It must be quite difficult being a fashion journalist. There are, I suppose, about four main seasons a year – Spring, Summer, Autumn and Winter. Each season has about thirteen weeks and during those thirteen weeks fashion journalists have to find new and exciting things to write about, thirteen times for each season, to both keep their readers interested and to attract lots of expensive, glossy ads. Of course, most fashion journalists are not really journalists in the sense of reporting something new. They are mainly in the business of pushing the products of those companies which give their employers the most advertising and making sure we keep journalists’ tip on buying stuff that’s usually hideously overpriced and which we don’t need. But perhaps that doesn’t really matter as fashion journalism is just a game that cannot seriously damage readers’ wealth. If readers are actually foolish enough to believe what the fashion journalists write, their only losses will be a little money spent buying clothes which may make them look slightly ridiculous and which they’ll probably not wear more than a couple of times, if at all.
Personal finance journalists are similar to fashion journalists. They too have to find something new and exciting to write about every week. And they must try to push their readers to put their savings into the products which the main advertisers are keen to sell or into shares where the journalists and their associates may have a financial interest. But things become a little more serious when people actually follow the advice of personal finance journalists as readers’ losses really can start to hurt their pockets.
“Personal finance is almost as corrupt….Financial institutions and PR companies target millions of pounds from marketing budgets at a few dozen business journalists, and almost anything goes. Some journalists boast of lifestyles that are little more than perpetual junkets.”
There’s an insider joke amongst personal finance journalists that there only are seven different stories they can write and each week they have to dress these seven stories up so they look new, important and interesting.
Personal finance journalists can have an important role to play in helping us with our finances. They can let us know what’s happening with stock markets; inform us about new and possibly complex financial products, for example exchange traded funds; explain the tax implications of various investment strategies; direct us to the best places to buy financial services; alert us to some of the most egregious scams and even help out a few readers who are fighting for justice against some incompetent, overly bureaucratic financial institution or other. But like the rest of us, journalists have mortgages to pay, children to educate and a lifestyle to maintain. So they are likely to be more than acquiescent when it comes to keeping the major financial services advertisers happy and unlikely to ever be too critical of the finance industry’s greed or dishonesty. We should all read the personal finance pages in our newspapers in order to keep up to date with what is happening. But there are a number of caveats we should bear in mind to ensure that we take most things written by personal finance journalists with a generous helping of scepticism.
– They’re seldom financial experts – If personal finance journalists were true experts in their field then they would be making millions working for firms like Goldman Sachs or Barclays Wealth Management rather than eking out a rather precarious existence trying to write a weekly column that will satisfy their editors, readers and advertisers. Personal finance journalists will tend to have good socialising skills to maintain a network of people to feed them material and reasonable writing ability to turn that material into compelling stories. But they may not be exactly the kind of people to whom we should entrust our financial futures.
– They’re often puffing, not reporting – Frequently they will be writing ‘puff pieces’ praising a product or a company by turning a persistent PR person’s press release into something that convincingly masquerades as a news story.
– It’s too late – By the time we read about the latest investment trend – shares, unit trusts, buy-to-let, guaranteed bonds, emerging markets, small caps, kick-out bonds, combination bonds or whatever – in our weekend newspaper, the financial services insiders have already moved into the market and prices are rising. Once all the suckers read about what’s happening, see the gains everyone seems to be making, think about whether to dive in, discuss it with their families, friends and work colleagues and then jump on the bandwagon, prices are probably too high and the bubble is about to burst. The insiders then get out with their profits, prices falter and plunge and the herd get stung yet again.
– Causing fad-jumping – Personal finance journalists have to find something new to write about every week. Like fashion journalists, they must keep encouraging their readers to jump on the latest fad, flitting from one type of bank account or fund or investment or market to another. Yet the more people move their savings from one place to another, the more they lose in charges, commissions and fees and thus the less they keep for themselves.
– Blowing and bursting bubbles – To keep their readers’ attention, journalists will try to sensationalise their stories. So, whether something – house prices, interest rates or stock markets – is stagnant, slightly increasing or slightly falling, the tendency for journalists to describe what is happening in overly vivid colours causes ordinary savers to rush in and out of investments magnifying price movements both up and down and losing us money whether we are buying or selling.