In general I support Personal Finance articles.
I state the obvious when I say the internet has revolutionized our lives forever; with access to information unprecedented, we are able to get answers and guidance to almost any facet of our lives, no matter how personal or how mundane.
So, what’s there not to like?
When your emotions are being manipulated for the sheer sake of driving site traffic.
One of the biggest fears I hear from clients is running out of money, being without money, the market taking their money, losing the ability to make money, or some combination of those.
Guess what tends to amplify those fears?
Reading a personal finance article magnifying a financial trend du jour or watching a financial show that leans toward financial ‘entertainment’.
I am painting with a broad brushstroke here, but the financial media can lack meaningful content that translates into actionable steps or into increasing one’s financial literacy.
Since I usually spend a bit of time addressing these client concerns that are a result of something recently read or seen, I thought I’d just share that, while alot of information out there is credible and timely, don’t necessarily take it at face value just because someone who sounds authoritative said it.
As a member of the financial community I get included in calls for press requests for a very broad range of financial issues. Many of them are good ideas but sadly some are chasing after some hot concept that is getting traffic on the internet.
Examples: Municipal Bonds’ Defaults! Egypt In Turmoil, Are Your Stocks Safe! Bernanke Just Said Something!
It can be really hard to keep things in perspective at times, and here’s what I usually respond to my clients with:
1) First I acknowledge that indeed ‘x’ topic is getting alot of attention right now.
2) How do you see this affecting the short term goals you identified in your Financial Plan?
3) What recent changes, if any, affect your confidence in the plan and it’s respective asset allocation and diversification?
4) Then I walk through my observations on the topic and what’s likely behind the reason it’s currently getting attention.
There’s an inverse to this: When a client reads an article about how ‘x’ asset class is going to make ‘y’ amount in the next few month/year/decade. Or an article about ‘Best Fund Manager’ of the year. Or a colleague of the client who says ‘x’ stock is absolutely hot right now and you better get in it! In general along those lines.
The trick here is not identifying luck as skill and not confusing anecdotes with data.
This isn’t intended to take away from a client’s interest to learn, it’s intended to encourage a pause when reading or seeing a program that leads to questioning the financial plan that is in place.