Is there scope for bias in financial advice? I am tempted to ask this question after reading a recent piece by Radio 4 Moneybox presenter and Money Marketing columnist Paul Lewis.
In a typically forthright – and provocative – column, Lewis points out similarities between the role of financial journalists and
advisers: “I hate to say it but we exist for the same reason you do: we make our living explaining the complex world of finance and advising people what to do.”
Lewis’s conclusion is that “advisers and journalists inhabit the same world and we should be supporting each other in our different roles”.
To be honest, I am not totally convinced by Lewis’s parallels between the two trades. I suspect that what he is aiming to do is return to his old argument about journalists giving “advice” in the same way advisers do. If so, this is probably not the best way to go about it.
Yes, it is true, journalists and advisers both discuss financial topics before an audience. We both provide a mixture of advice and guidance on the topics themselves.
But journalists are, by definition, more likely to focus on topics that have a wider application among the public.
They have to. After all, if you want to reach as many people as possible, your starting point is to demonstrate the applicability of that topic to as wide an audience as possible.
Even case studies, insofar as they look at specific stories affecting individuals, are primarily aimed at drawing in more people by personalising a case. And they are always used to prove a wider point.
The starting point for advisers is different. An adviser is required to focus primarily on the specific issues as they apply to the individual in front of them. If there are more general lessons or wider applications that flow from that individual case, then sure, flag it up and discuss it more widely.
Ironically, that is when the interests of journalists and advisers may coincide: when an adviser feels there is a need for a wider debate on an issue which he or she has experienced with one or more clients, or knows of other cases that point to a certain conclusion on that subject.
But it is a huge stretch between acknowledging that our interests can overlap or that we can work together on topics of common interest and suggesting we perform the same, or even similar, functions.
My suspicion is that most advisers would not want to be tarred with the same brush as journalists and, frankly, I feel the same way. Also fascinating about Lewis’s column was, as always, the comments under the online version of his piece.
The response to his suggestion that advisers should recommend “people read good, independent financial journalism” predictably went down like a lead balloon.
One adviser responded: “What? Good independent financial journalism maybe, but not the unqualified drivel you spew out.” Another wrote: “Explaining things is good, as long as it’s done in an unbiased way.”
Which brings me to the crux of the argument: neither advisers nor people working in the media are free from bias. In the past 26 years, I have met hundreds of advisers – and the same number of journalists – and I have never met such a thing as a totally unbiased member of either community.
But there are differences in the way that bias is expressed.
Journalists, whatever their personal views, work in an industry that is itself biased. Which is why, when I worked full-time in newspapers, my work was always written not just with my audience in mind in terms of its demographics and therefore its financial needs, but also its own very specific approaches to certain topics.
That is not to say I was unable to express a personal view at odds with my readers or the newspaper itself (occasional flashes of independence were never stamped on) but had I done so week in, week out my career with that organisation would have been over fairly quickly.
The same applies today. Take Guardian personal finance editor Patrick Collinson’s valiant efforts to speak out against the tendency of some commentators to constantly hype up rising property prices as a good thing. Or Jeff Prestridge, whose own editorial comments constantly chime with the Mail on Sunday’s doughty and highly-individualistic readers.
Advisers are not the same. By and large, by focussing on the specifics of that client’s individual need, they can avoid or curtail discussions about wider societal issues that impact on the advice they give if they so wish.
My guess is that unless they know their clients well enough to assess what is permitted and what is not in terms of sharing their personal opinions on topics of the day, the vast majority will refrain from doing so. With one exception, I have no idea of the political leanings of any adviser of which I have been a client.
Which is why my view is that, while journalists will always be biased one way or another, the same luxury does not apply to advisers. Which also addresses Lewis’s other main question: am I the same as a financial adviser? Emphatically not.
Nic Cicutti can be contacted at firstname.lastname@example.org