In some respects, the personal finance sections in the press can be useful.
For example, warnings about financial scammers and some of the methods they use are always helpful. Likewise, regular reminders for you to try and get the best rate on your motor and home insurance, and similar tips about how you can save money on anything from holiday insurance to train tickets, can also be valuable.
However, when it comes to articles that could relate to your own personal finances, referencing actual products and providers, warning lights should start flashing for you.
In fact, taking advice from newspaper financial pages – whether that’s weekend broadsheet “money” sections or midweek supplements – could impact negatively on your financial health.
Here are three reasons why you should think twice before taking financial advice from the personal finance press.
1. Scare stories are not financial advice
Headlines and articles in the personal financial press are designed to attract readers. You may well have heard this described as “clickbait”.
You therefore often find journalists writing content to deliberately stir controversy, rather than trying to adopt a balanced view or explain a certain issue in some detail.
Two recent examples of this are:
- A Telegraph journalist writing the headline: “Financial advisers are putting your money in tracker funds – so why are you paying them?”
- A Times journalist tweeting: “A life insurance policy is like a pact with death. You might as well invest those premiums. That way, you’re better off the longer you live, not the other way around.”
In the case of the Telegraph journalist, there was no recognition that there’s far more to financial advice than simply picking investment funds. A planner will actually put together a well-researched, robust investment strategy together for you, and review it with you on a regular basis.
Your plan also covers a range of areas, from protection to tax and estate planning, and isn’t just about “investment returns”.
In the second example, the Times journalist took no account of the importance of life insurance when it comes to financial planning, and the peace of mind it can provide for you and your loved ones.
Scare stories, and articles written to provoke a strong reaction, are not financial advice.
2. There may be ulterior motives for a particular recommendation
Financial companies such as providers and fund managers will often look to have their products or funds written-up favourably in the personal finance press.
An article or comment favouring one particular fund or market sector could be as a result of a meeting with a fund manager, rather than any considered analysis.
It’s also not unheard of for personal finance “stock pickers” to recommend a certain fund or share based on a conversation with someone from the company rather than any detailed research.
Quite often, you’ll read about how they invest their own money. The funds they recommend may well be perfect as part of their own portfolio, but there’s no guarantee at all that it would be suitable for yours. A share tip takes no account of your attitude for risk, capacity for loss, or whether it can help you to achieve your wider financial goals.
In contrast, financial planners work to high standards of conduct when making recommendations.
We analyse a wide range of options from multiple providers before making any recommendation. When it comes to investment choice, this can often be the result of many hours of research and, crucially, it’s tailored to your specific goals and ambitions.
3. The advice they give you may well be wrong
Some personal finance journalists may have a financial background, but generally they will have little or no experience of financial planning.
Remember, they are writing about personal finances because they’re being paid for it. They could just as easily be writing about sport or cookery.
Pensions are a complex and technical subject, particularly when it comes to the way they are taxed by HMRC.
There have been instances of articles in the personal finance press being incorrect or, at best, ambiguous, when it comes to pension taxation.
You could therefore find yourself in the situation of making an expensive mistake if you were to follow guidance or a suggestion made in an article. This could result in you receiving an unexpected and unwelcome tax bill.
Moreover, mistakes of this kind can often be irrevocable, so you could also put yourself at a permanent financial disadvantage.
Trust a professional adviser, not a journalist
As you’ve probably realised, professional advice from an experienced financial planner is important when it comes to your financial future.
Research from the International Longevity Centre found that receiving professional financial advice between 2001 and 2006 resulted in a total boost to wealth of more than £47,000 by 2014/16.
As well as the potential financial gains, working with a planner rather than going it alone can also have mental health benefits. We’ve written before about the wellbeing and emotional benefits of financial advice, which include feeling more confident and secure about your future.
We’ll tailor a plan to suit your circumstances and to reflect your financial goals, and will review your plan on a regular basis to ensure it’s on track to meet your needs. Your friendly newspaper journalist will do neither of these things!
To find out how we can help, email email@example.com or contact your adviser on 020 3828 8100.