One thing that has always irked me about personal finance journalism is that originality is rare and the same topics are regurgitated ad nauseum by writers and publications. So when Helaine Olen's book Pound Foolish: Exposing the Dark Side of the Personal Finance Industry released earlier this year, I was excited to see someone finally take a unique look at the personal finance industry and tell some of the harder truths that often go unsaid.
Olen took aim at just about every personal finance "guru" and personality to slap their face on a self-help book. These experts were demonized as peddlers of shallow words and empty promises, preying on the helpless public who blindly hand over their hard-earned money for a piece of financial wisdom.
Of course, everyone who writes on business and finance followed suit, retelling the same story of betrayal. Talking smack about the big names and how fake they all are has become the cool thing to do. Suze Orman and Dave Ramsey have become the Miley Cyrus and Kanye West of personal finance, thanks to Olen.
Unfortunately, while she demonstrated some great reporting and made several solid points in Pound Foolish, in the end, she did exactly what her book condemned others of doing. Olen went to the extreme, playing to the fears of her audience in hopes of driving readership.
Seriously, the pseudo-celebrities who pitch tips to get rid of debt and offer seminars for growing wealth are a far cry from the epitome of everything that's wrong with the personal finance industry. Everyone needs to get a grip.
Why We Need Gurus of Personal Finance:Findings by the National Foundation for Credit Counseling in its 2012 Consumer Financial Literacy Survey, as usual, were not great:
- Slightly more than two in five U.S. adults (43 percent) responded that they have a budget and keep close track of their expenditures. Fifty-six percent said they don't have a budget, while 22 percent admitted they don't have a good idea of how much they spend on housing, food and entertainment.
- If facing financial issues that would lead to debt, 27 percent of respondents said they would first turn to their friends and family for help. However, more than one in 10 say they would reach out to the lender or credit card company to see what solutions they might be able to offer.
- Forty percent of adults said they saving less than last year, and 39 percent do not have any non-retirement savings.
It's clear that our government, school system, and even our parents have failed when it comes to teaching and ingraining in us basic money management skills. But there are plenty of people who want those skills and a community of experts who inspire them to make smarter choices with their money.
Every December, we run a poll to find out who our readers consider the best personal finance expert. The votes and comments grow exponentially each year, proving that regardless of how writers feel about these people, their fans consider them to be instrumental in improving their financial situations.
We All Gotta Get Paid:
One of the biggest judgements against personal finance gurus like Suze Orman, Dave Ramsey, and Robert Kiyosaki is that they have built their empires (and wealth) selling their advice through TV spots, radio shows and books.
I'm sure Olen isn't giving away copies of Pound Foolish for free.
And most of the criticisms of these personal finance personalities that I've read across the web, written by established financial journalists for major publications, are posted on pages full of ads for major banks, credit card companies and other advertisers within the finance industry. Who's the hypocrite now?
The point is that receiving money to provide expertise does not render that advice inaccurate or untruthful. The world needs and relies on experts because we can't know everything, so they make a living providing expert knowledge to those who want it. Don't these people deserve to be paid for their work, especially by the people voluntarily seeking it?
At some point, people need to take personal responsibility for what happens in their lives, and make conscious choices to improve their well being. If that requires the larger-than-life personality peddling common sense that has simply been wrapped in a shiny new package, so be it. I can think of worse things than convincing people they'd be better off if they saved, invested and stayed out of debt.
Just like the criticism that popular personal finance advice is grossly generalized, so is the judgement that all personal finance experts are the same.
No doubt, some of the "experts" out there are nothing more than frauds. Others, I disagree with regularly.
But at their core, the majority of experts who have made their names providing personal finance advice have done so to the benefit of thousands of people. Their guidance may not always be the best answer for the person following it, but at least Ramsey, Bach, Orman, Kiyosaki and the rest attempt to provide their audiences solutions. Olen, and the journalists who parrot each other's opinions, seem to only point out what's wrong.
CORRECTION: An earlier version of this post incorrectly cited statistics from the 2012 Consumer Financial Literacy Survey as being from the 2013 Consumer Financial Literacy Survey. The post has been updated to correct this.