EDIT: Fixed the CFA definition, per Asset Gatherer
Most PF Bloggers are not a financial professionals. If you follow advice in a blog and lose everything, you can’t sue the blogger. For that reason, I tend not to advise readers about their situation because it makes me exceedingly nervous in our litigious society to speak directly to anyone’s situation. I helped run the Securities Industry Association’s Institute program at Wharton when I was in college and I was struck about the amount of time spent on ERISA, the piece of legislation that covers retirement plans and fiduciary responsibility to the plan holder. The ethical responsibility of finance professionals is tantamount and though sometimes unscrupulous individuals do awful things, I believe the industry does try to do the right thing and educate advisors on their legal and ethical responsibility to their clients.
Even the CFA program spends a lot of time on ethics on each portion of their 3-level examination. From what I hear, it’s Level 2 where they harp on it most. (CFA’s are Chartered Financial Analysts, a lot of mutual fund managers have this designation. It takes about 2 years to do it if you pass all three exams the first time you take them.)
Don’t take investment advice from someone who has no stake in your well-being. Sure, ask your friends, if you trust them. I do. I talk to people all the time. I solicit and I offer help, but I know my limits. I have very little formal experience forecasting stock prices. My experience in equity research was mostly limited to product research. Before you solicit advice from a PF Blogger, ask yourself if they have formal experience in financial advising or market forecasting. Ask yourself if you have other resources available to you, like the 401k plan’s customer service reps, or financial advisors. Sometimes they offer free counseling.
A blogger can always write, “If this were me…I’d do XY & Z.” But take us all with a grain of salt. PLEASE. One size does not fit all. There is prevailing wisdom and then there is blindly following someone who has no stake in your investment outcomes. I don’t want anyone to lose their shirt now by selling off in a bad market. That would be locking in all their losses and that seems like a bad idea to me.
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Hello again! (2 comments in one week!)
CFA is “Chartered Financial Analyst”; I was sucked into it for my career! It’s a pretty heinous experience.
Oh I agree with you so much on this. I’m amazed at the number of people who think certain PF bloggers are infallible or even know what they’re talking about just because they’re popular and prolific. Sure, everyone has some weak little disclaimer on their site that says something like “Everything I write here is crap and does not constitute advice. Consult a professional.” However, when they’re always posting about how you should sell this or buy that or do this or react in a certain way or (my least favorite) poll their audience for group advice, I want to scream and run away. It’s totally irresponsible, but I don’t think your average reader necessarily realizes that.
Awesome! I think you are completely right. It’s good to keep in mind that we are all spouting off stuff, but that ultimately most/none of the PF bloggers have any formal training or certification.
That doesn’t mean that the discussion isn’t useful, just that what you read on the web shouldn’t be held infallible.
Oh c’mon. Name names. You know you want to.
Nickel – You are a bad man. One word for you. “No.”
I stopped reading “The Simple Dollar” because Trent, the blogger–and a guy who was deep in debt a year ago–is now opining on what to do with $50 million trust funds and other topics about which he knows zilch. But he never hesitates to tackle these topics and potentially mislead people.
I felt that this post was not needed, but then again some people need to know this! I’m glad you posted it.
As a PF blogger AND and practicing CFP professional, I want to thank you for this post. Not to cast a bad shadow on PF bloggers, most are usually right. But I have said it before and I will say it again, never take advice from a pseudonym.
There were (and are) a mountain of regulatory issues I face to create and maintain my blog. I know that some people enjoy mananging their own finances and are not candidates for my services. Other people shudder at the thought of managing money and those are the people I can offer the most help to.
Thanks mapgirl for your insights.
BTW, Art Dinkins’ URL is actually http://www.momentonmoney.com/
There is a comma typo for the first dot. Please enjoy his website since he’s actually qualified to give some insight on these matters. His qualifications are rather lengthy but seem legit. Perhaps that’s a starting point when you go to select your own advisor.
Mapgirl,
Great post. I had been thinking of doing a similar post about a contradiction in claims I have seen on some PF blogs. While the blog contains the standard disclaimer (i.e. I am not professional…), there will also be a “subscribe to my blog for $Y, XX% returns in the last 2 months” widget in the sidebar.
I wonder if anyone else notices the irony of the act of requesting pay for advice while claiming to not be a professional
MapGirl, thanks for pointing out the typo in my URL and for the kind words.
Yeah, this is definitely a good post. No problem on the linking. Keep up the good work.
Indeed. Good post!
I see blog more as telling the story of what I do, what I have, what I do (or will do) with it, how I go about it, etc. Most other bloggers are the same. It’s not unlike having friends. I like my friends, but I know they’re not infallible about personal finance.