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 of 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.

Gurus, Media, PF Blogs, The Big Picture | Frank Curmudgeon | March 26, 2009 5:10 pm

18 Comments

By ObliviousInvestor, March 26, 2009 @ 5:19 pm

One reason I think that JD and Trent do so well is that they recognize that personal finance is (for the most part) fairly simple.

To grasp the most important parts, you really don’t need a degree in the field. A non-college-educated investor could be quite successful simply DCA’ing into an index fund for 40 years and paying off his credit card every month.

Nothing super tricky there.
By ObliviousInvestor, March 26, 2009 @ 5:20 pm

PS: Your disclaimer is one of my absolute favorites, hehe.
By Clayton, March 26, 2009 @ 5:27 pm

This is a terrible nitpick, but “begs the question” doesn’t mean “raises the question.”

Begging the question is a logical fallacy wherein the assumption of a statement’s truth is used to prove the truth of that statement.

A begged question in this context would be something like “we need qualified personal financial advisors because you can’t give good advice with being qualified.”
By GPR, March 26, 2009 @ 5:52 pm

All a diet book really needs to say is “eat less, exercise more.” But that would be boring.

I suppose a financial blog that says “spend less, earn more” would be equally boring.
By Manshu, March 26, 2009 @ 7:03 pm

Akio Morita in his book – Made in Japan wrote something to the effect that America is a very litigious society, which, I think is a point worth bringing up in this debate.

As your own disclaimer cleverly points out — how much can you hold a person accountable for the free opinions they make on their blog?

Is there really a need to state that coffee will be hot?
By Eric, March 26, 2009 @ 7:05 pm

WORD!
By DanL, March 26, 2009 @ 7:52 pm

I love your “Oh, and me..” paragraph. I majored in Economics at Union College and I was debating going back to school until I realized I was learning much more from experience than I would in school. My timing could not have been worse getting into the mortgage industry and the intangible value of my experience is currently worth more than any degree. I may go back just for fun…but I still have a lot more learning to do from experience!
By Bill Winterberg, March 27, 2009 @ 1:57 am

Suze Orman holds the CFP® Certification.
http://www.cfp.net/search/search_detail.asp?ID=W26784

What do you think of the CFP® Certification? Is it at least a good place to start, despite its lack of recognition?
By ryan, March 27, 2009 @ 7:23 am

Frank,
You say that you have been unemployed for 18 months, but apparently you and your family are solvent.

For me, at this point in my life, personal finance is about building up enough wealth that, without any salary, I would be able to maintain a comfortable, upper middle class standard of living funded exclusively and indefinitely by the returns on conservative investments.

If you’re in that position right now, then you’re qualified to give advice to me.

Qualified praise aside, I’ve noticed a slight conflict between this most recent post and “About this blog.” Since when is MIT “another Ivy”?
By Frank Curmudgeon, March 27, 2009 @ 8:32 am

Hmm. The fact checkers at Bad Money Advice had a bad day yesterday.

Clayton: I stand corrected (see above.) Everybody should click on Clayton’s link. It is exactly what the internet is for.

Bill Winterberg: Again, I stand corrected. I didn’t know you could search the CFP.net site, thanks for the link. I’m not really sure what to think about the CFP. It is a good idea in principle, and before I say anything bad about it I should probably get one myself. I can sit for the test without the classes because of my CFA, but it costs $600.

Ryan: Although MIT most certainly does not play football in the Ivy League, it is a member of the Ivy Group, the much more important organization that acts as a cartel of top schools to set tuition, etc. But I concede that generally when people say Ivy they mean the eight orignal schools in the athletic league. And yes, the family and I are reasonably comfortable (as least as long as the wife keeps her job) but I don’t think that’s much of a qualification either. One of the great fallacies of personal finance literature is that the rich necessarily are good at managing their own money.
By ryan, March 27, 2009 @ 8:55 am

The (non)-Ivy explanation is good enough for me.

Frank: This op-ed in the NY Times basically could have been your thesis for this blog.

http://www.nytimes.com/2009/03/26/opinion/26Kristof.html?_r=1&scp=1&sq=expertise%20myron%20fox&st=cse
By RT, March 27, 2009 @ 1:32 pm

Honestly, I hadn’t read your disclaimer before, but “All advice in this blog is guaranteed to be worth at least what you paid for it, or double your money back.” is a HILARIOUS line! Kudos to you for that one.
By the weakonomist, March 31, 2009 @ 8:44 am

Bill, the CFP is the best designation one can hold when making a living helping clients invest and manage money.

Frank’s CFA is perhaps the best overall certification in terms of absolute knowledge, but its best applied on non client-facing roles. Frank can add to or subtract from my thoughts.

If you hold a CFP and/or CFA in a respective industry, there isn’t much to be gained by obtaining additional certifications.
By David, February 24, 2011 @ 9:50 pm

I know I’m late to the party here, but I do want to correct an error in this post. There are schools where you can get a degree in personal financial planning. I guess that would be as close to a degree in personal finance as you can get. There are even two schools offering a PhD with an emphasis in personal finance. I agree, the profession is young. But, it does exist.
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