off 4% of that and not touch your principal. I don't have the time or space to talk about the holes in this strategy.
I've had some conversations with bloggers about it. It was like I was looking into the eyes of a deer caught in the headlights. There's almost a Zen-like persona that surfaces in some when you dare to challenge this prevailing view.
I'll give you two glaring examples of hypocrisy in the personal finance blogging space.
A great example is a worshipful attitude many have toward Dave and his methods. Even though he advocates selling A-share load mutual funds (see Echo Chamber, Three-fund portfolio above), there a precious few bloggers who write anything questioning this advice.
On the other hand, I've seen numerous articles denigrating load funds and actively managed funds as enriching those who sell them while ripping off those who invest in them. Can someone help me understand why, even though Mr. Ramsey advocates these funds, he gets a pass?
They went after Suze Orman en masse with laser-like focus when she challenged the FIRE community but not Dave Ramsey.
Maybe they are afraid to poke the bear. He's a big one for sure. I'm confused by it.
But then I'm a Boomer. We're easily confused.
Personal Capital is both a technology company and a registered investment advisor. They offer a free financial tool for investors to track their net worth, investments, loans, and all things personal finance. You can link all of your accounts and see everything in one place. You can even track your budget. It's a fantastic tool. And they offer the tool for free.
Some bloggers rail against financial advisors whose compensation is the assets under management (AUM) fee structure. That means they get paid by charging a fee based on the assets they manage for a client. Physician bloggers, in particular, speak out forcefully against this method.
I believe in choice. They seem to disagree when it comes to advisor fees. Here's a suggestion. Speak your mind about your preferences, tell people why you believe it's right, choose the way you want to go, and let other people make their decisions. Stop shaming people for making decisions differently than you, even if it's choosing advisor under the AUM model.
I was part of the What's Up Next Podcast with three other financial advisors who had a healthy discussion around whether the blogosphere is fair to the advice community. I'd encourage you to listen to the podcast. You'll get a good sense from the four of us on what it's like to be bloggers and advisors in the community.
Personal Capital manages close to $8 billion under the assets under management fee structure. Almost every blogger who uses them personally is an affiliate marketer for them. Affiliate marketers get paid a commission every time someone buys something from a vendor. In this case, if someone clicks a link to Personal Capital from a blogger's site and opens an account, they get a commission from it. For many of these bloggers, it is one of their most lucrative sources of revenue.
I don't have a problem with bloggers making money from affiliate marketing. I have affiliate links on my site too. However, I do find it ironic that they promote a company that grew to be one of the largest in the industry by managing money under the AUM model they hate so much.
Maybe it's their passive-aggressive way of poking the bear that is the AUM model by only using their free tool while they get paid to promote it.
Many bloggers don't seem to think there's anything wrong with that. Trust me. A regulator would.
A Notable Exception
Like in any group, the extremes often get the most press. This article fits into that category. There are far more personal finance bloggers who are helpful and show humility in their writing. Most care deeply about the content they write and how it helps their readers.
And not all who recommend Personal Capital fit into the category I've just described. A notable exception is Physician on Fire. In fact, in a recent article, When Your Income Becomes Your Enemy, he goes out of his way to disclose his affiliate relationship with Personal Capital, what he liked about them, what he didn't like about them and the fact that he got paid for recommending them.
That's one of the many reasons I love PoF and his blog. He's honest, has humility, writes detailed, well-researched articles that help physicians and anyone interested in taking care of their personal finances.
The arrogance I see in some circles comes when some of us challenge the conventional wisdom and accepted methods of the FIRE and personal finance blogging community. There seems little room for other views. When those views get spoken, the junk hits the fan. In the podcast I mentioned earlier, Doc G, the host, asked me about an interaction I had at FinCon with Mr. Money Mustache. Many consider Pete (Mr. Money Mustache) to be the father of the FIRE movement. I have the utmost amount of respect for Pete and the movement that took off from his blog.
Pete was on a panel with four other great bloggers. During the Q & A, someone asked him why there was tension between the financial advice and blogging community. Pete was the first to answer. His answer made the hair on my neck stand up. He spouted off a litany of things that financial advisors do; things like, they don't want you to retire. They want to keep managing your money forever. They sell you stuff you don't need. You get the picture.
After the discussion, I approached Pete at the table privately. I asked him why he had such an attitude about financial advisors; that I was an advisor and in my 30-year career had never done any of the things he just described. I challenged him on living in the bubble of the Fire community, which maybe represents 3% – 5% of the public. There are a ton of people outside the community that read his blog. Many of them need the help of a financial advisor. I challenged him to use his massive platform to educate those people on how to find a competent advisor.
He politely listened and ended with, “maybe I should write a blog post about that.” To date, I haven't seen the post. Maybe Pete's just too busy.
Where I live, the primary employer is the Federal government and contractors that serve it. What's wrong with people in those jobs working for as long as they want and retiring with a comfortable pension, full health care benefits, and plenty of time to enjoy them?
Here's a news flash, Y'all.
We're living well into our eighties and nineties these days. That's a lot of years to enjoy the fruits of our labor. Contrary to the mindset of many younger bloggers, retirees in the traditional sense are having a ball in retirement. Most of them are happy and very content with the decisions they've made on their career.
I love that you spend less than you make, save and invest the difference, and reduce or eliminate your debt. Those are great things to be doing. You are a minority – a growing one, but still a tiny minority. Live the way you want. Teach others how you're doing it. Let them decide if they wish to follow it or not.
Stop speaking badly about those who don't. Some people live paycheck to paycheck. They're working hard, contributing to society and doing the best they can.
Please don't mistake my post as a slam on the personal finance blogger community or the entirety of the FIRE community. I'm a personal finance blogger too. We all learn from each other, and we should all be willing to hear views different from our own. All I'm asking us to do is engage in a bit of self-examination.
The vast majority of the bloggers I read are Millennials writing to a Millennial audience. I wrote a post about how my attitude toward Millennials changed when I met some of the bloggers I now call friends. Most of what I read in the personal finance space is good.
It baffles me how some in the community speak harshly about those that disagree with them but overlook the hypocrisy of their own blogs. Speak your minds, talk about how you've done it, help other people who come to your blog. Don't shame people when they go a different way than you.
Toward the end of the year, I read posts of several bloggers encouraging people to give back. I agree with them. Here's an idea on how to do that.
Take the knowledge and skills you have about personal finance and teach them to the middle, high school, and college kids at your church, synagogue, or other places of worship. Alternatively, find a neighborhood community center and teach people there.
We all talk about how there is a lack of education about personal finance. Here's our chance to do something about it. Let's have a little more empathy. Let's help those outside our spheres of influence. Let' teach those who need our help.
Now it's your turn. Have at me. I know I've ruffled some feathers. Where did I go wrong? Do you see any hypocrisy here?