As a financial planner, I advise people from all walks of life. This includes high level professionals such as physicians, attorneys, engineers, accountants, etc. In addition, I counsel people who are starting out their careers in various fields.
Consequently, I learned that every person is unique. More importantly, I learned that most people, regardless of their background, are interested in receiving some form of financial advice. Despite this, many feel that they do not need to establish a long-term relationship with a financial planner. Some of the main excuses people tell me are, “I listen to _____ on the radio” , “I watch _____ on TV”, or “I read _____ blog posts. These reasons are unfortunate because the people they name are usually not financial planners. Rather, they are financial entertainers.
The names of these financial entertainers are not important. I am sure you have heard of these people before. What matters is the distinction between financial planners and financial entertainers.
The purpose of this article is to clarify these differences and explain why financial entertainers cannot replace financial planners.
General Advice versus Personalized Guidance
In financial planning, there are multiple subtopics. Within these subtopics there are multiple schools of thought. This is complicated by the fact that no two people have the same financial situation.
In my opinion, the goal of financial entertainers is to reach a wide audience. As a result, their advice tends to be more generalized. The biggest consequence of this is that they come off as resolute in their recommendations.
Based on my experience, I know that financial planning is never black and white. When I give recommendations, I must consider the nuances in my clients’ lives. This allows me to provide personalized guidance.
There is nothing inherently wrong with general advice. You should use the knowledge you gain from it as a starting basis to help you make decisions about your financial life. However, in my opinion, people tend to be overconfident with their financial decisions. Therefore, seeking out personalized guidance from a qualified financial planner can be useful.
They Do Not Know You
It is one thing to take financial advice from someone who has intimate knowledge of your financial situation. It is another to take it from someone who preaches to a mass audience with no knowledge of your specific financial situation.
Along the same lines as the last section, it only takes a single detail for a recommendation to change.
Your Financial Situation is Unique
When financial entertainers address someone else’s problem, it may sound similar to yours. However, due to your inherent uniqueness, it is never exactly like yours.
For example, it is general consensus that investing in the stock market early is important to save for retirement. In fact, I wrote an article about the cost of waiting to invest. However, if someone has an unstable income and a significant amount of high interest debt, the answer may not be obvious.
One of the ways financial entertainers are paid is through sponsorships. Therefore, there is sometimes a conflict of interest in the products and services they recommend.
As I mentioned in a previous article, no matter how you pay your financial advisor, there will always be a conflict of interest. However, paying your financial advisor directly for advice creates a better professional dynamic.
The internet allows people to get access to information with ease. However, having information and being informed are not the same thing. Since the internet is extremely vast, it is sometimes difficult to determine which information is accurate. This is especially true if you require specific advice.
In my opinion, some financial entertainers exacerbate this problem. This is not because they are bad people or because their advice is too general. Rather, it is due to the impersonal nature of how they spread advice.
Think about it another way. Pretend your New Year’s resolution was to get in better physical shape. Do you think watching a workout video online or hiring a personal trainer will yield better results? I imagine most people would choose the trainer.
Just like your physical well-being, financial planning, when overseen properly, is an ongoing personal experience. Therefore, in my opinion, comprehensive financial advice is best administered through direct human interaction. Although some of the general advice from financial entertainers can be helpful, it does not constitute comprehensive financial advice.