Financial Entertainer Damage Control

The Great Recession lingers on and corporate scandals continue to unfold as increasing numbers of governments, big and small, teeter on the brink of bankruptcy. Unemployment keeps climbing and the deluge of negative news coming from the press has fostered a sense of public uncertainty. As a result, more people are seeking financial advice and knowledge to quell their fears and make sense of the turmoil. One problem… to whom are people turning to for advice and knowledge?

Thanks to Google, we have an endless supply of data at our finger tips. At any moment and from anywhere in the world, we can search for answer to questions ranging from household plumbing to saving for retirement. This unlimited supply of data has created a bigger problem when many people suffer from the natural tendency to seek the easy path. Getting bad advice on how to fix a leaky faucet can be costly but it is generally not life changing. In contrast, bad financial advice can cause a ripple effect which can affect generations.  Rather than invest the time and effort necessary to establish a clear understanding of where they are financially and where they want to go, many people seek a quick fix. Where, oh where, can one go to get a quick fix?

The growing number of quick-fix seekers have given rise to individuals I refer to as, Financial Entertainers. Dave Ramsey and Suze Orman, are two of the most famous financial entertainers on the air waves today. Both are bestselling authors and each has amassed thousands of devotees who turn on their computers, radios, and TVs seeking guidance from their favorite financial advisors, wait, I can’t say that.

Side Note:
Financial entertainers like Dave Ramsey and Suze Orman are not actually licensed to practice as a financial advisor. In fact, they are not registered to practice as financial advisors, planners, brokers, or any other position regulated by government watchdogs. As far as I can tell, they are governed only by the first amendment which means that they can say pretty much anything they want and call it “sound advice”.

Now back to the quick fix crowd looking for fast answers. A good financial planner will spend quality time with an individual in order to fully understand their situation before offering advice. A financial entertainer on the other hand takes questions on the fly, with only cursory data to work with and then dispenses potentially life changing advice on the fly.  What if the advice given is wrong? What if the advice doled out on the fly costs someone thousands of dollars? What if the advice given diminishes a person’s retirement plans or a family legacy? Can a person sue the financial entertainer for bad advice? Not likely. After all, they are operating under the freedom of speech umbrella.

Think of this from a different point of view for a moment. An average Joe goes to the doctor complaining of chest pains. It has been a persistent and growing pain for three days and Joe finally agreed with his wife to get a professional opinion. After waiting for an hour, the doctor comes in, asks a few basic questions, presses a cold stethoscope against his chest and back and asks Joe to breathe deeply. This takes less than two minutes. The doctor spends an extra 30 seconds pressing Joe’s tongue down with a big popsicle stick while he says ahhhhh. After a full two minutes and thirty seconds with Joe, the doctor diagnoses him with heart burn and prescribes some antacid. Before Joe can say, “are you sure about that”, the doctor tells him to see the nurse and leaves the room for the next patient.  If this happened to you, how good would you feel about that diagnosis? Better yet, how would your spouse or family feel if you had a massive heart attack and died the next day?

The idea of a doctor diagnosing (or misdiagnosing) you in less than three minutes is ludicrous; yet, many people tune in to hear financial entertainers give out potentially life changing financial prescriptions with only cursory exams. Hopefully you would never accept this when it comes to your health so why would you risk a potential financial heart attack by not getting a thorough exam from a licensed and qualified financial practitioner?

For the record, if I gave out advice to clients like some of the financial entertainers on the TV & radio, regulators from several different oversight agencies would surely come after me. Maybe that’s why most financial entertainers do not hold any active financial licenses or designations?

So where does one go for qualified help? Whether you talk to me or someone like me, I suggest that you seek out a professional who has shown enough dedication to their trade to earn and maintain a CFP® designation. Asking a friend for a recommendation is also a great idea, but look for viable credentials.

Kraig Strom, CFP®, ChFC® is a Certified Financial Planner® and owner of WealthyCastle.com. He can be reached at 877-297-5851 or www.WealthyCastle.com.