Seeking Financial Advice Online Is Exactly Like Clothes Shopping
This post may have affiliate links. Please read the Disclosure Policy for complete details.
I’ve read lots of money books.
Some are great.
Some writers are self-aware.
Others are just clueless.
One theme, in particular, disturbs me.
Even the “gurus” fall into the trap.
They ignore the personal part.
They forget it’s “personal finance”.
Not just “finance”.
They spout off about how everyone needs to be like them.
How their methods work and everyone should follow them.
I’ve also noticed several book titles as well.
- “The Last Book You’ll Ever Need” on…
- “The Only Book You’ll Ever have to Read” about…
- “The X% Solution” to….
To be honest, it annoys the hell out of me.
Personal Finance Advice = Clothes Shopping
You know what else annoys people?
Shopping for clothes.
Yeah, yeah I know, it sounds strange, but is it really?
Seriously, there are a lot of parallels:
- The quality varies depending on the source
- Both require a style that fits your personality
- Each can be frustrating to deal with
- Everyone thinks you should do what they do
- You can lose a lot of time to either
Not so different after all, and I’m not as nuts as you thought when you first clicked on the title! 😀
But wait, I have even more, in-depth analyses that will prove the correlation and leave you with absolutely no doubt as to the validity of my comparison.
Shine The Proper Light
It just looked….different in the store.
How many times have you uttered that statement when you got home from a shopping trip?
After you’ve finally settled on an outfit or just a single item and you finally get home to wear it out and…
It looked so much different in the store.
That’s because all (or most) department and clothing retailers use fluorescent lighting due to its cheap maintenance and overhead costs.
It makes colors look way different than in natural light.
Which is how you will be seeing the clothing in action anyway.
You read an article and are super stoked to get down to implementing what you read.
The same thing happens with personal financial advice.
Then you sit down and…..
This is very common with taxes where “experts” scream:
- Make charitable contributions to get the tax deduction!
- Write off your extra travel and office costs!
- Buy a house to write off the interest & taxes!
- Etc, etc, etc….(they all sound similar)
The problem is, hardly anyone ever mentions the small little details that make all that reading and excitement obsolete.
(I guess it’s part of the “don’t sweat the small stuff crap” even though the small stuff tends to snowball into huge stuff, but I digress)
So when you sit down you’re like:
- Damn, I don’t itemize so I can’t deduct any of the money/stuff I donate to charity! Why didn’t they say I had to itemize?
- Oh, yeah, I do itemize so I can deduct the stuff my boss doesn’t reimburse me for. SHIT, I don’t have expenses that add up to more than 2% of my AGI to deduct it. Why didn’t they say I needed to have that much to get the deduction?
- Woo Hoo, we bought a house and have crazy-low payments. FUCK, our itemized tax deductions aren’t more than the standard deduction. Why didn’t they tell us that that could happen?
Wow, that’s some similar stuff–things look different when you shine the proper light on ’em.
Let’s look at another case, shall we?
Tailored To Your Custom Needs
B-b-b-b-ut it looked so good on the display!
You see an awesome suit or dress or whatever on the mannequin and are like “that’s me right there”.
You go grab your size and head to the check-out line.
A week goes by and it’s time for the wedding/bar or bat mitzvah, anniversary party, or whatever you bought it for.
And it doesn’t fit right.
In fact, it looks horrible compared to what it looked like in-store.
Why is that?
For starters, those plastic bodies are easy to fit clothes on: they don’t move or slouch.
And the secret sauce–the clothes can be pinned and tailored for the most “perfect” look possible.
Just like those marketing campaigns, you see where the food looks perfect–it’s fake non-food products made to look like the most appetizing, mouth-watering version possible.
It’s all a play on perception.
The same thing happens with personal finance.
The goal with many sites is to first gain your attention with a catchy headline (I’m being facetious and dramatic to make a point here):
- 1 Zillion Ways To Earn $1000 Today
- Learn To Time The Stock Market And Live Like A Celebrity
- Put Up A Website Today And You’ll Be Rich Overnight
- Start A Business And You’ll Never Have To Worry About Money Again
Then they go on to toss out a bunch of stuff that makes you drool uncontrollably at the very thought of it:
- Oh my God, I can live like (insert fake famous person here)!
- YES! I can start a business and start farting rainbows and unicorns!
- I finally get to live out my Field Of Dreams Fantasy…just with a website, but woo hoo!
- I’ve always wanted to swim in money like Scrooge McDuck!
But then you actually start to realize that you don’t fit the same profile as the author.
You’re single so you can’t save money by insuring multiple cars under the same insurance policy.
Or going by the same instance, you don’t own your home so you can’t do that bundling thing to bring down your insurance costs that way either.
Or, you’re married with young kids with tons of extra responsibilities unlike me, as a single guy with no kids who can use money differently.
Perhaps the strategy requires you to take risks that you aren’t comfortable with.
Basically, you can’t just blindly follow financial advice (this isn’t politics or religion after all).
The person writing may be in a very different situation than you and when they write about successes they are speaking solely about their very specific situation.
The same way a suit or dress off the rack won’t fit everyone the same way, financial advice isn’t going to apply to everyone who reads it.
What you need to do is take that overall message and snip and hem parts of it so it’s tailored to how you live and your personality.
There’s No Standardization
My other ones are the same size and fit perfectly, why don’t these?
I have a confession to make, and my mother always yells at me about it.
I buy stuff without ever trying it on.
I’m lazy and stupid that way.
And I can freely admit it.
I mean, if I’m a size 32 waist in pants, then every pair labeled “32” should fit me the same, right?
Same as everything marked “small”, “medium”, “large”, “9 1/2”, “12” etc.
You would think that, but you would be dead wrong!
There is apparently no standardization when it comes to labeling clothing and footwear.
It sucks, but it’s true.
And the same thing applies to personal finance as well.
There is no standardization regarding terminology for example
These terms are highly subjective:
They can mean vastly different things to different people.
Heck, over time your own definition of each can change as you experience different things in life.
A better example comes not even from money or clothing but something super popular like obstacle courses.
Some people who have been training for years view “success” as nothing short of finishing first.
Others say the formerly overweight office worker or the woman who had a brain tumor removed would consider “success” just making it onto the course at all.
The thing to remember is that just because any particular source frames any of these terms in one way, you don’t have to adjust your own thinking about it.
It’s ok to be your own person–in fact, I encourage it, and not following what others do, or say, or think all the time.
Quality Varies (Greatly) By Source
I knew I should’ve paid more attention to the quality!
Ah, yes…the “quality” issue.
It’s funny because people who are supposed to be “money experts” are averse to spending on quality and prefer spending on the cheapest quality things.
To me that’s crazy.
I even explain why on The Simple Dollar in an article about cheesy money sayings which are true so you know my point has validity or else that big a site would never publish it!
So, think of it this way:
You can buy a “famous label” jacket made of high-quality fabric and accessories (ie: buttons and zippers) for $300 and it’ll last at least 5 years.
Or you can buy a cheap one for $100 that you know will only last maybe a year and you’ll have to replace it several times over the years.
By choosing the higher quality version, you may spend more money upfront, but over the same hypothetical 5-year period, you’ll end up saving $200 in replacement costs.
This question of quality also happens to come up when looking at personal finance articles.
Is the person writing about something they actually have experience with?
And by experience, I mean REAL experience…not someone who signed up for a credit card and got a free flight and now promotes themselves as a “travel hacker”!
Or someone who used an app one time to prepare their own taxes and now goes around calling themselves a “tax expert”.
It may seem a bit silly, I know, but the reality is that on the surface there is no way to tell who is what based on cursory glances at a website.
You need to spend a little time reading the “about me” pages to see if there are any revelations about the author’s background.
I, for example, come out and declare my background straight away: degree in accounting, years of public accounting experience with tax prep, and small business consulting as the main focuses.
I can even show you a copy of my diploma!
Others…not so much.
It becomes a little bit harder to know who you can trust with certain things.
But the good thing is, when you do find someone you can trust, you generally get more out of their content because of that level of trust.
And it’s very similar to the jacket example; you get more value from a site you have vetted upfront–even if you spend a little more time doing so–than by continually having to waste time on sites run by people with no business talking about what they do.
When you have that trust factor you can be pretty sure you won’t have a situation where you spend time on their site only to come across conflicting information from someone else–then learn the latter was correct and you wasted all that time!
Be honest here–you like the analogy don’t ya? Eh, never mind lol. Have you ever found advice online that got you so jazzed, but then when you tried to implement it exactly were bummed that it wasn’t for you? Do you find it difficult to find advice that doesn’t take a ton of alterations to fit your situation?
I totally agree with you here – I read a lot of finance books and websites and I take all the information into account – but not all of it will apply to my situation and not all of it will always be right.
Personal financial advice is very essential and highly regulated by law. It’s the reason that most information you will read is generic. There are restrictions on giving personal finance advice. I would say the best thing for each person to do is to get as much information as they can and make their own decision. And if they can’t do that then contact a financial planner.
I just noticed the GreenBridge Advisors tab. Are you a financial advisor or is that your firm?
Glad you noticed it! It’s my accounting & consulting firm. I’m actually going to be taking he CFP course later this year.
I know, and that’s where part of my problem lies, LaTisha. The people who are qualified don’t because of ethics and regulations, but all these unqualified, uneducated people get to run their mouths and the poor troubled souls who turn to the web for assistance (which is far from a smart move in my opinion) and probably get crap advice.
I have found that even when I try to get one on one financial advise from a financial planner or advisors, they too give me generic age based advise. Since I am retired, each one I speak with wants me in bonds and cash – well I hate to tell them but I plan on living my life as long as I get to and that might be another 20 or so years! Cash and bonds won’t get me there. I depend on multiple sources for input but make my own decisions!
That’s so not right Marie. I guess the people you have spoken to in the past didn’t follow my advice by listening to a client before deciding what the action plan will include. I think it’s also a good idea to take advantage of free consultations, not for free advice, but to ask questions of the adviser and get a feel for their personality and people skills to see if they suit you.
It all goes along with your post on qualities of a financial advisor. When someone offers a one-size fits all, they are really just rehashing and recycling advice and not really considering people’s unique situation.
I love that you frequently discuss the credit card naysayers. I got into credit card trouble as a young adult and ran up 5-digits of credit card debt. But, I paid it off and learned my lesson. Now, I use my card to make me money. My irresponsibility as a young adult isn’t the card’s problem, it was my problem.
It really does, Shaun. Check out Marie’s comment and my answer for a direct correlation!
I don’t really have a problem with the cash-only crowd for how they live or what they believe. My problem is that so many of them feel the because they follow that particular path, everyone else should as well. It’s kind of like religion: you have certain people in all religions who feel it is necessary to push their views on everyone they can because they think their way is the only “right” way. But at least you learned from your mistakes and came out better for it!
A Financial Plan requires that you sit down with the client and gather the necessary information about the clients financial position, risk tolerance, goals, etc. before making recommendations. I agree that a one-size fits all strategy is not in the clients best interest. However, I do think that Personal Finance blogs like yours provide a good source of information and a chance to interact and have their questions answered. Unfortunately there are some sites out there that are misinforming their readers.
I know there are certain rules of thumb that work well for most people, but I get frustrated when I see the same advice over and over. Especially when none of it is realistic for my income or budget.
I do think people should avoid credit cards if they know they have a problem with them. I FINALLY managed to quit using mine last fall – until I stopped adding to my debt, I couldn’t make enough progress to pay it off. I didn’t touch them for a long time. Now, though, I’m slowly reintroducing them. Knowing how to use credit correctly is a must!
I don’t mind the seeing the same advice if the context in which it is presented is the same each time, too. But when the answer to everything is “max out 401(k) then max out IRA, then put some toward this, then that” it sounds a little like no one is actually listening and recognizing that each situation calls for a unique answer.
Sometimes you have to take drastic measures to get your financial feet under you. Your realization is, in my opinion, what all people in debt need to discover for themselves. It’s like trying to shovel snow in a blizzard.
Nice article DV. Personal finance/money management does not have one solution, but rather it has many based on the fact that people have different values, current situations, and goals. 🙂 This makes the interview process essential to provide advice tailored to the specific individual.
I remember reading the “Millionaire Next Door”. It opened my eyes that wealthy people did not need to have the “best” of everything.
That book really opened my eyes to the difference between quality and extravagance and how the two can be mutually exclusive. Even the advice in there isn’t for everyone, and I don’t think it’s necessary to be a tightwad as the millionaire self-introduction states (in general of course). My enjoyment of the book and the educational value is the reason why I decided to use them in giveaways.
The problem with free advice (especially from blogs) is that you often get what you pay for. Most of the people posting on blogs don’t have substantial investments or investment experience. They are often just floating or re-floating opinions and generic advice. Taking financial advice from someone who is either broke or in debt isn’t a very sound investment strategy.
The problem with financial advisors is that you have to pay for what you get. This comes in the form of high MERs, loads and redemption fees (Advisor Class products). Even worse, you may get stuck in a poor yielding life insurance policy, instead of an equity investment. For customers who understand this and get a good advisor, it can be a fair trade. For customers who are unaware of the fees or who get a poor financial advisor, it can really hurt their future. A good rule of thumb is to ask your advisor about their portfolio and why they chose those investments, before listening to their recommendation.
As with all advice, your mileage may vary.
While I do agree that the investment experience is something beneficial to giving advice, I don’t agree that it is necessary to have substantial investments to be qualified. Sometimes the situation may not be ideal for someone to have so much money to invest, but they may still be successful with their strategies. I do think that taking advice from someone who is broke can help, especially if they are trying to showcase what not to do from personal experience, which can be just as helpful if not more so than simply someone reiterating generic ways to succeed.
I do agree without a shadow of a doubt however, that people need to do their research and ask lots of questions before hiring an adviser. There is so much that can be learned just be having a conversation without even discussing money like being finding out how well the adviser listens rather than speaking, and how they approach people as individuals.
Realizing this will make you an amazing financial planner (Saw the GreenBridge)…there are a ton of advisors which see everything as a nail because all they have is a hammer.
I agree, finances are personal. What I recommend is that people be open to reading the various advice columns but to customize to their situation. There are a plethora of examples of all kinds of different financial situations. When in doubt, look to connect with someone who can analyze your situation and work with you to customize a financial plan that makes sense to you! But I leave you with this… even the most complex financial plan needs to be build on the basics.