Show me $1 and I’ll show you 10 “money gurus” who claim they can turn it into $2.
These so-called experts are a dime a dozen, and are responsible for a lot of bad money content and financial confusion. I try to avoid mentioning them when I can, which is why you rarely read articles about certain money “celebs” on Two Cents.
But what happens when one of the so-called “good” money guys goes bad? Ron Lieber has an enraging report in the New York Times about how one such financial guru, Jordan Goodman, came to be fined by the SEC for making $3 million from a Ponzi scheme. Goodman is a well-known money expert who misled people about an array of financial products, personally benefitting from his affiliations with them.
What makes Goodman’s case so startling, at least to me, is that he got his start as a personal finance writer at Money Magazine, where I used to work (I did not cross paths with him while I was there; he left in 1997). Money and Time Inc. (RIP) generally employed rigorous editorial standards and fact-checking—particularly for the magazine.
I’m proud of the work I did there, and know how much heart my editors and colleagues put into stories and reports. It was all in the service of the reader, all done in an effort to even the playing field and help people cut through all of the financial clutter. Those are values I still hold today.
And like most journalistic enterprises, editorial and business were very much separate.
How did Jordan Goodman go from 18 years at Money Magazine to being hauled in by the SEC for making $2 million from a Ponzi scheme? I've spent several weeks trying to sort it out. Here's my column: https://t.co/5GrZmbwj6d
— (((Ron Lieber))) (@ronlieber) March 1, 2019
According to Lieber’s report, after he left Money, Goodman branded himself as “America’s Money Answer Man,” and used his service journalism experience to write books (which shilled for products), host a podcast and put himself forward as a financial expert.
The rub is, of course, that he is an expert, in that he reported on money and finances for 18 years. But he used that experience to sell people bad products, and took a cut of the profit. (This isn’t different, actually, from how a lot of money managers operate.)
One such product was commercial mortgage bridge loans, according to Lieber, “in which everyday people would help property owners and developers with their short-term borrowing needs.” Goodman used radio appearances to suggest them to callers, without disclosing his affiliate relationship.
The loans were supposed to work like so: People handed over their money, and Woodbridge would find borrowers willing to pay between 11 and 15 per cent for short-term loans. When those borrowers made their payments, between 5 per cent and 8 per cent would go back to the investors and the rest would stay with Woodbridge and its agents.
Mike Rosen, the host of the KOA show, said Mr. Goodman had not disclosed his financial interest in Woodbridge — a 1 per cent commission on all money that came in through his endorsement.
But it wasn’t just these loans that Goodman shilled. He also had financial relationships with “companies that promise to settle your debts for pennies on the dollar and allow you to borrow money using fine art and luxury handbags as collateral.” Payday loans and credit counseling were other fruitful areas for him, at least for a while.
I can’t really convey the amount of irritation I felt reading this article. Readers, rightfully, should question our recommendations (especially when it comes to money/finances). But Lifehacker writers and the personal finance journalists I know at other publications are trying their best to put the reader first. That’s our whole mission. The Goodman saga jeopardizes reader trust for all of us.
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So, in the interest of full disclosure, I want to be clear about Lifehacker’s affiliate/product relationships.
Lifehacker isn’t in the business of selling you things. When we recommend products, software, tech gadgets, etc., it’s because we genuinely believe in it or think that it will work for readers in certain circumstances. We don’t link to affiliates, and writers and editors don’t make money off of any products mentioned on the site. (If we link to a product site, we don’t make money off of that interaction; we’re just trying to lead readers to more information.)
Additionally, we rarely accept “freebies” from public relations firms, just like any other journalist worth their salt. The exceptions here are books, which we might use for articles, reviews, etc., booze, food and small dollar items (for example, Expedia once sent me a pair of socks and a small foam gnome, which I kept).
If we review a piece of tech, we send it back. If a product can’t be returned, it’s donated. Occasionally app developers will offer us free trials, and if that’s the case and we end up writing about the app, we will disclose that in the post. Personally, if I own/use a certain financial product that I write about, I disclose that as well, but none of them have or will pay me for that mention.
However, as we are part of Gizmodo Media Group, we indirectly benefit from anything readers might buy from a link we provided.
I’ve also fielded reader questions about certain sources I use. To be clear, I try to be discerning with the experts I quote and sources I link to. If ever you think they aren’t up to par, let me know.
All of this is stuff I take seriously. I want Two Cents to be a place you can come for quality, reliable money content—not a place trying to sell you.