Enter your keyword

Bad Money Advice

Bad Money Advice

Bad Money Advice is a new blog I discovered through one of the eighty five million personal finance blogs I read. Written by “Frank Curmudgeon,” Bad Money Advice has an interesting take on some of the personal finance advice available on the net and elsewhere, finding errors where others miss them and deconstructing the overly simplified take on broad stroke financial issues that are covered by the mainstream media. I suspect Frank Curmudgeon is a dyed in the wool conservative, but I love him anyway.

Today, Frank talked about the unique problem of determining who is qualified to give personal finance advice:

But all this begs the question as to what a properly qualified giver of advice on personal finance would look like. Would they have impressive credentials, such as advanced degrees or professional certifications?

Based on a quick review of Wikipedia and various other websites, as best I can tell, Suze Orman, David Bach, Dave Ramsey, Phil Town, and Jim Cramer have between them only one graduate degree. (Cramer went to law school.) Orman majored in social work in college. She and Bach once worked as stockbrokers, so presumably have the necessary government licenses. (But then so does Martha Stewart.) Again, as best I can tell, none of the five have any professional designations or certifications.

Generally speaking, the people who are avowedly in the business of giving advice have only the circular qualification that they’re successful givers of advice. And that’s a qualification, it seems to me, to which the big bloggers have as legitimate a claim as the big gurus.

Moreover, there really isn’t a better qualification out there. There are no prestigious graduate schools of personal finance. There is such a thing as a Certified Financial Planner (CFP) designation, but it is not widely recognized. There are no government licenses for financial advisors, nor is there anything remotely like the professional certification process we have for doctors and lawyers.

Personal finance is an unsettled field. Some know more than others, and some claim expertise while others shy away from it. But nobody has any particularly useful qualifications.

Well said, Frank. You can read the rest of the article here.

Comments (6)

  1. Mar 26, 2009

    I imagine this will come as a big surprise to a lot of people.

  2. Mar 26, 2009

    I discovered that blog recently too (probably through the same link/event you did), and I am LOVING it. It’s my new favorite of the personal finance ones.

  3. Snakey
    Mar 27, 2009

    Yay, another money blog! The main thing I’m noticing lately with $ blogs is how you can’t give generic advice that fits all; that any given person who is feeling positive about his/her finances (reached goals, making progress, finally has a plan) feels they’ve found the holy grail, and they want to share their process. And then someone with a lot more or a lot less money comes along and rips them a new one! I’m starting to think it’s a bit like fashion or decor: you may agree on some very general ground rules (should not cause injury) but beyond that, there are people who wanna express themselves first and foremost.

    I recently bumped into a reference to this book: http://wik.ed.uiuc.edu/index.php/Framework_for_Understanding_Poverty,_A
    I’m no expert in this field, and apparently some people boo this particular author as a “pathologizer of poverty” (although I looked and the formal/casual register language stuff is considered legit by others, so I don’t think she made everything up). Anyhoo, the above wiki has some interesting summary quotes. If there’s any truth to them, no wonder we keep butting heads about what should be done with money.

    Chapter Three – Hidden Rules Among Classes Chapter three begins with a quiz to help the reader understand his/her ability to survive in poverty, middle class, and wealth. The questions chosen for the quiz “have the most impact on achievement in schools and success in the workplace.” The quiz points out to the reader those things that are taken for granted and those situations that are out of his/her comfort zone. The knowledge that is taken for granted are the hidden rules of that socioeconomic class.. For example, knowing how to enroll your child in Little League or where to go to get the best interest rate on a car loan are hidden rules of the middle class. However, would a person from the middle class know how to get and use food stamps if they were suddenly in a situation where it was a necessity? The quiz is followed by a brief summary and then a chart that gives an overview of some of the hidden rules among classes. An example of the hidden rules of the different classes in regards to money would be: Poverty – to be spent, Middle Class – to be managed, Wealth – to be conserved or invested. Another example in regards to food would be: Poverty – Was there enough? Quantity is important. Middle Class – Was it good? Quality is important. Wealth – How did it look? Presentation is important. The overall message of the chapter is best explained by Dr. Payne herself. “The key point is that hidden rules govern so much of our immediate assessment of an individual and his/her capabilities. These are often the factors that keep an individual from moving upward in a career – or even getting the position in the first place” (p. 44).

  4. Mar 27, 2009

    Uh-oh, looks like the smart people have discovered my blog. Thanks for the flattering comments. I’m only a dyed-in-the-wool conservative relative to my surroundings in Boston, which means I’m pretty middle of the road for an American. And I finished a Thursday Times crossword. Once.

    Snakey: I totally agree about the fundamental impossibility of giving generic personal finance advice. It’s one of my basic meta-points. People like Suze Orman make unstated assumptions about their listener and give advice that only makes sense in that context. Sadly, as a nation we are so willfully ignorant about money that we wind up taking the advice of “experts” instead of making decisions for ourselves.

    The Payne book sounds interesting. And available on Kindle….

  5. Mar 27, 2009

    @Snakey, very interesting quote. I definitely think this is true, I have noticed differences in how money is viewed even just among my family and in-laws, and these are largely rooted in childhood experience, mobility, etc.

    I also agree that you can’t have a catch-all, I think that’s why I like personal finance blogs. I find myself going cross-eyed when they talk about making your own laundry detergent, etc. Works for some people, but not the route I want to go. But that doesn’t mean there isn’t something else I’ll find valuable. They encourage you to figure out what you think for yourself, instead of just using somebody else’s plan. Even with Dave Ramsey, who I do like, I find my attitudes changing all the time, particularly now that we’re out of consumer debt. Very interesting.

    @Frank–thanks for coming by! I’ve never been a fan of Suze Orman, but I think that’s just something about her personality. But yeah, you have to take what you hear and retrofit it for yourself. But yes, we are the “smart” people of the interwebs. LOL

  6. Mar 28, 2009

    CFP is a trustworthy designation. I think an individual or family without incredibly unusual issues would be safe with a well-recommended fee-only financial planner who is a CFP. Advice from other trusted professionals such as your lawyer, CPA e.g. is a good place to start. I’m surprised Suze Orman is not a CFP. I thought I read somewhere that she is.

Post a Comment

Your email address will not be published.