Ultimate Fighting step aside because the biggest blood sport in recent weeks has been the Banking Royal Commission. Banks and financial institutions have been belted, executives smashed and conflicted financial advisers guillotined. All with good reason.
Next, we had the politicians backtracking and apologising before they quickly repivoted to grandstand for advantage. The media gleefully reported on the whole saga, as it’s one of the meatier stories they’ve had in a while – the biggest companies in the country up to no good.
The media has enjoyed recounting every juicy detail of banking executives and financial advisers squirming in their seat. However, they’re not without culpability in what’s been presented at the royal commission and the problem of our wider investing malaise.
Firstly, Australia’s business media were up in arms at even suggestion of a banking royal commission. Names don’t even need to be named. Pick a business media windbag and it’s almost certain they were blowing hard against the royal commission. Peppering their commentary with empty lines like ‘world class banking system’. Stuff that could have been straight from the Australian Banking Association crib sheet.
Then there’s the issue of Sam Henderson. Anointed as an expert by low brow and high brow media alike, Henderson hosted a show on Sky Business TV and made appearances or had articles in The Australian Financial Review, Sydney Morning Herald, The Today show, The Project and Money Magazine.
Sam Henderson on Sky Business
All these media appearances lent credibility. Free media coverage is a nugget of gold, so being anointed as an expert in the media is a pot of gold at the end of a rainbow. Potential Henderson client and Fairwork Commissioner, Donna McKenna admitted she sought out Henderson’s advice because of his media appearances. He wouldn’t be on TV or in the newspapers if he was no good, right?
The media is not a good filter of quality. Why did they give a platform to Henderson? The clue can be found in a quote on the Henderson Maxwell website (among the now removed GQ styled pictures of Mr Henderson).
“We’re not just another boring old finance firm.”
You can guarantee no media outlet who hired Sam Henderson did so after seeing samples of his financial planning work. Irrelevant. They hired him because the media loves colour and movement. Sam Henderson was a performer. He wasn’t an old guy with a comb-over using $10 words. He was an old guy with the haircut of a 20-year-old, speaking in quotable language.
Not that understanding how to deliver a message is a bad thing, it’s just the media won’t get beyond the jazz. They’re not experts in investing or financial matters themselves. They have no ability and likely no interest in due diligence on financial experts, investments or financial planning matters.
Jennifer Hewitt of the Australian Financial Review admitted as much recently, as she recounted her tale of being duped by a dodgy financial planner into setting up a geared SMSF. Hewitt is a senior columnist who covers business, politics and economics.
As Hewitt noted, contrasting Henderson’s media appearances and her own experience, “I am not sure if I feel any better realising media managements also fail to identify blatant, self-serving financial nonsense.”
Think back to the coverage Nant Whisky was given in the media. In 2012 the senior business reporter for The Courier Mail said Nant was “clearly one of the year’s better investment opportunities.” Nant had been in business a couple of years and had no track record of returning anything to investors. As we later found out it would never have a track of returning anything to investors.
If it’s not new and hot nonsense like whisky or agricultural tax rorts. It’s promoting hot stocks. It’s panicked headlines when the market corrects each year. It’s coverage of newsletter salesmen who’ve been predicting apocalypse for the past decade. It’s asking an egotistical hedge fund manager where he sees the market going. All garbage or astrology, but it’s eye-catching.
In contrast, investing with evidence seems mundane. Accept markets work. Risk and reward are related. Asset allocation. Diversification. Keep your costs down. Maintain discipline and get on with your life.
None of these things generates headlines. No reward for the media, but much more rewarding for the investor.
It’s an unfortunate disconnect.
With thanks to FYG Planners for this article
This represents general information only. Before making any financial or investment decisions, we recommend you consult a financial planner to take into account your personal investment objectives, financial situation and individual needs.