The world seems to be increasingly difficult to navigate in this information age. The internet is a wonderful tool, but the probability of receiving the wrong information is as high as ever. The consequences of living by that wrong information can be extreme.
Below are the 7 real issues with financial entertainers.
1. They likely don’t have an insurance or investment license
What they say is not regulated and their investment advice, legally speaking, carries absolutely no weight if it’s not backed by a financial license ensuring their integrity. This is a crucial distinction because on the other hand, if a licensed professional gave bad advice, they could have their license stripped, and lose their practice. If they don’t have a license, why wouldn’t they earn one?
2.As the world changes their personality can keep their advice stagnant
The best example of this is today’s drastically lower mortgage interest rate. A piece of advice which once may have been sound, can now actually hinder the ability to grow wealth. Parading it around with confidence using the most simplistic of calculations to reinforce their schtick and to justify their advice is a dangerous form of entrenchment.
3.You may not fit in their one size fits all advice
Taking advice that isn’t at least state specific can harmful. Laws and regulations including things such as the state tax code are overlooked. The format of the media outlet incentivizes a one size fits all plan. Too many nonrelevant details can bore an audience. Those specific details can be incredibly important to you.
4. Group Think
This is the psychological phenomenon which occurs consciously or subconsciously when a group of individuals takes an opinion solely based on the perceived popularity of it. When someone has thousands or even millions of listeners it can be easy to fall prey to bad advice. It’s important to remember an opinion does not have merit simply because it’s popular.
5. Their way or the highway
When meeting with a financial professional the first objective is to find out what your goals are. Often financial entertainers are more concerned with how many of their rules you are breaking. It just makes for better content.
7. Entertainment and finances don’t mix
For the same reason injecting drama and fabricating a reality tv show can lead to higher viewership, yelling and spectacles can lead to an increased viewership and higher profits for financial entertainers. Objectively, a financial advisor will succeed in business if they provide the right advice and help others. A financial entertainer will succeed in business if they make the show engaging and people listen to them day after day.
Stay Planted in Reality
Listening to financial entertainers can be a fun way to become more financially literate. They can be great cheerleaders an accountability partners too, but it’s important to take what’s said with a grain of salt. Speak with someone held accountable by a license before implementing a plan or even a portion of a plan offered by an entertainer. If you aspire to one of or several of the goals an entertainer champions, this isn’t inherently bad. It can be a wonderful thing and a trusted financial advisor should work with you to help you achieve your goals.
The way entertainers are incentivized is their downfall. Profit is made based on the amount of viewers rather than their viewer's success. If giving the audience a spectacle rather than solid thorough and specific financial council is what will make a show successful, it’s best to tune out.
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