Most personal finance bloggers talk about their mission to spread financial literacy and yet …
1. Tax-saving Every year in Jan. and Feb. there is invariably an article on ‘how to save tax this financial year’ and none for the rest of the year. Tax-planning should be integrated with goal-planning. A prudent investor starts his/her planning in April based on the union budget. Very few blogs stress this. Why? Is it because no one will be interested in a ‘how to save tax this financial year’ in April?
2. LIC Polices Around the same time each year LIC introduces a new policy or two. Immediately all the bloggers jump on the review band wagon. Search for ‘Jeevan S**am review’ to see what I mean! In the movie ‘As good as it gets’ Jack Nicholson’s character says, ” I am drowning here and you are describing the water!” I get reminded of this line each time I see such a review. All most all bloggers will agree that one should not mix insurance and investments just as one should not drink and drive (most reviews would thankfully end with this line after reproducing most of the information found in the insurers website). What is bad is bad! So what is the point of review after review? The following article template should suffice.
“Review of LIC Jeevan ****** ”
3. “Best Mutual Funds to invest in 2***” Every year there is an article like this. Compare this with a similar one written by the blogger last year and the year before, most of the funds will be the same. Many bloggers who write such articles are finance professionals. Eventually all most mutual fund investors will realize that the ‘best fund’ does not exist and that fund ratings are a myth. An article on “How to choose a mutual fund?” re-published every six months will educate investors more than such a ‘best of’ list. Don’t expect a finance pro who is offering MF investment services to write such articles. You will not find a ‘how to fish’ manual in a fish market. Such articles cater to the free-lunch mentality: ‘Suggest me good funds to invest in’.’ Which is the best life/health insurance policy’ etc. If you think such articles promote financial literacy, think again.
4. Tax-free bonds. At least the LIC policy reviews had a statutory warning at the very end of the article. Reviews on tax-free bonds are even worse. Most of these articles are a mere reproduction of brochure information. Somebody please tell these bloggers that a review of a financial product is an assessment of who should invest and when, besides the usual yadda yadda. This is completely missing in almost all such ‘reviews’. Somebody please tell them because I tried and failed: one leading blogger thought I was attacking his integrity. Another gave me such an unprofessional (he was a pro) reply that I choose not to reproduce it here. What is worse is that a peddler of these bonds writes ‘review’ after ‘review’ in a leading blog. Don’t expect financial literacy from those!
5. MF-Direct option. Did you notice that there are surprisingly few articles on this! Why? A leading blogger would have been the first to review such an option (and he knows, or should I say knew, how to write proper reviews) before he started financial advisory services. The problem lies in linkups (with who or what? Take a guess!). Fact is most financial planners in India are fee-based planners. That is they offer MF services and get commissions in addition to client fees. Do you expect them to tell their clients, “choose the direct option, you just pay me advisory fee”. Expect them to say something like: “Yes the direct option will fetch more returns over the long term. However if you cannot choose MFs yourself then it is best that you stick to the regular option”. Easy to guess what that means. Recently a well-known planner recently wrote an article in NetworkFP to stress exactly this to their clients! A major portion of financial planning is investment advisory. The other part is the math and the calculations which you can get free from here :).
The point is the financial gyan offered by a blog is limited by bloggers agenda (hidden or otherwise). Let us not confuse information with knowledge – Caveat emptor.