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Always Get a Second Opinion

The other day I was pouring through various personal finance blogs and I paused at one of the bigger names.  There it was, an affiliate link for a company that had contacted me many moons ago.  The company I ultimately decided would be a very bad deal for both me and you the reader. That inspired this post, that you should always get a second opinion.

Nothing Concrete, But a Feeling of Unease and a Clearly Bad Deal

I won’t name the company here, not the least of which because I don’t really feel like being sued.  Nothing they said in their pitch indicates they are out to screw customers.  Really what I have is my thoughts on their pitch and an entirely uneasy feeling.   Nothing concrete enough to publish a name.

Always Get a Second Opinion

But what I do want to do is make sure those out there in the community that are reading this take a step back.  If the media, someone who owns a blog or podcast, or anyone else who runs a business suggests a product, do yourself a favor.  Check it out independently, get a second opinion.

How Blogs and Sites Make Money

Most blogs make money in one of two ways.  The first is how this site obviously makes money, the ads you see on the side of your screen.  The reality is, those ads keep the lights on and keep this hobby revenue neutral for me.  But they don’t bring in what I would call significant income.

Ads Are a Limited Revenue Source

Even blogs with much higher viewership then our own, if they are high income, are probably not making that money from simple ads.  It’s just not lucrative enough to provide big bucks.    A click on an ad might bring you 2-3 dollars.  A page view might be a few cents.  Even with 100,000 viewers a month you are probably only looking at 3-4K a month in ad revenue.  So how do some bloggers make hundreds of thousands a year?

Affiliate Links, A More Lucrative Source

One such method is called affiliate links.  Essentially company’s pay you funds sort of like a sales commission for bring them a customer.  Now let me say outright, I have no problem with this approach in the correct context. I have even used the process myself.

But the way I use it, is you only ever get a pitch from me for something I would buy myself.    Usually a book or something else I’m incorporating into my writing.  Ie. the affiliate link is ancillary to the post and usually just referencing some service I am writing about.   I also go out of my way to clearly denote the affiliate link, something that is a requirement by law.  

Sponsored Posts with Affiliate Links

Some other sites also use sponsored posts where the post’s main goal is to drive a sale.  Again if it is clearly identified then it is 100% legal.  Also again if a site you like is doing so, take the time to get a second opinion.  I have never done one of these myself, but if the service seemed like a good use of the audiences money I don’t necessarily take a dim view of this practice either.

The Offending Sponsored Post

Which brings us back to this particular, I guess I would call it, sponsored post.  The ones that seem to be the most common in our space, outside the generic Amazon, are for financial products.  This example was no different.

Signs of a Bad Investment

That example had all the hallmarks of a bad investment for most people.  Things I look out for in a bad investment are:

Speculative returns: If the investment’s only potential return is appreciation I can’t in good conscience recommend it.  This is especially true if you don’t understand the item being invested in.

Non-transparency:  Say you can invest but it is very hard to get information on what you are investing in.  Run away as these are usually scams.

High Fees:  Let’s face it, if something requires you to spend a few percent in fees these days it’s probably not a good idea.  You can invest in nearly every space for 1% or less.  In cases like the stock market you can invest at near 0% fees.  Those fees eat into principle rapidly.

Lack of a track record:  A new investment type and a new investment company, what could go wrong?  With a new investment type you have no way to understand what it will do in the multitude of potential market scenarios going forward.  Worse with a new company you can’t even evaluate the company for trustworthiness and capability.  Even the best investment will fail due to incompetence or corruption.  Combined with non-transparency these are the two worst.

The Offending Investment Ticked All 4 Boxes, Run Away!

Honestly, the sponsored post was about an investment that hit all 4 criteria at once.  A screaming no.  I was a bit more professional to the pitching group with my no.  I didn’t run the room screaming scam.  But I did ensure to route future contact to spam folders.  It appears that some bloggers either don’t have as high a standard as I do, or really don’t care about you, the readers, safety.

Due Your Due Diligence and Get that Second Opinion

I realize this is a bit of a rant post.  But I feel like this message needs to be delivered regardless.  Do your diligence any time someone recommends something you consider. Get that second opinion.  Your wallet will thank you.

15 Comments

  1. Xrayvsn
    Xrayvsn November 23, 2020

    I agree 100%. I get pitches every now and then that I have turned down because I don’t think it is a good fit with my site beliefs (gambling is one I have turned down a few times) or there is potential for fraud (I turned down a company that prepared income taxes but had a pay what you feel like charge strategy. I didn’t want my readers to give sensitive financial data to a company I wasn’t sure I would use myself).

    Making money is nice but not at the expense of integrity.

    • FullTimeFinance
      FullTimeFinance November 23, 2020

      You have to be able to sleep well knowing you did right by others.

  2. steveark
    steveark November 23, 2020

    I never have done an ad or link, I just subsidize my hobby of blogging for my enjoyment, so I haven’t had to deal with any moral dilemmas that might arise from monetizing a hobby. Frankly I don’t see a problem with accepting any legal ads on a blog site. However writing promotional blogs in exchange for money is a slippery slope. You might say you would only promote products you believe in but what if you were in dire financial straits for some reason, and a sketchy product producer waved a couple of hundred grand in front of you? It would be tempting wouldn’t it? And by you I don’t mean you, I mean theoretically broke you whose daughter needs a kidney transplant. Writing promotional blogs for money is always a conflict of interest for a blogger, 100% of the time. I’ve written nice things about Personal Capital who manages a bunch of money for me, Betterment and Vanguard who do the same and Vroom who sold me my latest car. But they didn’t pay me, don’t know I wrote the blog posts and probably never even saw them.

    • FullTimeFinance
      FullTimeFinance November 23, 2020

      There are definitely extreme hypotheticals where nearly anyone would “sell out”. Save your kids kidney is probably on that list. Doubt the blogger I’m thinking about has that problem ;).

      I much prefer the organic posts that might mention a useful product in passing, but not necessarily be about that product solely.

  3. Dan
    Dan November 23, 2020

    You have revealed the ugly secret of FIRE/financial blogs. Actually it is not that big of a secret. The most successful FIRE bloggers (in terms of revenue) are pushing products, services & companies that are their major sources of revenue. Even when the services they are hawking are free to the user, the blogger is getting compensated with the hope that the user eventually upgrades to one of the paid services. Like many professional financial advisers, bloggers are not fiduciaries. Some (many?) bloggers do not reveal their relationship with the companies they praise & endorse on their blogs. Caveat emptor is the watchword.

    My 2nd complaint (specific to FIRE blogs) is that the bloggers are often working 40 hours per week or more on their blogs and other revenue sources associated with their brand which are ostensibly about retiring early. Perhaps they are financial independent but they are not retired. They have simply switched careers and called the switch a “retirement” in order to reinforce their brand. In many cases they are not financially independent either.

    • FullTimeFinance
      FullTimeFinance November 23, 2020

      It’s certainly not a secret if you are around for awhile. I will say before I started blogging I was more trusting of online review posts. I still always got a second opinion, but I would consult them a lot more then I do these days.

  4. Q-FI
    Q-FI November 23, 2020

    No rant here bud, and great post. I’ve been working on an article for a long time on this same subject, but still haven’t figured out the best way to say everything. Maybe you’ll be that motivating factor to kick it over the finish line. Haha.

    Your points above need to be reminded frequently. Like you, I have no problem with people monetizing. However, what I see too frequently on the popular FI blogs is the lack of transparency. If you’re upfront, cool, if you’re not, now you’re lying to me. For some reason, either intentionally or through ignorance, bloggers fail to realize that once profit is involved, the relationship has changed – I’m no longer a reader but rather a customer. Now there is a conflict of interest that needs to be addressed up front. And if it’s not, shame on that blogger. Because once you monetize, you have become a sales person. People, don’t like that word, but that’s what it is. You have become a sales person for that ad, for that affiliate link, for that service.

    I’ve always respected how transparent you are FTF. Thanks for a great reminder article.

    • FullTimeFinance
      FullTimeFinance November 23, 2020

      Thanks Q-Fi. I look forward to reading your piece when you get the chance.

  5. Scott @ Costa Rica FIRE
    Scott @ Costa Rica FIRE November 23, 2020

    Sadly, many people reading the piece won’t realize/understand the nuance or be bothered by it. That’s why it works and how people make money that way.

  6. Physician on FIRE
    Physician on FIRE November 24, 2020

    Ooh, lemme guess.

    Were they peddling art? Wine?

    Also really hoping it wasn’t something you saw on my site! Although I cannot imagine it is since I don’t publish sponsored posts and am pretty good about disclosing affiliate relationships. I turn down more potential partners than I accept and I often invest on the platform if I’m going to present the opportunity to my readers.

    FWIW, I think big media sites are more guilty of this than most of the solopreneur bloggers. Do you know how much Mr. Ramsey collects from his many thousands of endorsed local providers, many of whom do not have a favorable fee schedule for their clients?

    • FullTimeFinance
      FullTimeFinance November 30, 2020

      Very good guess….

      Not you and you are right the mainstream sites are worse. Even the finance magazines now have large full page article ads…

  7. FreshLifeAdvice
    FreshLifeAdvice December 1, 2020

    I really appreciate your transparency, FullTimeFinance. It’s refreshing to see such an honest take when it comes to ads and sponsored posts. Ha! That was smart to avoid naming the company that could potentially sue you.

    I completely agree overall – if you don’t use the product yourself, why would you recommend it to a friend or a stranger? Keep up the great work!

  8. Jay Rigler
    Jay Rigler December 10, 2020

    Thanks for sharing! Unfortunately, this is 100% true. As consumers of online content, it’s easy to forget that so much of the content is simply a paid advertisement. It’s pretty much infomercials 24-7, painted to look like regular TV shows.

    One type of personal finance sponsored post that is particularly annoying to me is all of the gurus promoting the “best” credit cards, or gimmick investments. Real financial progress requires behavior change, not a gimmick or handout.

    I’m hoping the content-creation ecosystem will evolve to something better, but for now a healthy dose of skepticism is required.

    Great article!

    • FullTimeFinance
      FullTimeFinance December 12, 2020

      Very true. There is no shortcut to success in life, just good habits and time.

  9. Dividend Power
    Dividend Power December 10, 2020

    Ad revenue is too uncertain and fluctuates too much. It is enough to meet the costs for running a blog though. Affiliate revenue is hit or miss. Some affiliate links do well and others barely earn anything.

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