The more I write about various so-called financial “experts” (who are not really experts) the more it seems I run into additional examples of their non-expertise.
In the latest example, I was listening to the Masters of Money podcast (I enjoy and recommend it!) interview with Joe Saul-Sehy from the Stacking Benjamins podcast Joe spilled the beans on both financial advisors as well as TV experts. It was an awesome interview and I wanted to be sure I recorded what he said.
By the way, I LOVE Joe. Probably because he and I are on the same page in almost every way financially. We have very similar money philosophies.
Financial Advisors are Not Experts
Joe told the story of how he was a successful financial advisor/planner back in the day. Despite the fact that he was advising people on their finances, his own personal finances were in shambles. He was in debt plus had some major tax issues caused by his ignorance of the law. It was a complete mess.
As I was listening to the interview I was thinking, “And this guy is advising other people on how to manage their money?” Sure enough, PT (podcast host who is also an awesome guy) said almost the exact same thing in his wrap up. He noted that you have to be very careful who you listen to and take financial advice from because many financial advisors simply don’t know that much about managing money.
Here are his exact words:
Be careful who you use for financial planning advice.
Joe talked about jumping in and working for his financial planning franchise, while still a DJ, without having much financial education. He was just cleaning up his own financial mess when he got started.
Although Joe picked things up quickly – and became a student of personal finance and investing – just know that not everyone in the financial planning world is the same. Not everyone is going to be as far down the road with their own finances as you might think.
Or worse, they’re excellent at their job of selling you on expensive, over-complicated investments. Investing should be simple enough to understand it and transparently inexpensive (yep, I just made that term up).
Be careful when working with future financial planners. And realize you need to become your own financial expert.
Joe was an advisor for 16 years and I’m sure he got better over time, but it was because of his own interest and pursuit of the topic, not because his employer needed him to know more (his employer likely just wanted to be sure he knew how to sell more than anything else).
Joe said that 98% of success in finances comes from actions the average individual can take by himself. The other 2% people may need a bit of help from experienced professionals. I couldn’t agree more. I’m (at least) a 98% DIY guy but do get help from people like a CPA for taxes and a lawyer for an estate plan when I need specialized expertise.
TV Experts are Not Experts
Joe also spent some time on TV as a money expert (he was interviewed by a TV host on various financial issues).
He said he did NOT want to do TV initially because he didn’t want to have to answer questions on the spot. They told him not to worry because the way things worked was that he would write the questions, give them to the host, she would ask them, and he would answer them (with prepared responses).
I am familiar with this myself. I’ve been interviewed on various business subjects and have always had a PR firm get questions for me in advance. It makes you sound much more knowledgeable this way. 🙂
There’s nothing wrong with doing this, of course, other than it appears to be spontaneous and it isn’t. In addition, having a system like this can help anyone create the illusion of competence. They can appear to be an expert on personal finances and not really be. It’s my guess that many of the reporters who report on money issues fit into this category. They write a set of questions and answers and look like they know what they are talking about, but they are just regurgitating researched answers.
The Deeper You Dig
There’s not really any new learning for this post, just the realization that the deeper you dig into how people get to be financial “experts”, the less substance there seems to be behind most of them.
It’s for this reason that people need to take the reins of their own finances. It’s not that hard — the basics of succeeding with money are pretty simple and within the ability of most people to both grasp and implement.
If someone fails to do this, he is at the mercy of financial “experts” who in many cases simply want to turn his money into their money.
I love PT’s Master Of Money Podcast, and Joe Saul-Sehy @ SB. I’m also 99% DIY (hey, I beat you by 1%, but pretty subjective, right!?).
We run in similar circles. I, too, have been interviewed, and provided questions in advance. Interesting how “staged” things can be. Never assume, and never blindly trust, especially when it comes to your money. Take the time to learn, no one cares about this stuff as much as you do. Great lesson, and great reminder for us all.
This is a phenomenom I’ve found interesting enough, to the extent that I’ve considered pivoting my career towards personal financial consulting. If you’re not part of the cure, you’re part of the problem, right? And intuitively, when there are so many people so clearly without substantial knowledge regarding what they are “preaching”, there should be a market for people who actually know shit and give well-founded advice, right?
But then I always circle back to the hunch that the world wants to be deceived, and the reason why there are so many snake oil salesmen in business, is because selling snake oil is more lucrative than selling cold, hard truths. I guerss, to a certain extent, the world gets the experts it deserves. Thoughts?
Agreed. The world does like to feel special and snake oil salesman are good at making people feel special.
Even with my own family (parents and sibling) it is hard to convince them to do more DIY taxes, finances, etc. They are just not interested in doing so even if it saves them money.
You are probably right, unfortunately.
So, we’re better off trying to teach people to change their mindsets, for instance through writing about these subjects online? Would you agree? ?
No body knows your financial situation as well as you do. Experts seem to always want to put people in boxes when the best answer needs to be tailored to the individual. I’ve always resisted the urge to use a “financial expert” and instead have took it upon myself to learn and grow along the way.
I think people go to advisors beacuse they like being told what to do. They need that reasurance. That’s ok in some circumstances. But, “And realize you need to become your own financial expert,” the interesting thing is that you don’t really even need to be an expert. Investing in an index fund is not hard or complex. Yet people build it up to be a hard thing. If someone had a 50/50 split of the S&P 500 and the total bond index fund they would be doing pretty well compared to most.
Good article.
I agree that these so called experts prove to me they know a lot of buzz words and are eloquent speakers and able to sell themselves well, yet they open there mouths on ideas that have no foundation and can be knocked down easily.
The best financial planner is you and your continuing education on the matter.
Likely you could just pick a few index funds and you will do better over a 10 year period than having an “advisor”. How do you think these managers and investment companies get so rich? How do you think they pay for those luxurious office complexes and skyscrapers? Its by siphoning off all that money from you. This also applies to other situations in some respect. My advice is to watch everybody. I’ve caught mistakes and oversights by doctors, dentists, lawyers, accountants, autoshops etc. Im not an expert in these areas but I try to educate myself as much as possible and pay attention to the details. These “professionals” get busy and miss things all the time. Dont get lazy and just blindly trust anyone with any aspect of your life.
Great point!!
My dad caught a miscommunication between one doctor and another that likely saved my mom’s life. People need to be in charge of all areas of their lives.
I try to avoid financial advisors like the plague and I agree with the comments regarding index funds. They are so simple and all it takes is one or two funds and you’re set. When in doubt, read Jim Collins stock series.
It’s funny how so many people think they know more than they actually do and will openly give advice when they aren’t doing what they are preaching…
– fat people giving weight loss advice
– broke people giving personal finance advice
– the list goes on and on…
Thanks for sharing ESI
Joe’s episode was the first Masters of Money podcast that I caught. Very good episode!
It’s quite scary how easily one can become a ‘trusted’ financial adviser. The same can be said about our PF blogs. I do my best to position myself as just a guy that’s telling his story, but if you keep talking long enough eventually someone will think of you as an expert.
I hope those looking for advice do their due diligence.
I love this series. Steve over at ThinkSaveRetire.com has a timely post about what makes someone an “expert” anyway. http://www.thinksaveretire.com/2017/03/29/retired-early-im-no-expert/
First I really like the line of thought in his series. Sadly it’s very true. About 8 years ago I was contemplating a side hustle of financial planning. A friend of mine introduced me to their financial planner who worked for one of the franchise companies. I won’t name it here. Essentially for a cut of my earnings they would set me up as a financial planner. From what I can tell they never asked for my resume to check my qualifications and training was never discussed. I quickly got cold feet on the idea as it just seemed too scammy for me.
I had no idea questions/answers are rehearsed on some tv. Shows what I know! I was on a TV morning show a couple of years ago and had no idea what I would be asked. I was so nervous. I would have loved to have the questions beforehand.
We were almost burned by a financial advisor in our mid 20s (tried to sell us universal life ins. as a college savings vehicle). Thankfully we were suspicious, did our homework and walked away unscathed. But, we decided right then and there that we would DIY from then on (though, like you, we use a CPA and attorney).
I became very disillusioned when I looked for a financial planner before we retired. I just wanted a sounding board, another set of eyes to look at the big picture with us. Everyone I contacted wanted to sell us some comprehensive plan. I guess they pay to develop these data analysis tools and want to use them and/or pass along the costs to someone else. Needless to say, we stuck to the DIY plan and we’re the better for it. Like you, if we need specific guidance we’ll go to a CPA or a lawyer (we’ve done both).