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The Money Whisperer: The Dangers of Financial Pornography
Written by James N. Hait
Tuesday, 22 July 2008
Every time I venture past the news stand at the grocery store, I can’t help but notice financial magazines which sport articles such as: The Top Ten Mutual Funds You Need To Buy Today, Double Your Money in a Year, and so on. And who hasn’t been bombarded by flyers, either in the mail or newspaper, luring us to a financial workshop coming to our area. You know the kind, a flyer that contains some really scary phrases such as: “What if Everything You knew About Living Trust is Dead Wrong?”; “Educational Safe Money Workshop”; “Safe Solutions for Uncertain Times.” Or my personal favorite: “Bulletproof Your Finances.”
No matter what form it’s in, this is known as “Financial Pornography”. So just what is Financial Pornography and why should we avoid it like the plague?
What is Financial Pornography?
Let’s start with the basics: Webster’s defines pornography as: “The depiction of acts in a sensational manner so as to arouse a quick intense emotional reaction.”
Is that not the same reponse so‐called financial professionals and others want from us? When we hear statements such as: Three Ways to Double Your Money or Ten Hot Stock Picks for 2008, or when we see a flyer in the newspaper for a free senior workshop, do they “arouse a quick intense emotional reation” in us?
Columnist Humberto Cruz summarizes it well.
“I call it financial pornography. It titillates and excites but gives no lasting pleasure. Succumb to it, and it could actually be hazardous to your financial health. I am talking about all those alluring cover headlines from financial magazines, all the "hot tips" from the supposed market experts dispensing their eagerly sought but often contradictory advice all day long on cable TV. Not to mention the thinly disguised infomercial, in which some financial planner buys air time from a radio or television station, then spends half the show asking listeners and viewers to call his office for an appointment.” If we tweak Webster's definition of pornography just a bit, we can offer the following definition. Financial Pornography: “The depiction of investment and/or financial information in a sensational manner so as to titillate or arouse a quick intense emotional reaction.”
So what’s the big deal about Financial Pornography? Why should we avoid it like the plague – even if we get a free lunch out of the deal?
What are the Dangers?
Individuals or companies that resort to tactics such as Financial Pornography, use it to make their victims feel guilty about failing their families if they don’t buy their products, or scare them with bleak stories about how bad their future would be if they didn’t take action right now.
You know the drill: If they can make us feel scared enough, guilty enough, or stupid enough, chances are, we’ll buy whatever they’re selling.
"It titillates and excites but gives no lasting pleasure..."
The danger lies in what we do with this pseudo‐financial advice. Not only can it distract us from achieving our financial goals, it can overwhelm us with negative feelings which can cause us to “shutdown” to any advice from a competent professional. Or worse yet, we may give in to our intense emotions and buy a product or service that may not necessarily be suitable. The emotional / physical impact on a person can be significant too.
Recently, I met such an individual. He was telling me that he was a former Day‐Trader. (Day‐Traders often live off of Financial Pornography.) I asked him, “How’s your heart?”
He looked at me with wide eyes as if he’d seen a ghost. Instantly, he lifted up his shirt to reveal a 12 inch scar running the length of his torso! As it turns out, he had major heart problems. When asked when he had the surgery, he mentioned that it was around the same time he was a Day‐Trader. He
readily admitted to the huge amount of stress he endured as a Day‐Trader, glued to the television and internet, ready to jump from one investment to the next.
Now, I’m not a doctor. But do you think that all of this was a coincidence? Hmmm…
How can I protect myself?
What’s the best way to protect ourselves from Financial Pornography? The same way a person might avoid literal pornography: look away! Make a conscious effort to divert your eyes and ears. This is not always easy. We are surrounded by advertising on a daily basis. We hear it on the radio, we see it on television, and our well meaning friends and loved ones may unwittingly disperse it as well. It’s as if the air around us is permeated with it.
If you’re a financial Do‐it‐yourselfer, it’s imperative that you recognize Financial Pornography for what it
truly is. Just how can you do that?
About a hundred years ago when I worked at a bank, we were trained to spot counterfeit money. Did the training involve handling phony bills to learn how to detect them? No – we worked with the real deal. By doing so we could count large sums of money, and if a counterfeit bill was inside the bundle, we could pick it out by just by the way it felt. That’s how well we knew money!
Likewise, we need to know the “real‐deal” when it comes to the financial information and advice we choose to pay attention to. Better yet…
If you do have questions and really need help, why not find someone you trust to get your financial advice from? If we trust a competent professional we will follow their advice without them having to resort to these tactics.
How can you find a true Trusted Advisor?
In his book, “Values‐Based Financial Planning – The Art of Creating an Inspiring Financial Strategy”
author Bill Bachrach offers this advice: “…being a Trusted Advisor... means that the advisor has to
actually earn and maintain the trust of the client. In your search for the right person, you may encounter
three types of individuals: the “scientific” salesperson, the so‐called consultant (who is actually a salesperson pretending to be a financial planner), and the genuine article: the trustworthy and competent advisor.
It’s unfortunate that they don’t hang out a shingle to let us know which group they fall into. Their titles are no indication, either. Stockbroker, insurance agent, financial planner, financial advisor, financial consultant, estate counselor, CFP, CFS, CIMU, CLU, ChFU: none of these labels is a clue. Neither is the big‐name company they might represent. So you must assess each individual based on a set of characteristics and, ideally, recommendations from a friend, family member, or another advisor. The Trusted Advisor rarely advertises, makes cold calls, or direct markets, so you are most likely to find one by referral.”
The Bottom Line
Financial Pornography is vile and dangerous. It distracts us from reaching our goals. It wastes time that should be spent doing things we care about. Things such as: nurturing our relationships with loved ones, pursuing personal interest, and enriching our health.
Train yourself to avoid it altogether. If it’s a good fit for you, find a true Trusted Advisor. Implementing these simple suggestions will greatly improve your quality of life.
P.S. My overly‐zealous attorney insists that I tell you: “No portion of this article shall be construed as
investment advice.” Enjoy! JH
It makes complete sense that its in my best interest to find a trusted advisor and delegate my financial choices so I can live a higher quality of life.
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Delegate vs. Doing it on your own written by Jeff,
July 22, 2008
It makes complete sense that its in my best interest to find a trusted advisor and delegate my financial choices so I have more time to do the things I want todo in life.
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... written by JoAnne,
July 24, 2008
I just got a flyer in the mail just like the ones you talked about. Thanks or the heads up!
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Every time I venture past the news stand at the grocery store, I can’t help but notice financial magazines which sport articles such as: The Top Ten Mutual Funds You Need To Buy Today, Double Your Money in a Year, and so on. And who hasn’t been bombarded by flyers, either in the mail or newspaper, luring us to a financial workshop coming to our area. You know the kind, a flyer that contains some really scary phrases such as: “What if Everything You knew About Living Trust is Dead Wrong?”; “Educational Safe Money Workshop”; “Safe Solutions for Uncertain Times.” Or my personal favorite: “Bulletproof Your Finances.”
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