When Money Advice Becomes a Marketing Plan, It’s Problematic
Navient certainly isn’t the only example of this. A while back, writer J.Money of the popular finance blog Budgets Are Sexy complained about a media pitch he received from a credit card bank who wanted to encourage Millennials to use credit cards more often:
When asked what is the biggest benefit of using cash, most Millennials said using cash ensures they spend within their means and one-fifth say they worry using a credit card will make them incur debt. However, strategically using credit for regular purchases can help Millennials keep track of their overall budget.
J.Money’s response to this pitch summed up my own thoughts pretty well:
COME ON!!!! If people are worried about going into debt AND spending within their means, then leave them alone already! They’re being smarter than most other adults out there! Who cares about the rewards if you’re just going to dig yourself into a hole in the end and pay more for the privilege of it.
Sure, using a credit card can help your credit if you do it responsibly, but solid money habits are more important than good credit. Also? Credit card companies actually profit when you don’t use cards responsibly. They profit when you fail, financially speaking.
And that’s the problem right there: the advice is not completely wrong. These companies aren’t exactly misinforming consumers, they’re manipulating them by baiting them with a little bit of truth.
The line gets blurry. For example, while J.Money’s example is fairly obvious, the fact that these companies reach out to bloggers, personal finance experts, and journalists to spread their message just goes to show that there’s a fine line between solid advice and marketing.
How to Protect Yourself
So how do you protect yourself from big idea marketing masquerading as money advice?
For one, you can think like a journalist. A journalist has to consider the source and avoid those pesky conflicts of interest. Similarly, when you come across a bit of financial advice, whether it’s a blog post or a quote, it might help to consider your source. How does the source get paid? Is it a podcaster who gets paid via ads? Good financial advice doesn’t exactly contradict the way she profits (in fact, it supports her success). On the other hand, if it’s a credit card company that gets paid when you go into debt, good financial advice totally contradicts the way they profit. This doesn’t necessarily make the financial advice good or bad either way, but conflicts of interest are certainly worth considering.
You can also research the company’s reputation. The CFPB’s massive consumer complaint database contains a number of different banks, credit unions, and other financial services customers have lodged complaints against. Let’s say you’re hooked on a blog, podcast, or video series but it’s sponsored by a major bank or investment firm. Again, that doesn’t automatically make the advice wrong, but the least you can do is research that entity’s reputation.
It should go without saying that you should verify any advice, too. For example, if it’s money advice on how FICO calculates your credit score, it doesn’t hurt to go directly to FICO’s website and verify the information.
Finally, if you’re getting advice from a financial planner, you definitely want to make sure they’re a Certified Financial Planner®. True CFPs have to take a fiduciary oath to give advice that’s actually in your best interest. The alternative is working with someone who’s just trying to sell you an investment product, even if it’s not the best fit for your portfolio.