The MapleMoney Show » Financial Literacy

How to Cut Through the Financial Noise, with Eric Nisall

Presented by Borrowell

Welcome to The MapleMoney Show, the podcast that helps Canadians improve their personal finances to create lasting financial freedom. I’m your host, Tom Drake, the founder of MapleMoney, where I’ve been writing about all things related to personal finance since 2009.

Just as you should consider the source when it comes to news and politics, the money advice you receive is no different. Eric Nisall joins me to discuss how we can objectively consider the information we find online, and how it applies to our situation. After all, personal finance is personal, and not everything we read will apply to us.

Eric explains why it’s important to consider the source when receiving financial advice. Always ask yourself whether the person you’re getting information from has education and/ or experience on the subject matter.

In a world of self-professed experts, it’s more important than ever to do your homework. Does the person have the proper credentials, or are they simply relaying their own personal situation? Eric tells us why it’s important to be suspicious and to always question the source.

Lastly, never one to shy away from giving an opinion, Eric weighs in on the rise of robo-advisors, and explains why he’s not necessarily a fan.

This week’s sponsor is Borrowell. They’ve launched an automated credit coach, named Molly, who will help you improve your credit score. To meet Molly, head over to Borrowell today!

Episode Summary

  • Do your research. If someone is giving you tax advice, do they have an educational background in taxes?
  • How social media has given rise to thousands of self professed ‘experts’.
  • One person cannot be an expert in seven different disciplines.
  • Even the mainstream media has become less reliable, information is often judged by how click-worthy it is.
  • Eric explains why he’s wary of robo-advisors.
  • The idea of being an expert is to have a wealth of knowledge in one specific area.
  • Why it’s important to find what works for you and your personal situation.
Read transcript

I just think you should consider the source when it comes to news and politics. The money advice you receive is no different. Do they have the credentials or experience on the topic? Are they providing the right advice for your situation? Eric Nisall joins us on the show to discuss how we can objectively consider the information we find online and how it applies to our situation. After all, personal finances are personal and not everything we read will apply to us.

Welcome to the Maple Money Show, the podcast that helps Canadians improve their personal finances to create lasting financial freedom. Our sponsor this week is Borrowell, who have launched an automated credit coach to help you improve your credit score. To meet Molly, head over to maplemoney.com/borrowell. Now, let’s chat with Eric…

Tom: Hey Eric, welcome to the Maple Money Show.

Eric: Thanks a lot. How are you doing?

Tom: Pretty good. I wanted to have you on the show because there is a lot of financial noise online where there are just so many things people can take in and so many different opinions. I wanted to get your thought on that. Just to dive right in, what are your overall thoughts on all this information coming at us?

Eric: To be honest, I’m not a fan of social media very much these days. If I’m going to be blunt, it just gives a lot of insignificant people a platform to spread misinformation to people. These days anybody can call themselves an expert. You’re about the same age as I am so you should remember those Holiday Inn Express commercials where the guy is performing surgery and the patients asks if he’s a doctor and he says, “No, but I stayed in a Holiday Inn Express last night.” Those types of deals where you have people who may have done their taxes on Turbo tax last year and think they’re an expert now so they go out an offer their advice to everybody who asks for it in a Facebook group. And with Twitter, people see someone with 10,000 followers and figure they must know what they’re talking about. They don’t realize that all of these people just put the hash-tags in their profile and they just follow you back. It doesn’t really mean anything. They’re just false equivalencies. So yeah, I’m not a big fan of a lot of the stuff I see online.

Tom: You mentioned that anyone can start on Twitter—I see that a lot especially when it comes to things like politics and news, but even when it comes to your money where do we draw the line? I think we are considered experts but someone else might look at us and say we are those insignificant people as well.

Eric: Well, what you have to do is just look at the source. If somebody is giving you tax advice, do they have an educational background in taxes or any kind of finances at all? Are they actively a paid tax preparer? Have they ever worked in a tax environment? If not, question them and ask what their qualifications are that allow them to give this type of advice. It’s the same as anything. If you were to go and ask for advice about a diet, are the people giving that advice registered dietitians? Are they nutritionists? Are they doctors? Or did they just happen to find success in their own personal life and think that makes them qualified to give blanket advice. That’s where my problem really comes in… What works for you or me isn’t going to be the same. Most people don’t have that self-awareness to qualify themselves to say, “Look, what I’m going to tell you worked for my particular situation. You might live differently. You might have different needs, wants or requirements.” It goes both ways. The person purporting to be the expert is at fault and the person who just blindly accepts that information as fact is also at fault for not doing their due-diligence.

Tom: That’s a good point with the dietitian. When it comes to personal finance, I’m so deep in the weeds that it comes more natural. But if you’re just coming into it a topic blindly, the dietitian is a perfect example where, if you don’t know anything about the person, you better start digging in a little bit before you follow it too closely.

Eric: A lot of people in the personal finance space are deeply engrained in it. They’ve been doing it for a long time. Again, personal finance and nutrition are different things but the analogy is still the same just simply because you have to know who the person is that you’re getting the information from. Are you going to take advice from somebody about investing if you knew that they claimed bankruptcy four times due to bad investments?

Tom: Yeah, yeah that’s true.

Eric: It’s as simple as that. Just try to get some basic background on them. At the same time, I’m not a fan of letters after a name because that’s a lot of crap too. Going back to the medical field, anybody with an MD after their name is a doctor. But you’re not going to go to a cardiologist to ask about neuroscience or neurosurgery. You’re not going to go to a pediatrician to find out about an endocrinologist issue. Just because somebody has letters after their name—a CFP is not going to know everything about all investment products. A CPA is not going to necessarily know about taxes for small businesses. They can be evaluation specialists or auditors or forensic accountants. Everything isn’t just an all-encompassing thing. Like I said, just because you have letters after your name doesn’t mean you’re an expert at everything under the sun in that category.

Tom: True. It’s nice to see those credentials but I’ve also seen that sometimes there’s even a difference between those that can do well getting the education and those that can actually use it in a situation.

Eric: My first job after I got my degree in accounting—I didn’t have a great GPA. My first two years at the University of Buffalo, I left under my own accord. I wanted to go home. I was tired of it but I left with a 184 GPA. When I interviewed for my first job at a CPA firm, they asked me something very simple and I answered the question. They told me the last five people they interviewed with higher GPAs (that were CPA candidates) could not answer the question correctly. Once I left Buffalo I put my focus on actually learning the information, not learning how to cram. I didn’t care as much about the GPA because I knew I would have a chance to show I knew the practice rather than the theory. It’s like you said, there is a difference between having the ability to study and memorize information versus being able to put it into practice.

Tom: For sure. Spreading beyond just online, I know a lot of people who want to get information on what they should invest in from their local bank. Or they might even see a bank’s ad on TV or online where it might be promoting mutual funds or something like that. Meanwhile, I go very strongly on index investing through ETFs or even robo-advisors but in a way I think both are a little wrong. Because, I’m not always giving other options like how you can make more money investing in certain stocks if you’re really good at it. To keep things simple I just always advise on index investing. What are your thoughts on balancing those out? I know someone like Todd Tressider likes to give all the options so there’s sort of a balance between putting it all out there or keeping it simple so people get started.

Eric: That’s an interesting point. I don’t have a problem with the way you do it as long as you qualify it by telling someone who is just starting out to do this, just to take advantage of the time value of money and compounding returns so you can get any dividends or capital gains reinvested and take advantage of the time. Later on, as you’re growing your knowledge and getting more experience with it, then you can go and explore more about individual stocks or REITs or self-directed retirement funds and all that other stuff. But, it all goes back to how you present it. If you’re presenting it as being strictly for beginners and this is how I think is the best way for someone just starting out with no knowledge whatsoever, that’s perfectly fine. Todd, on the other hand, has got a whole thing in his head—I wouldn’t be able to do anything like that.

Tom: That’s a lot higher level.

Eric: Yeah, on any topic. Even on accounting or entrepreneurship topics, I find myself not being able to go so far in-depth into everything like that just because as I’m writing or talking about it I’m losing interest in it, to be honest. So, if I’m losing interest in it other people might lose interest in it too. For you, you might want to do a follow up and say, “Hey, here’s something for more advanced people,” then link it to that. I would say, “This is my advice for people who are beginning but I realize that as people get more investing experience they might want to expand their practices with everything so let me go onto something else. So, here’s this thing…”

Tom: Even for those who really understand that I’m still a fan of index investing. But I’ll always get someone emailing me saying, “Why would I do that? I’m making 18 percent this year.” It’s hard to dispute it but at the same time it’s a safer, simpler way, and it’s the way I suggest.

Eric: You just said it right there. Safer, simpler. As long as you say that, that’s fine, in my eyes. That’s all you need to do because it qualifies your whole viewpoint as being; this isn’t meant for everybody. This isn’t an index thing. This is for somebody who wants to be safe with their investments, doesn’t have the time to sit there and read all the reports and profit and loss statements, balance sheets and all that stuff. I don’t like robo-investors though. As an accountant I’m not a fan. I just see all the volume and everything and when there are so many transactions it looks like there can be a lot to lose inside of there with constantly rebalancing or moving in and out. It’s the same thing with people who say, “Let’s harvest our tax loses.” They say, “If you’re going to sell your losses just to save a little bit on taxes, why don’t you just leave it in there? Especially when you’re on the up-tick, just wait it out and see what happens.” It is opportunity costs and people don’t talk about that. That’s another thing about getting advice online. People are told that at the end of the year they should do this, and this, and this. But no! Not everybody should be doing that. Because it worked for you doesn’t mean it’s going to work for everybody else. Nor is everybody in a position to want or need to do that. Going back to your example, as long as you’re qualifying it, I view it as the exact way to do it.

Tom: Okay. Another thing I think causes a lot of confusion lately is how the press works online. A little over a year ago Bitcoin was huge and everybody was talking about it and now, especially here in Canada, nobody talks about that because everybody’s talking about marijuana stocks. By the time the press hits that mass audience is almost already done when it comes to anything, especially investing related.

Eric: Yes, the press in recent years—and this goes back to my whole issue with social media and everything. I’m not using this to be left or right leaning but if the press will start out over here it’s now shifted over here in terms of how reliable it is. Now everything is about clicks and eyes on the page so I find there are a lot of headlines that are just very reactionary, inflammatory. Anything to grab attention rather than giving straight facts the way it used to be presented in a newspaper. Because knew they were reading the newspaper. Every town would have maybe two or three different newspapers but everyone had one they read the most consistently so they knew they really didn’t have to compete as hard. But now, with all these different websites and micro-blogs and such, it’s a competition for the short attention span of today’s youth and adults as well because, as adults assimilate more to the technology, their attention spans have shrunk as well. When it comes to the press in general, there are still a lot of good people out there but the majority of them have transformed into click-based stuff. They’re more reactionary. To use a term we use in the online space, they’re less evergreen and more in-the-moment. They’re more “hot-button” issue type thing. Depending on what you’re looking for, it may or may not be worth your time. You’d have to determine it yourself, really.

Tom: I think it’s that turn-around time too. You mentioned a local paper. That might be everyday or weekly but now you’re getting that story out in five minutes because it’s all breaking news. It pushes them to not have that whole day to check the facts. They have to push something out right away. One thing to give them a little bit of leeway is that journalists don’t often claim to be experts. They’ll reach out to the experts and hopefully through that get some better information. But again, they have the same problem we’re talking about in trying to figure out who to talk to.

Eric: I do take a little bit of issue with what you just said because I have called out on my site sometimes. I remember Kiplinger’s had an article one time by somebody who didn’t have any education in taxes or finances and they were writing about tax deductions and stuff. I was looking through the article and cringing at it. It was incomplete. It wasn’t 100 percent right. It was missing a section that would totally turn the thing around. It depends on the publication and what they’re actually trying to do. Most of our friends who are writers are not going to sit there and take from this site and that site and put it together themselves trying to piece together the information. They will go to the experts. They will put out a call asking for experts on say, credit card rewards or experts on health care, raising a kid or something like that. They’ll frame everything and then use the quotes from the actual people who have gone through those things or have the educational or working background in those areas. But I still see some of these places where they publish something that doesn’t have quotes. And I thought that was really surprising that they would allow something like that. On ESPN they would take a quote from somebody… and I remember this very vividly. Justin Tuck, when he was with the Giants a few years ago, made a comment about the Atlanta Falcons offensive line. And what he said was actually reiterating what the team players had said about themselves. But Fox Sports took it and said that Justin Tuck called them, this. They had said this about themselves. So, it’s not just money, it’s all over the place. You have to be careful of what you’re reading. I have this conversation with my father all the time. He says, “I saw this headline…” I read the first couple sentences and you have to read the rest of the article because it’s trying to drag you in with the headline and first two sentences. They want to be outlandish. They want you to think about what the article’s about but you take that as an assumption of the rest of the article.

Tom: If someone is reading something and their intuition starts to hit where they’re thinking what’s wrong with this, how can they work that back? Do they look into the author? Do they search for other facts online?

Eric: Well, I’m going to get into my comic nerdom and say, if your spidey-sense is going off, trust it. Your gut is generally correct. More so than your head. I always scroll right to the bottom and check out the author’s bio. That’s how I found out about Kiplinger’s article. I went to the bio and realized the person did not go to school for accounting or finance. Then I went back into the article and noticed there were no quotes in it. It was all just straight information. That’s the first few things you should do because you’re right there anyway. You’re already on the article. Look through it and make sure that there are no quotes. If it’s coming from a source, then you can look into that source. Again, you and I both know that especially in something like the FINCON group, there are a lot of calls for experts to give their take on things. I see people (and I’m not naming names) where it seems like the same people keep mentioning themselves as being available to answer calls for those things on a huge variety of articles. How can somebody be an expert in six different things? It’s like those people that have a JD, a CPA, a CFP, where you have an alphabet soup after your name. If you have all these accreditations what are you an actual expert in? You can’t say you’re an expert in seven different disciplines because that defeats the whole purpose of being an expert, which is to be supremely knowledgeable in one specific area rather than having a jack-of-all-trades and master of none, essentially.

Tom: Yeah, exactly. You know your taxes in the US and that’s basically what you’re an expert in. I’m not strong in taxes at all so if I’m going to write an article it’s going to be researched. And that’s why we do this show. We bring people on because I can’t be an expert in everything. I’m willing to research anything but it’s still not off the top of my head expertise.

Eric: Well, to be fair, nobody is an expert off the top of head unless they’re a freaking savant. That’s why lawyers have resource libraries and paralegals to read case law and all that stuff. That’s why accountants have volumes of the tax code that are broken down into plain English so they don’t have to deal with that stuff. I don’t really know of many people who can recite actual statutes or case laws off the top of their heads unless they really, really focus on one specific area where these statutes and/or laws come up very often. So, in all fairness, you don’t have to know everything off the top of your head to be considered an expert. I’m pretty tough on people, trust me. I would not say that’s a qualifier for being an expert or guru.

Tom: That’s a good point. I get it. Even in your field you can’t know everything but you should at least have enough knowledge to realize when you need to look something up.

Eric: Yes. If you’re an expert on five different things, you’re actually an expert on nothing. That’s the way I view it.

Tom: It’s the jack-of-all-trades, master of none.

Eric: Yeah.

Tom: Within blogging, we get into these little vicious circles of different ideas. What are your thoughts on different movements and everything when it comes to slight differences of opinion where people might be saying the same thing overall but it comes down to bashing one and other? It doesn’t make one side more expert than the other—or not an expert at all. I think it adds more noise and mess to the whole thing.

Eric: I know what you’re saying. The two that come to mind are FIRE and credit. Again, not to categorize everybody because you can’t lump everybody into one bucket. There are always going to be some bad apples in the bushel. From what people have told me, the way they view a lot of FIRE in general is if you don’t want to live their way, there’s something wrong with you.

Tom: I should point out that if someone hasn’t seen the FIRE episode I did with Bob Lai, it’s; Financial Independence, Retire Early. It’s the idea of being able to quit your job at age 30 or whatever and live off of your investments.

Eric: I don’t really get into any of that stuff because I’m just not into any of that stuff. But, people have told me that they’ve tried to get into it or they’ve been in groups… Again, this isn’t the FINCON people. This is just in general having discussions on the subject with people who claim to be of that mindset while other people have the mindset of thinking, “This is the best way to live. If you don’t want to live like us then there is something wrong with you.” It goes for the anti-credit people too. There are a lot of people who say, “You’re stupid if you want to get into debt, blah, blah, blah…” But, there are two sides to every story. And I’m not even talking about the fact that there are a lot of people in FIRE and anti-credit who are great people, who I personally know. They’re great people. I’m talking about the other side of the informational coin. With FIRE you have some people who believe you have to give up everything in your 20s and 30s to retire to have the rest of your life to do whatever you want. The problem is, your body can’t physically do the same things. Especially when you cross 40. Men and women. Once you cross 40 your body starts to physically change and you can’t do the same things you could when you were in your 20s and 30s.

Tom: I’m noticing that.

Eric: Yes, but there are a lot of people who push back saying they don’t want to give up their ability to X,Y or Z when they’re young and basically able to do that. They would rather push their retirement forward. They were met with negative comments like, “That’s just stupid.” But you know what? If that’s the way you want to think, the more power to you. At least be open enough to look at other people’s mindset and see the other side of things. The same with the anti-credit. Most people don’t like credit because it leads to debt. Well, guess what? You can get into debt many other ways too even if you’re a “cash only” person. Credit cards only came into existence around 1984 or so. Credit cards have not been around since the Great Depression or anything like that so how did those people get into debt if there were no credit cards? They had a thing called, impulse spending. They would take their cash and go out and spend it on stuff. That would lead them to not being able to pay their car bill, their utility bills, and then those would get shut off. What would happen then is their cheques would bounce causing fees for that from the bank that you’d end up owing. They were different kinds of debt but you’re still in debt. People who say they only use cash because they have a better lifestyle, blah, blah, blah… That’s all crap because I just proved you can get into debt other ways. People are into the whole lifestyle, the way they live their lives—getting up at 4:00 am, working themselves to the bone and only sleeping four hours a night. I don’t even know what kind of movement you would call that. But for me, it’s called the “unhealthy” movement. Some successful people say they wake up at 4:00 in the morning because that’s when they’re getting their work done, while other people are sleeping, blah, blah, blah. What kind of BS is that? If your body cannot physically get up and operate when it’s pitch black outside, you’re basically waking up at 4:00 am for nothing. You’re up two hours earlier for nothing and slogging it through the rest of the day. Again, it’s not everybody who does that. I know people who do that and they’re perfectly fine with people who don’t want to live like that. I guess people are very offended when you challenge or question the way they do things. And not argumentatively challenging them, just inquisitively challenging them. Why do you do this? What is the benefit? How long did it take you to adapt? Or are you even adapted to it?

Tom: It seems like it’s all a bit of balance. Take personal finance for example. Personal finance should be personal. I’m on the pro-credit card side but I totally get there are some people who can’t have that in their lives. If it becomes a problem you need to use it like a tool. It’s the same with someone who might want to get up at 4:00 am. Someone else might want to work until 2:00 in the morning. There’s different ways to do stuff. You just have to find out what works for you. Sometimes you might see differences in these experts and bloggers where you’ve just got to find the person that most resonates with you and go with that.

Eric: You just hit the nail on the head. There’s only one universal truth when it comes to any of this stuff and that is to find what works for you in your particular situation. Personally, I cannot get up at 4:00 in the morning.

Tom: I haven’t tried.

Eric: Now, that doesn’t mean that I’m going to tell everyone not to do it. Somebody who is looking for advice on, let’s say, household finance management. They go to you and you’re going to say something. They come to me and I’m going to say something. Are either of us wrong? Not necessarily. If you take everything at face value and say it’s factually correct, you and I can both have different bottom lines and different things we advise people to do. Why? Because you’re married with two kids. You live in Canada. You’re not in a big metropolitan area like Toronto or Vancouver or anything like that. I’m single with no kids and no responsibility to anybody else. I live in Fort Lauderdale, which is more of a metro area. Our cost of living is different than yours. Our needs personally and familial are different such as insurance needs, income needs. You just have to see what works for you in terms of who to follow as well. Getting back to finding out the source of the articles and all that stuff, when you’re reading a blog that’s not meant to be for national publication but for specific needs, you have to look at that as well and see which person is giving what advice and whether you should be following that or not—depending on your situation. If someone is giving the type of advice that’s more in-line with your situation, maybe you should be looking at them. But, at the same time, you can also combine the two. Let’s say you’re offering advice on things I don’t discuss. You can combine the two and see what parts you can take away from these things that will actually apply to me in my situation.

Tom: This has been great, Eric. Can you let everyone know where they can find you online?

Eric: I lucked out with having a very distinct last name so my name is everything. Eric Nisall is all over the place. It’s Twitter, Facebook, and Instagram. My website URL, I didn’t have to change anything. I get everything all right there so, as long as you can spell my name, you’ll find me anywhere.

Tom: Okay, that’s sounds good. Thanks for being on the show.

Eric: Thanks a lot, Tom.

Thanks, Eric, for your thoughts on dealing with all those sources of information for managing our finances. You can find the show notes for this episode at maplemoney.com/ericnisall. Head on over to maplemoney.com/show to catch all the past episodes. Maple Money just turned 10 years old. The first post on what was then known at The Canadian Finance Blog was published February 1, 2009. To celebrate, we’re giving away 10 prizes of $100. For more details and to enter, head over to maplemoney.com/giveaway.

'I’m not a big fan of social media these days. It’s giving a lot of insignificant people a platform to misinform people. These days, anyone can call themselves an expert.' - Eric NisallClick to Tweet

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