Categories: OLD Media Moves

The failure of personal finance journalism

Personal finance journalism is failing in that it does not tell consumers what they need to know about their money and investing, said John Wasik, the personal finance columnist for Bloomberg News, at a business journalism symposium Thursday.

“In terms of personal finance, I think that we are failing,” said Wasik, who spoke at “The State — and Future — of Business Journalism” symposium in Chapel Hill, N.C. “I think we need to tell stories. We need a lens to view all of these issues through.”

Corporate reform and financial industry trends impact consumers on a level that many people don’t realize, said Wasik. For example, there is poor disclosure of money management and financial planning terms and conflicts.

“We have to make these decisions on our own now,” said Wasik, but few people are knowledgeable enough to do so. In the past, corporations would make decisions for their employees such as what investments to include in pension plans and what health insurance plans to purchase.

Wasik called 401(k) plans a “scandal” because of the poor mutual fund offerings from companies. What employers are not telling consumers is that their 401(k) offerings are not as diversified as they should be. The fees charged by the mutual funds in the 401(k) plans are “highway robbery” because employers are picking them off the shelves without any customization.

“It’s a scandal that we have failed to tell,” said Wasik.

Wasik added that personal finance journalism also needs to do a better job in telling readers that many people who call themselves “financial planners” are actually stock brokers or insurance agents who don’t have the certified financial planner designation. Many “planners” are simply trying to sell products.

Wasik also complaioned that there is a lack of complete conflict of interest disclosure by registered investment advisers in the Form ADV Part II that is filed with the SEC. He said he recently asked SEC chairman Christopher Cox what the regulatory agency was doing to improve such disclosure and received a non-committal response.

College savings plans, typically known as 529 plans, are in need of reform. Many of them have expenses that are paid to the state treasurer and need to be controlled by the SEC, said Wasik.

There is also too much focus on risk in personal finance journalism, added Wasik. “We should be thinking about diversification,” he argued. The largest investment in retirement plans remains company stock, which means that consumers are ignoring what happened to employees at Enron and WorldCom.

“We are the gaurdians,” said Wasik. “Everyone in this room can do personal finance. Why? Because it’s common sense.”

The challenge with personal finance journalism is keeping stories and advice fresh, said Bill Choyke, business editor of The Virginian-Pilot. He argues that he has seen personal finance stories that he remembers reading back in 1996.

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