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A Call to Pens — Or Why You’re Paying Too Much for Financial Journalism

You may have seen a recent story by Jason Zweig in The Wall Street Journal entitled, “Why You’re Paying Too Much in Advisory Fees.” Well, it seems to me that the way financial journalists charge for their writing often makes no sense, and it needs to change.

The typical financial writer charges absurdly high fees to produce editorial content — content that is often mediocre in terms of practical real-world application.

According to a 2015 survey by the Society of American Business Editors and Writers (disclaimer: I’m a member), in the Northeast, the median salary for reporters is between $75,000 and $80,000. These annual salaries may bear little relationship to the services they provide.

Typically, the most expensive freelance writers get paid $1 per word (and that’s rare). The average financial columnist writes a weekly story at about 800 words. For $80,000 a year, that would equate to about 100 stories. But there are only 52 weeks per year (less if you include vacation time).

Moreover, the Editorial Freelance Association says journalists typically get paid 26 cents to 50 cents a word. That means a typical freelancer could produce between 200 and 400 stories for $80,000. But there are still only 52 weeks in a year. In other words, a freelancer could produce a weekly column for between $10,000 and $40,000 per year — a fraction of the salary rates typically paid to business journalists.

But these fees look increasingly bizarre nowadays: Many publications allow freelancers for publish articles for no compensation whatsoever. Indeed, business bloggers — another form of journalism — routinely post their stories at no cost to the readers, sometimes at a clip far greater than one column a week.

Of course, many people could benefit from good, sound journalism that presents the reader with practical financial advice: saving for college, managing debt, minimizing income and estate taxes, giving to charity, financing retirement. That kind of content, in the words of a famous credit card commercial, would be “priceless.” Yet, financial journalists don’t charge separately for this value. They get paid the same no matter what they write.

Does this make sense? Your doctor doesn’t get paid two to eight times more than another doctor. You don’t pay your accountant two to eight times more just to get your taxes filed on time. Your lawyer doesn’t get a two to eight times bonus just for drafting your will. No, they all charge fees tailored to specific services in line with their industry: doctors charge by the visit or procedure; accountants charge per tax preparation; and lawyers charge… well, we won’t get into what lawyers charge. You might wish they charged you less, but at least you know they’re charging you for doing a specific task.

Financial journalists, by contrast, get paid in ways that don’t seem fair and, as one report on Bloomberg News’ pay scales noted, may involve conflicts of interest. Why should they get paid anything, for that matter, when quality writing is available at no charge (to the reader or the distributor)?

Fortunately, some media companies are warming to the idea of reducing fees associated with financial journalism. The Washington Post ran a story about layoffs at The Wall Street Journal. It wrote, “The paper would be ‘scaling back significantly’ its personal-finance team.” The article quoted financial journalism insiders to decry the “injustice” of it all. Helaine Olen, a New York journalist and author of Pound Foolish, called the decision a “tragedy” and said, “But most people don’t have the expertise to sort out what has or hasn’t been vetted, and they will just simply never know.”

In keeping with the “rich only get richer” theme so often found in the mass media, the Post article even contained this tidbit from Trudy Lieberman, a contributing editor to the Columbia Journalism Review and longtime consumer-affairs reporter: “The wealthier people are going to find this information because they can pay for advisers. Who loses? The average Joe loses.”

Does the average Joe lose? How many financial blogs are thriving right now? And it’s not that the major media is being left out. The Wall Street Journal is among the traditional media outlets that feature unpaid contributors. (Again, full disclosure: They “invited” me to participate. When I told them my pay rate was $1 a word, they informed me that it was a non-paying gig. I declined the “offer.”)

Ironically, in 2008, Doonesbury’s fictional Washington Post reporter was laid off. What did he do? He started a blog.

He was way ahead of his time.

(Author’s Note: This article was written, with tongue firmly in cheek, in response to Jason Zweig’s article, “Why You’re Paying Too Much in Advisory Fees,” The Wall Street Journal, June 19, 2015, in which he cited survey data from Cerulli Associates. Oddly enough, on that same day, Management.com ran a story, based on different “recent research by Cerulli Associates,” with the headline “Financial Planning Doesn’t Pay.” Go figure. I suggest all practitioners who currently provide content to media outlets take to their pen and comment on Mr. Zweig’s piece. After all, speaking purely as a portfolio manager, the only way I get a raise is if I make money for my clients. And more importantly, how many employees regularly risk getting a pay cut for not hitting their targets?)

The opinions expressed are those of the author, and do not necessarily reflect the views of NAPA or its members.

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