Who is Qualified to Give Advice?

Two weeks ago Trent at The Simple Dollar had a post in which he quoted at length from a pretty hostile email attacking him for not having any particular qualification to give personal finance advice.  Of course, to a blogger like Trent that’s a slow hanging curve, and he proceeded to yank it into the bleachers in post that got 225 mostly supportive comments.

His defense of his right to give advice was not “Hey, maybe I don’t have a lot Blackboard Lecturing Cropof credentials, but I know what I’m talking about” nor “Look, I’ve been doing this for three years and more than 100,000 people read this blog every day, so my advice must be pretty good.”  Instead, Trent essentially said what most  bloggers say, that he is not a guru but an ordinary guy doing his best. “All I can do is share my experiences and what I’ve learned along the way.”

Similarly, in the Get Rich Slowly post that discussed this blog (and led many of you to discover it) my current hero j.d. wrote that he had been thinking of updating his disclaimer and had settled on borrowing the text from The Digerati Life:

Disclaimer: I’m not a financial professional, and I’m not in the business of giving advice. This is a personal blog and most of the content here is based on my own experiences and opinions. I hope to use this site as a way we can all learn from each other.

Before I go any further, kudos to these blogs (and most other blogs) for not claiming to know it all.  Examples of people understating the extent of their knowledge are few and far between, particularly in the financial world.  Still, the phrase “I’m not in the business of giving advice” does split hairs a bit, making a distinction between providing detailed personal finance information and opinion and giving advice about it.

But all this begs [raises] the question as to what a properly qualified giver of advice on personal finance would look like.  Would they have impressive credentials, such as advanced degrees or professional certifications?

Based on a quick review of Wikipedia and various other websites, as best I can tell, Suze Orman, David Bach, Dave Ramsey, Phil Town, and Jim Cramer have between them only one graduate degree.  (Cramer went to law school.)  Orman majored in social work in college.  She and Bach once worked as stockbrokers, so presumably have the necessary government licenses.  (But then so does Martha Stewart.)  Again, as best I can tell, none of the five have any professional designations or certifications.  [A reader has pointed out in the comments below that Orman holds a CFP.  Sorry.]

Generally speaking, the people who are avowedly in the business of giving advice have only the circular qualification that they’re successful givers of advice. And that’s a qualification, it seems to me, to which the big bloggers have as legitimate a claim as the big gurus.

Moreover, there really isn’t a better qualification out there.  There are no prestigious graduate schools of personal finance.  There is such a thing as a Certified Financial Planner (CFP) designation, but it is not widely recognized.  There are no government licenses for financial advisors, nor is there anything remotely like the professional certification process we have for doctors and lawyers.

Personal finance is an unsettled field.  Some know more than others, and some claim expertise while others shy away from it.  But nobody has any particularly useful qualifications.

Oh, and me?  I majored in Economics at Harvard, got an MBA in finance at MIT’s Sloan School of Business, am a Certified Financial Analyst (CFA) and hold the same stockbroker’s licenses as Orman, Bach, and Stewart.  (But I’ve never worked as a broker.)  I have 10+ years of experience managing stock portfolios for mutual funds, institutions and hedge funds.  All that may sound impressive (or not) but none of it taught me much about personal finance.  What I know I learned in books and blogs and figured out on my own, just like everybody else.

Check out my new disclaimer at the bottom of the right hand column.

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