When I used to blog on Money Smarts as Mr. Cheap, I wrote some posts dealing with the topic of trust. It’s an area I remain interested in. As the world gets bigger and we’re more often doing business with people we don’t know, it becomes increasingly important.
On Twitter, today a conversation started between Boomer And Echo, Nelson Smith and Mike Holman (my old blogging partner) about MoneySense magazine‘s recent changes to their
recommended fee-only financial advisors program. I love MoneySense (my dad has a subscription and every issue gets passed to my brother and then to me).
The basic idea of the program is, financial advisors pay $2,499 to MoneySense and they are then included in a list of advisors, which is replacing their popular fee-only advisor listing.
The general views seemed to be that Nelson Smith thought it was a “shitty move”, Boomer and Echo thought it was bait & switch and Mike thought it was their prerogative to charge for advertising but that it might be overpriced.
I’d agree with all 3 of their positions, but I think there’s something else going on. When they maintain a list of advisors, that’s content. The reason why it was so popular was that many Canadians have become concerned with how financial advisors are compensated, and worry that salespeople are masquerading as having a fiduciary responsibility (being legally required to act in their clients’ best interest). Knowing that the fee-only financial advisor is making recommendations based only on your payment and not on what pays him the highest sales fee, was reassuring to investors. The pay off for MoneySense is that people come to their website or buy their magazine because they want more of the information being provided.
Once they start selling placement on the new list, it’s now advertising. It’s shitty, as Nelson suggests, when content that people would seek out is replaced by advertising. It’s bait & switch, like Boomer and Echo suggests, when people are confused between what is content and what is advertising. As Mike suggests, it’s valid for magazines (or anyone else) to advertise and a part of how many magazines, newspapers, websites and other content sources operate. They shouldn’t need to apologize for advertising.
To understand the danger of mixing content with advertising, we can think back to Google’s appearance as a search engine. At the time, Yahoo! and Excite were some of the dominant search engines (at the time I also used AltaVista and Ask Jeeves). Google had developed their PageRank algorithm and approached Excite wanting to sell it to them for $1,000,000. In one of the biggest blunders in Tech business history, Excite declined, telling Larry Page and Sergey Brin that search didn’t matter and that Excite, like Yahoo!, was now a PORTAL company. Being a portal company meant that they were trying to get users to spend as much time on their site as possible, and they would provide them with e-mail, news, messaging forums, games and a variety of other content and activities to keep them there.
While they had users on their site, they then advertised to them as much as possible. The most egregious of these, was they sold placement in their search rankings to the highest bidder. When you did an Excite or Yahoo! search, you didn’t necessarily get the best match, often you’d be shown the websites who had paid the most to be seen by you.
When Google launched their search, in an amazing viral upheaval, users saw dramatically better search results through a combination of a better algorithm and not selling result placements. En mass they moved to Google as their go-to search engine. Google also eventually monetized their search engine with advertising, HOWEVER they clearly separated AdWords from the search results – customers can still expect the most accurate search results.
What Excite and Yahoo! were doing (which I think MoneySense’s decision here is the same) wasn’t illegal or even immoral, but I think it was shortsighted. They were selling their brand in a destructive way, trading users’ belief of their trustworthiness for advertising revenue. Within 2 years of Google incorporating, Yahoo! switched their search engine to Google.
MoneySense changing from providing a list of fee only advisors, which encouraged my view of them as a reputable source of financial information, to selling placement on a list of MoneySense Approved financial advisors for $2,500 makes the list useless to me – just like I skip over glossy ads in magazines, a financial advisor being willing to pay $2,500 to be on a list doesn’t give me any reason to want to hire him. It also makes me feel more suspicious of content and information I received from MoneySense in the future.
I hope the revenue they receive is worth what they’re giving up for it.
What’s your view on the MoneySense’s new list? Ok? Not ok? Couldn’t care less?