Warning: This post is a rant and contains foul language. Enjoy!
Despite this, pretty much every website offering reviews makes claims of objectivity and independence. These websites don’t claim that they try to minimize bias. They claim to actually be unbiased.
Let’s take a look at an excerpt from TopTenReviews, a high-traffic review site:
I’ve ranted enough in the past about run-of-the-mill websites offering bogus evaluations. What about websites that have reasonably good reputations?
NerdWallet publishes reviews and recommendations related to financial services.
Looking through NerdWallet’s website, I find this (emphasis mine):1
NerdWallet meets Vanguard
Stock brokerages are one of the types of services that NerdWallet evaluates.
One of the most orthodox pieces of financial advice—with widespread support from financial advisors, economists, and the like—is that typical individuals who invest in stocks shouldn’t actively pick and trade individual stocks.2 This position is often expressed with advice like: “Buy and hold low-cost index funds from Vanguard.”
Vanguard has optimized for keeping fees low and giving its clients a rate of return very close to the market’s rate of return.3 Since Vanguard keeps costs low, it cannot pay NerdWallet the kind of referral commissions that high-fee investment platforms offer.
NerdWallet slams Vanguard for not offering the sort of stuff Vanguard’s target audience doesn’t want. Vanguard gets the worst-possible ratings in the “Promotions” and “Trading platform” categories. Why? Vanguard doesn’t offer those things.6
Imagine someone going to a nice restaurant and complaining that the restaurant’s steak doesn’t come with cake frosting. NerdWallet is doing something similar.
The following excerpt comes from NerdWallet’s Vanguard review (emphasis mine):
Investors who fall outside of that audience — those who can’t meet the fund minimums or want to regularly trade stocks — should look for a broker that better caters to those needs.
From my perspective, NerdWallet is saying that if you are (a) the typical kind of person that should be buying stocks and (b) you don’t use a stupid strategy, then “you really can’t beat [Vanguard].”
So there we have it. Despite the lousy review, NerdWallet correctly recognizes that Vanguard is awesome.
NerdWallet didn’t really lie, but NerdWallet is definitely biased.9
Sometimes evaluators aim to create divisions between editorial content (e.g., review writing) and revenue generation. I think divisions of this sort are a good idea, but they are not magic bullets.
WireCutter is one of my favorite review sites, but it makes the mistake of overemphasizing how much divisions can do to reduce bias:10
Bias is sneaky
Running Coverage Critic, I face all sorts of decisions unrelated to accuracy or honesty where bias still has potential to creep in. For example, in what order should cell phone plans I recommend by displayed? Alphabetically? Randomly? One of those options will be more profitable than the other.
I don’t have perfect introspective access to what happens in my head. A minute ago, I scratched my nose. I can’t precisely explain exactly how or why I chose to do that. It just happened. Similarly, I don’t always know when and how biases affect my decisions.
I have conflicts of interest. Companies I recommend sometimes pay me commissions. You can take a look at the arrangements here.
I’ve tried to align my incentives with consumers by building my brand around commitments to transparency and rigor. I didn’t make these commitments for purely altruistic reasons. If the branding strategy succeeds, I stand to benefit.
Even with my branding strategy, my alignment with consumers will never be perfect. I’ll still be biased. If you ever think I could be doing better, please let me know.