Headlines Need Not Tell The Whole Truth

Are there many people out there that think hyperbolic commentary adds value?  I hope not.  But one that may still think so is Rob Carrick of the Globe and Mail.

A recent piece entitled “Carrick on money: Six-figure shocker – your lifetime bill for investing fees” ran last week.  Grand total: $170,578.27.

It referenced a more thoughtful piece by Preet Banarjee from whence the number came.

I suppose if you need attention and assume people only read headlines, then this tactic makes some sense.  The headline misses important elements.

  • Doing nothing has a cost.  It may not be money but it is there nonetheless.  If you value your time, your skill and your risk at zero then the $170,000 cost may be avoidable.
  • Having no advisor/confidant is error prone.  Who will say, “Stop!”, “No!” or “That’s crazy, back away!”  More people blow themselves up than ever have had advisers do it for them.
  • Everything of value costs something else it would have no value.  Cost and value always come together as a pair.
  • I suppose there are some that think it is possible to get something for nothing.  They typically overlook the fact that someone must supply the resource for them to have.  Someone who gets something for nothing is always paired with someone else who got nothing for something.
  • Most people who believe they get too little for the fees that they pay for investment advice pay no attention to the value they do receive.  If it is easy to do and costless and risk free enough to be a do-it-yourself project, why are experienced advisors in demand by thoughtful people?  It cannot be that easy or people would not need years of education and experience to get good at it.
  • Even given the idea that it must be easy, there are few who would engage their next door neighbor to do it for them.  I doubt the DIY investor who fancies himself skilled could talk his neighbor into using his services.

If you do not look at the value you receive then everything has a significant lifetime price.  For example, in a world where money is worth 7% and inflation is 3% the 40-year cost of eating at $50 per week is $814,598.81.  No one thinks this should be avoided because the value is more intuitive.

Avoiding financial advice may be the equivalent of avoiding post-retirement food.  You only get to blow yourself up once.

Financial advice is not valued because the critics are too ill-informed to discover its value,  or perhaps too cynical to admit it has value.

Admitting financial advice has value would eliminate the need for hyperbolic headlines and that would be a blessing too.

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Contact: don@moneyfyi.com  |  Follow Twitter   @DonShaughnessy

Don Shaughnessy is a retired partner in an international public accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.

4 Comments on “Headlines Need Not Tell The Whole Truth

  1. This observation is true in a more general way. If you don’t know and don’t find out the value of what you are receiving, there is no way to assess the correct price.

  2. Hi Don, your one piece of wisdom plus my one piece equals two right….Is that a good way to learn ??? When I was age 24 I am fortunate to have had a boss who was a marketing executive of Singer Sewing Machine Co. who told me how to climb the ladder to the top and over see the chaotic world we live in. But he warned me at the same token that it’s lonely up there. For me to succeed climbing to the top; he said… take fifteen minutes of the twenty four hours available each day to acquire one piece of wisdom and if you can remember just 30% of the total you acquire in your lifetime, you will surely be there. Do you agree or disagree.

    • Wonderful advice. 30% is more than 100 per year. I would be happy with a tenth of that. Warren Buffett has said you need to be right only a few times if you can avoid big mistakes. Wisdom does not generally make you more right but it is wonderful for avoiding big mistakes.

  3. Good thoughts here, reminds me of the news yesterday … the radio announcer proclaims during the news report at 6 pm that “Stocks Where Down Sharply Today” and I said to my father-in-law who was driving, when in the world did 0.26% become Sharply! , headline nonsense

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