Do you feel another ESI Money rant coming on? Me too. 馃檪
I’ve noted previously how many “financial experts” (or at least people who hold themselves out to know something about money) in the media really know very little about it. If you want to see my thoughts on the subject, see Why Another Financial Website? and Buying in Bulk is Always Cheaper.
This has been my perspective based on what media people said (and didn’t say) about managing money. If you really know something about managing money it’s easy to identify someone who knows nothing about it. Many media financial “experts” make it clear that they don’t really know much about money management simply by what they say. Anyone who knows how to manage money can see that.
I’ve also experienced this lack of expertise in my career. I can’t tell you the number of times I was interviewed by press people who were “experts” in business. But it was clear that they didn’t know a lick about running a business. (Yes, I said “lick”. It’s the Iowa boy in me.) They reported on business and hence they were an “expert” — that’s it. They often couldn’t keep their facts straight — facts we had provided them prior to the interview. That’s right, they couldn’t even quote the numbers we gave them to help them with the interview. It was like 1) they knew nothing about the topic and 2) they just started studying the notes about 15 seconds before they started the interview. We always had to dumb down what we said in hopes by some miracle they would actually get the story straight.
A recent interview I saw confirmed these thoughts as accurate. Mike Rowe was on The School of Greatness podcast. In case you don’t know, Mike (made famous by “Dirty Jobs”) has been a TV host/interviewer/reporter type for much of his career. Between 23:45 and 28:50 into the podcast, he talks about the difference between how “experts” do/recommend something (in this case castrating lambs) and how real-world people who have been doing it for decades (and know what they are talking about because they’ve actually done it) do it. After telling the story Mike says at 28:10:
“The lesson on that day was beware of experts.”
Why? Because they may know about something in theory, but really know very little about how it works in the real world.
He continues and soon thereafter starts getting into the lack of expertise among the media (edited a bit):
“I worked 15 years impersonating a show host prior to Dirty Jobs, as well as a journalist…I was committed to impersonating successful people on TV…as an actor and as a host.”
In other words he (and by extension others in the industry) was good at acting like he knew what he was talking about — but he (and others) didn’t really know much about the subject.
Then he really spills the dirt between 31:50 to 33:00 (edited a bit for back and forth dialogue and because I’m not the best transcriber — but the meaning here is correct):
“As a host, it’s nothing but ritual. You stay up the night before and get smart on the topic, you have to. You’ve got to Google me…you’ve got to read up on me…you have to do something. And I had become very facile over the years at creating the illusion of competence. But that’s all it was. I used to call it the plaque approach. Literally a plaque on a statue. I used to host all kinds of shows where we were pulling stuff out of our butts constantly and I’d walk up to the statue of Francis Scott Key and I would read the plaque. I’d get it in my short term memory and then I’d turn to the camera and say, “Francis Scott Key born in…blah, blah, blah.” And so people would say, “That Mike knows everything.” Mike doesn’t know sh*t. He knows how to read a plaque.”
This is it EXACTLY! This is exactly what we see in much of the mainstream financial media over and over again. If you read/watch/listen to mainstream financial media stories you can tell they simply read a plaque before writing their story, filming the spot, or commenting on the radio. They had to have done this — because what they have come up with makes no sense if you really know something about money.
This is why we see writers spouting off advice that someone who reads a few basic money books would know better than to pass along.
This is why we see mainstream media confusing terms — like using “income” and “wealth” and “net worth” (if they even use this term, many don’t seem to have ever heard it) interchangeably.
This is why we see them getting basic “rules” of money wrong.
It’s because they read a plaque — that’s all they did. Then they regurgitate it in an attempt to sound knowledgeable. The problem is that to the masses reading, watching, listening, they do sound knowledgeable — because those people reading, watching, and listening know so little about managing money they think the media folks are well-informed. But people who actually know something about money can see right through it.
Don’t get me wrong, these media people are not stupid. They are experts for sure. They are experts at looking good, sounding good, and being able to project the image of knowing what they are talking about without really knowing it. They can write extraordinarily well, they look fabulous on TV, and they speak and communicate well. They ARE experts. It’s just that they are experts at show business/communication, not experts on the topic they are covering. They are experts at “creating the illusion of competence”. That’s it.
This is why I prefer reading blogs for my financial knowledge. Granted, many of them are written by people who are just starting out and don’t know much themselves, but at least you know that. And you can have interaction with them in the comments. So both the content and the conversation become grounds for everyone learning more.
Many blogs are by authors who have a vast amount of knowledge on money issues because they have actually lived and worked through money challenges. I certainly prefer real people managing real money to a great-looking, well-spoken journalist who is skilled at creating the illusion of competence.
So consider this yet another public service announcement from ESI Money to beware of mainstream media financial experts. They are far from experts at handling money and listening to them could leave you far poorer.
Update after this posted: It’s interesting how once I write about a topic it seems to pop up again and again in things I read/listen to.
As mentioned below in the comments, I ran into this post today.
It’s written by a CFP and an author who is complaining that his clients are listening to experts who are not experts.
Two things are notable to me in his response. First is how he notes that experts are often biased:
Virtually every expert you encounter online or on television is being paid for those opinions. If they鈥檙e discussing gold, real estate or master limited partnerships, you can be certain that their wallet or purse stands to gain from your interest in any of them. If they are recommending stocks, bonds or unit trusts, it is a sure thing that those products generate profits for them or their company. If they are discussing annuities, well, just run away as fast as you can.
Second, he defends himself against the experts not by touting any financial prowess he has (either personally or professionally), but simply saying he’s been in the media just like the experts (who he says aren’t experts).
Uh, ok.
Then he ends with:
I may not be right all the time. But I鈥檓 just as much an expert as these talking heads鈥攁nd probably more so.
Wow. Is that the best endorsement you can give yourself? Yikes!
In addition to the above, I was listening to Tim Ferriss’ interview with Mr. Money Moustache while walking today and Tim said:
It’s important in almost every area but certainly in the world of financial planning and advice to ensure that the person giving the advice has done what they are suggesting or has some practice putting their words into action because otherwise they haven’t stress-tested their ideas or at the very worst they are a hypocrite and they’re doing the opposite of them.
Exactly my point. I’ll leave it at that.
photo credit: Matt Biddulph TV news at the Empire State Building shooting via photopin (license)
Good thoughts ESI. I believe your opinion applies to the food industry and exercise industry as well unfortunately…
What’s unfortunate is if you are a journalist, you are paid to write content and you better get it done by a certain time and date. Given these constraints, it seems the creativity, fact checking, and quality goes out the door. You can notice this when any major event happens: the news corporation who gets the story out first will get the views, it doesn’t necessarily need to be right, but needs to be first.
Have you read the book, The Black Swan, by Nassim Taleb? His advice is to remove yourself from the media because it has a negative effect on your life. I’ve implemented it and feel better mentally on a day to day basis.
I haven’t read the book, but I have been backing off watching the news. It’s just too toxic and I’ve felt better the less I ingest.
Right on ESI. People parrot the mainstream like they know what they are doing. That being said it’s worse even then you portray. In my limited experience I’ve found the people on tv are usually just reading from a prompter, i.e. Someone else has done the five minutes of reading to comment on the topic. As such you don’t even really know who did the research, let alone if they are experts.
I agree 100%.
An analogy that I like to use is based on the television series “Gold Rush” where people are actively mining for gold in the Yukon. They have to remove overburden to get to gold rich dirt and process tons and tons of dirt just to get a few ounces of gold. If not processed correctly then gold will slip right past you and be washed away.
I find MSM is mostly dirt and very little gold.
Nice rant. I’ve learned to separate the wheat from the chaff on the so called experts by asking a few questions or just giving more thought to what is being pitched.
What do you make of Cramer? Sure, it’s pure entertainment but does he occasionally know what he is talking about?
I am a huge fan of Mike Rowe. A very straight talker he is.
-Mike
I don’t watch Cramer as I can’t stand his personality (a bit too over-the-top). And since I don’t buy individual stocks, what’s the point?
Mike Rowe seems to get better every day. I listen to his podcast and follow him on Facebook. He seems to have a lot of what we used to call “common sense.” Not sure it’s too common these days. 馃檨
Watch Jon Stewart destroy Jim Cramer http://www.cc.com/video-clips/iinzrx/the-daily-show-with-jon-stewart-jim-cramer-pt–2
The man is an idiot
Ha! FYI, found this today:
http://www.humbledollar.com/2017/02/fake-news/
I especially agree with points #1 and #2, but it’s interesting that the author uses his journalistic credentials to justify that he’s an “expert” (point #3). Why doesn’t he cite his financial skills? Maybe he doesn’t have any?
It’s funny, as I read your post, what crossed my mind are all the “experts” I come across at work, including c-level individuals. I remember one of them telling me a while back that knowledge is not important, only the illusion of knowledge, which is easier to pass off the higher up you get, because no one dares to challenge your BS. I have a really hard time watching anything on TV these days that gets passed off as real news, regardless of the subject.
I love what you said about getting your information from books! It’s such a good point. I think everyone would benefit from gaining knowledge from a thoughtfully written, well-explained and documented source like a book, that encapsulates thousands of hours of life wisdom and carefully crafted advice rather than TV news, or even in many cases, articles from newspapers. While they tend to be a bit better than their visual counterparts, I haven’t really found a money column in a mainstream newspaper that gives me enough in-depth knowledge to make it worthwhile. My mom is a huge follower of Fox Business for her money advice, and I just *facepalm* every time I see her watching. 馃檪
Excellent post. The CFP post rings true for me. When I was an advisor, I’d watch CNBC just to know what clients would be panicked about the next day.
I definitely recommend picking up Josh Browns “Clash of the Financial Pundits”. He’s an advisor who is regularly on CNBC and is open in saying that it’s really just entertainment and no one should actually invest their nest egg like they talk about on the halftime report (the show I refer to as ESPN for stocks).
I’ve always wondered why people purport themselves to be “experts”. Yes, in the media, this is basically their job. They gotta make a living somehow, so calling themselves experts is how they get interviews, write articles and generally pay the bills. They’ll call themselves whatever they have to in order to maintain their income.
But, I’ve also read several Twitter profiles within the PF community claiming that they are either personal finance or early retirement “experts”. Really? What makes you an expert? Because you’ve supposedly “done it”? Bull.
I retired at 35 and I certainly don’t consider myself an expert. We made the right choices for us. We prioritized retirement. We hate work.
Great, we’re experts, then?
If the bar is really set that low, then I’m most definitely an expert at pooping, too. I can poop like nobody’s business…get it? “Business”?
Okay, I’ll stop now… 馃檪
Now that’s funny…
The distinction for me is the difference between being an “expert” because you know something versus being an “expert” because you’ve actually lived/applied it.
If it comes down to listening to someone because they have a journalism degree from a big-name college and have studied the topic a bit or someone who has no formal training in a topic but has achieved what I want to achieve/what they are talking about, I would 100% go with the latter.
So I’d MUCH rather listen to your advice on early retirement than that of someone who’s only writing about it based on their personal theory.
Knowing how many friends have turned into financial “expert” who have appeared on major morning TV shows makes me think that anything I’ve ever heard on TV is either false, exaggerated, or regurgitated information. It’s not that it’s not great that some people I know have risen through the ranks of the PF world, but it just makes me take everything with a grain of salt.
Well said. That is definitely something to keep in mind. I’ve learned to never blindly trust talking heads on the media. I need to do the research myself before I can believe anything that is being said. I know that I am by no means an expert, but I have paid the price and looked like a fool following the so called experts. You know an expert by the fruit of their labor. Thanks for sharing.
Sorely needed commentary here, thanks for writing. “Fake” financial advice is as ubiquitous as fake news and also highly destructive. Internet search engines allow just about anybody to fake expertise with a very small investment in “research.” Plagiarism also is apparently rampant–I regularly see the same, ill-informed advice appearing from many “pop” sources. The best remedy is to educate ourselves directly from primary sources–not from bloggers (no offense–I’m a part-time personal finance blogger too), friends, and family–and to get more than one opinion from genuine experts. Shortcuts lead to sound decisions only by chance.
What would you suggest as an alternative? Sometimes experts can’t communicate their ideas in a way that moves an audience.
I would suggest you find someone who:
1. Has done what they are talking about (and thus knows the subject).
2. Can communicate in a style/manner in which you can receive it.
Yes, there are many who meet only #1. These are the people you are referring to and it may be hard to follow them.
There are also people who only meet #2. They communicate well, but really don’t know what they are talking about. These are the people I’m referring to in the post above. You certainly don’t want to listen to them.
Fortunately, there are plenty of people who can do both. I prefer bloggers but you can find some good media people who report based on their own experiences. If you need help finding someone good, drop me a note and I’ll make suggestions.
Or you could just keep reading this blog… 馃槈
I honestly much prefer data-driven studies and analysis than just listening to the experts tell me what to do but that does take much more time. Getting to your own conclusions after much research is tedious (especially in finance) but I like it 馃檪
I do like watching FBN and especially BTV, sound off, for the ticker tape display and short news briefs. Like fish on TV for the cats or something (lol) . . . simple pleasures, baby. Media-wise, though, yeah, what a nightmare. Losing the voice of Scott Burns really hurts; his old column in the Seattle Times is greatly missed, the #1 reason I no longer buy their paper. Nothing but reason and practical advice, for the most part. Now it’s full-time leftist blather; I’ll spare you the hideous details. Red meat for shallow thinkers, nothing more. Bankrate is profoundly offensive, more often than not, biased as f*ck. The WSJ . . . I wouldn’t know if they were once good; what I see now tells me everything and nothing. Kiplinger’s seems a sort of moronic clearinghouse, endless hype about WHERE TO PLACE $1000 TODAY FOR HOT RETURNS, and so forth. These blogs are pretty much it, then the books I’ve read, or soon will.
Ramsey’s radio show, sometimes, only if I’m driving. I seem to have outgrown him, and he pushes the religion more now that he’s flush. Not much out there, really, and yet reasonable advice is more desperately needed than ever.