MOMA Meme: Be careful who you take advice from
Patrick over at Cash Money Life tagged me to fill out a meme called "My One Money Advice." I guess the point of this meme is to share a favorite tidbit of personal finance advice. It's been hard for me to pick just one, since there are a lot, from the tried-and-true to the offbeat. So I chose the probably controversial yet common sense "Be careful who you take advice from." Consider the motives and positions of anyone whose advice you are taking, and be wary of anyone whose motives don't wholly align with yours. This should be common sense, but I'm amazed at the rampant stupidity I see splattered all over the PFBlog-o-sphere masquerading as good advice. Mapgirl had a great post a week or so ago alluding to this fact. Read it, and then be sure to check out the comments.
Whenever possible, you should seek the advice of a qualified professional. Everyone's financial situation is different, and the people you interact with probably have quite different needs and goals than you do, and their strategies will necessarily differ from yours. Having someone who is capable of assessing your situation based on your current and future income, your expenses, your obligations, your values, and your goals is a lot more important than people realize. Popular personalities, like Suze Orman or Dave Ramsey have a quite a few rules of thumb, but the reason these people are famous is because they're SALESMEN, not good financial planners. There are a lot of personal finance bloggers who fit into this same category. They generally have no formal training or experience, and all they care about is driving up their traffic and collecting ad revenue.* One widespread sign of this are people who post "ask the reader" type posts, which are a great way to drive up traffic and comment count with relatively little effort, even though they're often loaded with bad advice. The other sign is my well-known pet peeve of page ads, which have a frightening tendency to run totally counter of the intent of the blogs on which they appear, though that doesn't encourage most bloggers to turn them off. Credentialed personal finance bloggers are few and far between, and they only get a tiny fraction of the traffic of the most popular ones.** And the credentialed ones, if they even answer personal questions in a weblog capacity (there are a lot of ethics issues with this), won't do so without a consultation and a bit of turnaround time.
I know a lot of people don't like the idea of actually paying for good advice, especially in this era of thievery of intellectual property and free information overload. However, everyone's financial situation is different and most people would greatly benefit from a professional consultation. Yes, in order to talk with a qualified professional, you will probably have to PAY for it, but that's not necessarily a bad thing. A fee-only financial planner or someone with fiduciary responsibility is someone who will work for YOU, not for themselves. And I daresay, when we're talking about ones entire financial future, it's a small investment that can have a huge payoff.
I'm probably supposed to tag someone, but whatever. If My One Money Advice has inspired you to post, then go for it.
*I keep wondering when a personal finance or investment blogger will get sued for promulgating bad advice. Sure, everyone has those lame little disclaimers on their sites, but I doubt they're legally rigorous, especially if they aren't easily visible and clearly written. Probably the biggest barrier to lawsuits is the lack of positive identification of the authors.
**It should be noted that I am not currently a credentialed blogger. However, in a year's time I will have completed all the requirements for accreditation, and I certainly will not be doing personal finance consultations over this blogspace.
Whenever possible, you should seek the advice of a qualified professional. Everyone's financial situation is different, and the people you interact with probably have quite different needs and goals than you do, and their strategies will necessarily differ from yours. Having someone who is capable of assessing your situation based on your current and future income, your expenses, your obligations, your values, and your goals is a lot more important than people realize. Popular personalities, like Suze Orman or Dave Ramsey have a quite a few rules of thumb, but the reason these people are famous is because they're SALESMEN, not good financial planners. There are a lot of personal finance bloggers who fit into this same category. They generally have no formal training or experience, and all they care about is driving up their traffic and collecting ad revenue.* One widespread sign of this are people who post "ask the reader" type posts, which are a great way to drive up traffic and comment count with relatively little effort, even though they're often loaded with bad advice. The other sign is my well-known pet peeve of page ads, which have a frightening tendency to run totally counter of the intent of the blogs on which they appear, though that doesn't encourage most bloggers to turn them off. Credentialed personal finance bloggers are few and far between, and they only get a tiny fraction of the traffic of the most popular ones.** And the credentialed ones, if they even answer personal questions in a weblog capacity (there are a lot of ethics issues with this), won't do so without a consultation and a bit of turnaround time.
I know a lot of people don't like the idea of actually paying for good advice, especially in this era of thievery of intellectual property and free information overload. However, everyone's financial situation is different and most people would greatly benefit from a professional consultation. Yes, in order to talk with a qualified professional, you will probably have to PAY for it, but that's not necessarily a bad thing. A fee-only financial planner or someone with fiduciary responsibility is someone who will work for YOU, not for themselves. And I daresay, when we're talking about ones entire financial future, it's a small investment that can have a huge payoff.
I'm probably supposed to tag someone, but whatever. If My One Money Advice has inspired you to post, then go for it.
*I keep wondering when a personal finance or investment blogger will get sued for promulgating bad advice. Sure, everyone has those lame little disclaimers on their sites, but I doubt they're legally rigorous, especially if they aren't easily visible and clearly written. Probably the biggest barrier to lawsuits is the lack of positive identification of the authors.
**It should be noted that I am not currently a credentialed blogger. However, in a year's time I will have completed all the requirements for accreditation, and I certainly will not be doing personal finance consultations over this blogspace.
Labels: credentials, meme
6 Comments:
Great advice, and I don't think it's controversial at all.
Most "good" personal finance bloggers have a disclaimer informing readers they are not professionals, and if they deal with a reader question directly, almost always state in the response, "I am not a certified financial planner, but here on some things to consider in your situation." Then they follow that up with a comment about seeking professional advice.
I agree with you though, there are several bloggers out there who dispense advice as though they are qualified to give it, even though they are not.
(Is the disclaimer enough? I don't know, but I always try to clarify. It's the right thing to do.)
I'm not sure that a disclaimer would hold weight in a court of law. Now, if you made people sign a form (electronic or otherwise) before dispensing advice with your disclaimer on it, that would probably hold up.
Even though most people have a disclaimer, their actions are frequently misleading. Like, did you know that Dr. Laura has a PhD in physiology as her only "doctor" credential? If you act as an advisor while not qualified to give advice, you may mislead people into doing certain things, regardless of what disclaimers you post. In a society like ours, is it a risk you're willing to take?
As a practicing professional CFP and a PF blogger too, this topic is near and dear to my heart. One of the reasons I launched my blog was to fill an obvious void. The success (ie, traffic) of many PF bloggers indicates that people want to read about money issues. The problem is, as you point out, that the reader is left to separate the wheat from the chaff. Overall I am very impressed with the knowledge level of most amateur financial bloggers, but every once in a while I shudder with what I read.
You also raise an issue I do not think most non-professionals understand. The financial services industry is highly regulated. EVERY post I make goes through a compliance review prior to publication. In the world of blogs I may not always be timely (for example, wild swings in the markets may take a few days for me to comment on) because of this review, yet I am fortunate. Several colleagues have told me that their compliance departments will not allow them to blog as they are unwilling to invest the time to do the required supervision. Thatis probably why there are not more professionals writing blogs.
I do sometimes get jealous of other bloggers who I perceive have page views and subscribers which are measured by the thousands per day while I measure my traffic in 10's and 100's. Is some of this the natural tendency for people to read what they want to hear? "Give the people what they want" is an easy trap to fall into. People want to read that they don't need to pay for advice, that insurance is a rip-off, and here is the easy way to do it. But the reality is some people do need help, insurance is right for some people, and the easy rule is there everyone is different.
Dimes, I applaud your courage to speak out and deliver the message readers may not want to hear, but need to.
I have learned lots of great things from fellow PF bloggers, although of course it does go without saying that just because something worked or is right for someone doesn't mean it will work (or is right) for you.
Dime, thanks for helping out with the MOMA meme. You are absolutely right; readers should be wary about advice given; especially on the Web.
So far, Art's is the only "professional" blog I have seen to date. That's said, there's a lot of good content I have read on non-professional blogs -- and some not so good ones.
I think it's fine for non-professional bloggers to blog about personal finance as long as they don't cross the line - i.e., give professional advice.
I'm just now seeing this post. Thank you for the link. I am so glad you agree how important it is to pick and choose the source of financial advice. (Note it's the source you pick and not the advice itself, because sometimes it's a bitter pill *wink*)
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