July 14, 2023
Beware the art of persuasion
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Love it or hate it, we live in an information society. From a financial perspective, this reality has some clear pros and cons. On the plus side, every one of us has the option to access and manage our financial accounts any time, any day of the week. (What a far cry from the days when we had to visit the bank in person, wait for checks to clear, and physically balance a checkbook!) We also have myriad sources of financial information at our fingertips—a change that has improved financial literacy and made us more financially self-empowered than ever before.

On the downside, this unlimited access to information can lead unsuspecting investors astray. Financial pundits have become top TV personalities. Online blogs and financial advice websites offer wildly differing opinions that are all framed as educated insights. Even athletes, celebrities, and tech wizards are getting into the game, urging investors to jump on the latest financial bandwagon (yes, I’m talking cryptocurrencies and NFTs!) or worse, to jump out of the market completely. In most cases, this endless barrage of information is distributed by media outlets that are on a mission not to help investors make better, smarter decisions, but to create enough fear and anxiety that viewers keep tuning in, readers keep coming back, and advertisers keep getting enough ‘eyeballs’ to justify their massive budgets. In other words, the media is doing everything in their power to create and evoke emotions to achieve their own financial goals—not yours.

At LCM, we serve clients of every age—from investors in their early 20s to those in their late 90s. Across that wide spectrum, we’ve seen the impact of the media’s well-honed art of persuasion in action. “I heard about a ‘dark-horse growth stock’ that is ready to outperform Apple. I want to invest!” “I read that the market is going to crash after the next rate hike. I think we should move everything to cash now!” “My favorite Laker believes crypto will make me rich. Is he right?”

Whenever we’re asked questions like these, we strive to steer the client back to the basics by focusing our conversation on the two things that matter most to their financial future: their personal goals and how their portfolio is designed to help them achieve those goals. (For more on our approach, see Marr’s blog post How We Serve You.) One reason it’s not always an easy conversation is that we are financial professionals—not media personalities, celebrities, or hot-shot advertisers. It’s hard to compete! As a fiduciary, we have a legal obligation to act in our clients’ best interest. We are prohibited from sensationalizing what we offer or guaranteeing investment outcomes, and we are required to support every piece of the advice we give with a clear economic rationale. Media influencers may have a large platform, but they are not required to abide by any of these important restrictions. And unlike our team, they have no vested interest in the outcome for investors who heed their advice.

At LCM, we aren’t trained in the art of persuasion. We will never offer the pizzazz and punch of a well-crafted campaign. Instead, what we bring to the table is a professional team with decades of investment experience, highly respected credentials (Chartered Financial Analysts, Chartered Advisor in Philanthropy, Chartered Alternative Investment Analyst, and Chartered SRI Counselor), a passion for research and the capital markets, and a focus on balancing asset growth and asset protection. Most importantly, we are 100% dedicated to growing every client’s wealth so they have the freedom to live the life they choose with the confidence of financial security.

Research has found that information overload “increases information and estimation risk and deteriorates investors’ decision accuracy amid their limited attention.”[1] That means that rather than helping investors make smarter decisions, too much information can make it more difficult to make rational decisions. In the worst case—especially when the source of the information has suspect motives—this can lead to behaviors and decisions that can be harmful to your financial health. Don’t be fooled. Consider limiting your information sources to trusted media outlets. Bloomberg and The Wall Street Journal both provide balanced content from real experts. For non-US perspectives, The Economist and the Financial Times are sound. You can also find smart, research-focused guidance from independent asset managers that share the goal of helping investors do well, including BlackRock, J.P. Morgan’s Guide to the Markets, and PIMCO’s Economic and Market Commentary. Morningstar also offers reputable, research-based content. Steer clear of platforms that lean toward dramatic headlines, include celebrity endorsements, or feature heated opinions by individual pundits. Beware of ‘research’ that makes astounding claims (always confirm the source to be sure they aren’t profiting from your actions!) and be especially wary of financial content that appears on social media. None of these sources are vetted (there is an important difference between a ‘smart person with an opinion’ and a ‘smart person with expertise in the field’) and they add to the information overload you are striving to avoid.

And if you do come across something new that you’d like to discuss? We are happy to explore it together with the goal of maintaining a portfolio that is designed to provide you with the financial strength to meet your personal goals. As your fiduciary, that is—and will always be—our mission.

[1]  Effects of Information Overload on Financial Markets: How Much Is Too Much?, Board of Governers of the Federal Reserve System, March 2023


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