How Financial Gurus Make Money
Show me $ 1 and I’ll show you 10 “money gurus” who claim they can turn them into $ 2.
These so-called experts are a dime a dozen and are responsible for a lot of bad money and financial distress. I try not to mention them as much as possible, which is why you rarely read articles about certain monetary “celebrities” on Two Cents.
But what happens when one of the so-called “good” guys gets sick? Ron Lieber published an outrageous report in the New York Times about how one such financial guru, Jordan Goodman, was fined by the Securities and Exchange Commission for receiving $ 2 million in a Ponzi scheme. Goodman is a renowned money expert who has misled people about a number of financial products by personally benefiting from his association with them.
What makes Goodman’s case so startling, at least to me, is that he started out as a personal finance writer for Money Magazine where I worked (I didn’t cross paths with him while I was there; he left in 1997) … Money and Time Inc. (RIP) used to have strict editorial standards and fact-checking, especially for the magazine. I am proud of the work done there and know the heart with which my editors and colleagues invest in articles and reports. All of this has been done in the interest of the reader, all about leveling the playing field and helping people get over all the financial mess. I still hold to these values.
And, as with most journalistic ventures, newsroom and business were very different.
According to Lieber’s report, after he left Money , Goodman branded himself as America’s responsible person for money and used his experience in service journalism to write books (which paid for food), host a podcast, and promote himself as financial expert.
Rub, of course, that he is an expert in what he has reported about money and finance for 18 years. But he used this experience to sell bad products to people and made a cut of the profits. (This is actually no different from how many money managers work.)
One such product was commercial mortgage bridging loans, according to Lieber, “in which ordinary people will help property owners and developers with their short-term borrowing needs.” Goodman used radio appearances to offer them to callers without revealing their partnerships.
The loans were supposed to work like this: people transferred their money, and Woodbridge found borrowers willing to pay 11 to 15 percent on short-term loans. When these borrowers make the payments, 5 to 8 percent will go back to the investors, and the rest will remain with Woodbridge and its agents.
Mike Rosen, host of the KOA show, said Mr. Goodman did not disclose his financial interest in Woodbridge – a 1% commission on all money received from his approval.
But Goodman did more than lend these loans. He also had financial relationships with “companies that promise to pay off your debts for pennies on the dollar and allow you to borrow money using art and luxury bags as collateral.” Payday loans and credit counseling were other useful areas for him, at least for a while.
I cannot convey the amount of irritation I experienced while reading this article. Readers should rightfully question our recommendations (especially when it comes to money / finance). But Lifehacker writers and personal finance journalists I know from other publications go out of their way to put the reader first . This is our whole mission. The Goodman saga jeopardizes the trust of readers in all of us.
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So, in the interest of full disclosure, I want to clarify the affiliate / product relationship of Lifehacker.
Lifehacker does not sell you items. When we recommend products, software, hardware devices, etc., it is because we truly believe in it or think it will work for the readers under certain circumstances. We do not link to affiliates, and the writers and editors do not make money from any of the products mentioned on the site. (If we link to a product site, we’re not making money from that interaction; we’re just trying to lead readers to more information.)
Plus, we rarely accept freebies from public relations firms like any other decent journalist. The exception is books that we can use for articles, reviews, etc., booze, food, and small dollar items (for example, Expedia once sent me a pair of socks and a little foam gnome that I kept).
If we consider the technology, we will send it back. If the item cannot be returned, it is given as a gift. Sometimes app developers offer us free trials, and if that’s the case and we end up writing about the app, we’ll let you know in the post. Personally, if I own / use a certain financial product that I write about, I also report it, but none of them have and will not pay me to mention it.
However, since we are part of the Gizmodo Media Group, we indirectly benefit from everything that readers can buy on The Inventory / Kinja Deals. Inventory is a separate site that is operated by separate personnel. You can read about how they make money from product recommendations here , but one important point to highlight: “All inventory and Kinja Deals content is created entirely independently of our editorial and advertising side and is never sponsored.”
I have also answered questions from readers about some of the sources I use. To be clear, I try to sort out the experts I cite and the sources I link to. If you think they are not up to par, let me know.
I take all this seriously. I want Two Cents to be a place to come for quality and reliable content for money, not a place where they try to sell you.