The Evidence-Based Investor

The voice with nothing to sell is hard to hear

Posted by Robin Powell on April 25, 2016

There’s been a big response to my comments last week on the inherent conflicts in financial journalism.

Briefly, to recap, the point I made is that the media and the fund industry have a symbiotic relationship: they need each other. True, investment magazines and newspaper money sections are financial dependent on advertising revenue from fund providers and retailers. But more important, for me, is that journalists have an insatiable demand for stories, and that actively managed funds provide a steady stream of things to write about.

My post prompted a particularly thoughtful and well-written article by Kathryn Saklatvala, Managing Editor at Euromoney Institutional Investor.  In it she recalled how, when starting out in journalism, much of her time was spent poring through a deluge of material from PR Newswire and similar agencies:

This material, delivered straight to my inbox, was the origin of 80% of our stories. I wrote up to four stories a day; who would go out searching for fish when they swam straight to us?

During my second month inside the meat-grinder of news, a rather unsettling thought began to take hold. Here, in this tiny sub-set of a sub-set of the publishing world, we were largely reporting on one thing: what people wanted to tell us. People with money and time to spend on creating press releases, churning them out into the newswires and talking to our staff. People with something to sell – products, ideas or simply themselves. Were we, I wondered, little more than extension of industry PR efforts?

My experiences as a rookie journalist (admittedly many years earlier) were almost identical. Each day began with the news editor handing each reporter a pile of press releases. True, many of them got spiked — literally spiked, on a sharp skewer on everyone’s desk (it would probably break health and safety regulations now) — but many of them ended up as “stories” in the newspaper.

Of course, we had to rewrite them, and we would try to be impartial, but in many cases the final edited copy wasn’t hugely dissimilar to the original press release.

I particular remember having to rewrite PR copy from house builders, estate agents and mortgage lenders for our weekly property guide. Typically I would write about how fast prices were rising and how important it was for young people to get on the ladder while they could; we would write, for example, about shared equity schemes and other ways of making monthly mortgage repayments affordable. 

Soon after I left, interest rates rose sharply, recession set in and the UK housing market crashed. Looking back, I was fairly clueless then about the housing market, let alone wider economic issues, and I sometimes wonder, rather guiltily, how many people ended up in negative equity as a result of reading my articles.

Sure, my heart was in the right place, as no doubt was Kathryn’s. If someone had pointed out to me that my colleagues and I were effectively being manipulated by the housing PR industry I would have been horrified. But that was how it worked.

I dare say it’s even worse today, with internet-facilitated automation. As budgets are constantly squeezed, newsrooms are increasingly reliant on interns and office juniors. Proper investigative reporting is generally too time-consuming, and therefore too expensive. Churnalism is the order of the day.

Don’t get me wrong. There are some excellent investment journalists in the UK, and  they are starting to ask searching questions on such issues as fee transparency and the undue influence of the City. But the financial media, at least in this country, remains hopelessly conflicted — not through self-interest, but more out of necessity, a lack of time and resources and the unrelenting onslaught of propaganda from the industry spin machine.

As Kathryn says: “We should all be watchful of the bias that inevitably creeps in as a result of what we’re exposed to on a daily basis.” We should also listen to “the voice with nothing to sell” — a voice that, above the din, can be hard to hear.

 

Related posts:

Investors should trust the evidence, not the Mail on Sunday

If only journalists quizzed fund managers like they do politicians

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Robin Powell

A journalist and broadcaster, Robin Powell is a campaigner for positive change in the investing industry. He runs a communications company for the evidence-based investing sector called Regis Media.

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