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Dangers of relying on the media for financial advice

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By Capital Partners Markets and Investments

If you’re a regular reader of our content, you’re likely aware of the importance of a fiduciary. As a CEFEX-certified firm, we’re legally required to put clients’ needs first. Any recommendations we make must adhere to a duty of care and a duty of loyalty.

Duty of care

The duty of care entails not only providing advice that is in the best interest of the client but also executing that advice in the most effective way possible. This standard requires us to offer ongoing advice and guidance throughout our relationship with the client, ensuring their financial well-being is consistently prioritised.

Duty of loyalty

The duty of loyalty mandates that we place our client’s interests above our own. We are obligated to provide full and fair disclosure of all material facts related to the advisory relationship. Additionally, we must address or disclose any potential conflicts of interest to our clients.

The media’s fiduciary responsibility

While mainstream media also has a fiduciary responsibility, it is primarily to the organisations they serve, not to the consumers of their content. Media personnel are expected to make decisions that benefit their organisation and avoid unnecessary risks. However, this does not mean they are responsible for providing information that is in the best interest of their audience.

In today’s 24-hour news cycle, media outlets significantly influence public opinion, affecting many people’s behaviours, including their financial decisions. Media organisations are largely unregulated concerning the accuracy and impartiality of their reporting, which means the public has no guarantee that the information presented is unbiased or in their best interest.

Bias in financial reporting

Biases in media reporting can lead to skewed information, particularly in financial news. Media outlets can manipulate information to favour specific firms or investment strategies, without any regulatory oversight to prevent this.

Implications for investors

Investors need to be cautious and avoid making impulsive decisions based on media-driven market noise. Short-term, emotionally driven investment moves often result in poor outcomes, such as selling low and buying high, which can significantly impact long-term returns.

A well-rounded long-term investment strategy should be based on a diverse set of data, considering factors such as long-term goals, risk tolerance, financial situation, and investment horizon. While current market events are relevant, they should not overshadow the importance of a diversified and well-informed investment strategy.

The value of a financial plan

To avoid the pitfalls of emotionally driven investment decisions influenced by the media, having a robust financial plan is essential. A fiduciary wealth adviser can help develop a comprehensive plan tailored to your specific needs and goals. While adjustments might be made to leverage certain market conditions, your investment plan should primarily guide your long-term strategy and help you navigate short-term market volatility.

At Capital Partners, we are dedicated to assisting you in filtering out the noise and making informed financial decisions aligned with your personal goals. If you need help establishing a long-term financial plan, our experienced team is here for you. Schedule a call with us to discuss how we can support your long-term financial strategy.

The information provided on this site is of a general nature only and may not be relevant to your particular circumstances. The circumstances of each investor are different and you should seek advice from a financial planner who can consider if these strategies and products are right for you.

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