The Biggest Mistake Made in Financial Media
Several mistakes are made in the financial media. I should know – I have made just about every one of them. It is easy to get your facts wrong. Fact-checking is always essential before airing any story. Second, just plain being wrong about a subject is doing your audience a disservice. Well, no one is perfect. However, by far, the one mistake that could be avoided and should be avoided is categorically disapproving or approving of an investment product.
For example, “Annuities are bad” or “Life settlements are horrible investments, and no one should invest in them.” One you would often hear me say is to “stay away from debt repair companies.” Before someone shouts hypocrite, I will be the first to admit that I have made this mistake and really am working at being better about stating my opinions. I like to think that I am getting better about qualifying.
If I am going to broadcast that I am not a big believer in debt repair companies, I should be able to give my reasons. Then I should further qualify it by saying here are the pros and cons. And I should finish by saying that if you are considering going with a debt repair company, this is what you should consider, etc.
Stating an opinion as if it were fact ends up being irresponsible financial media because listeners take some of what they hear or read as the gospel. As a result, they might end up avoiding a particular option that would have been good for them because they heard it was terrible through financial media.
When you hear an opinion (don’t forget it is an opinion and not a statement of fact), qualify it with this in mind: First, nothing is categorically wrong for everyone. There are some situations where it might be appropriate. Second, the investment product being denounced might be a category of investments and not a specific investment.
For example, annuities are the one thing that financial writers continually bashes. Well, does it mean that all annuities are bad? There are several different types of annuities. For the record, I am a fan of the fixed indexed annuity model as long as you get with a good program and have the right risk level. I think that variable annuities are not a good fit for most people. I believe that fixed annuities are a great alternative to CDs right now. I can’t find a whole lot wrong with plain-vanilla, guaranteed, fixed-interest-rate annuities.
Financial talk show hosts or writers are speaking to a general audience. Often, at least in the case of live-radio or TV, you are talking completely off the cuff, and that internal filter doesn’t always work.
Remember that your financial situation is a personal situation that is specific to you. Take what you hear and see if it applies or doesn’t apply. However, don’t let your financial decision making be determined ahead of time just because of the good opinions of Suze Orman, Dave Ramsey, etc.