Pound Foolish: Exposing the Dark Side of the Personal Finance Industry

Pound Foolish: Exposing the Dark Side of the Personal Finance Industry



thanks for joining us here at the New America Foundation I'm Justin King I work in the asset building program here at New America you know our work is focused on significantly broadening access to economic resources through increased savings and asset development and in part you know that work involves advocating for increased financial inclusion including democratized access to markets and wealth building tools it also includes an insistent focus on consumer protection and steadfast common-sense regulation of financial products our belief is that families that participate actively and directly in saving and at times that means just saving and at other times it means exposing themselves to risk and investing will in the long run be better off they'll see increased economic mobility for themselves as well as better mobility and educational outcomes for their children it's critical that we engage on ideas about promoting saving and asset development now the Great Recession saw the average family's modest wealth reduced by 40 percent it saw a decade of progress in wealth development for African American and Latino families wiped out entirely we live in a nation with extraordinary levels of wealth inequality where nearly 45% of Americans don't have enough savings set aside to live at the federal poverty line for three months should they lose their job people often often ask me isn't the lack of savings just American culture the truth of the matter is is that culture and policy interact that the one shapes the other but it's especially foolish to see the results of policy decisions and to dismiss them as merely culture particularly when our policy encourages people to take individual action and individual risk and leaves them in a marketplace full of hucksters and predators I'm very pleased you have here with us today Helaine olen Helene is a journalist and the author of a new book pound-foolish exposing the dark side of the personal finance industry the book takes a look at the culture of personal finance that has sprung up around our policy choices it's a culture that says you should be ashamed for getting into financial trouble you'll be rich as soon as you stop buying lattes and you aren't well-off because you didn't want it badly enough and pound-foolish says we've all been sold a bill of goods the book looks at vast numbers of hardworking struggling Americans sees them participating in incomplete and broken systems and pins their troubles on them for not wanting it bad enough it's a book that's a little bit angry it's a book that is a lot of fun and and it's a book that provides a challenge to the status quo it also I think provides some challenges to those of us in the asset-building field it brings home the importance of making sure that our work is sustainable and making sure that our our work is scaleable because the people that are on TV aren't mang aren't paying much of a price for selling bad advice and it doesn't look like they're going away anytime soon so I'm gonna sit down we're gonna have a conversation with Helene and after week sort of cover some of the basics of the book we're gonna have a conversation with all of you in the audience and so we're very much looking forward to that we also have a virtual audience that's watching us live online right now and if anyone out there is interested in participating in the conversation you can send questions to Helene through our Twitter feed at assets naf naf and using the hashtag pound foolish please join me in welcoming Helene Nolan so I just should say is a recovering shy person I initially told Justin I wouldn't get up here and speak but I've changed my mind I'm over 40 now I can speak in public anyway I should say I didn't start out to write an angry book though I know a lot of people think this is an angry book I started my backstory is as I was the personal finance writer for the LA Times for several years I wrote a column called Money Makeover which they tell me was quite popular indeed well the way I got this column is I was a freelance writer in Los Angeles I'd recently moved out there with my husband and someone called me up one day and said do you know anything about personal finance and what I knew about personal finances could be summed up thus it paid a lot more than other freelance journalism so being in my actually I was about 30 at this point so I can't claim I was in my late twenties I said sure I know personal finance truly I didn't know a mutual fund for Mutual of Omaha okay so I take this assignment I literally run to the Barnes & Noble at the Beverly Center pick up a copy of personal finance for dummies and try to like sound knowledgeable while I'm doing these interviews while I'm actually really scrolling down terms like annuities and mutual funds so I can go back home and look them up I think I actually did a lot of the interviews my phone so that no one would know I was looking them up while I was doing the interviews and I hand this piece in and it was an interview with a I think a former basketball player turned pharmaceutical person and I turned this piece in and I'm thinking I'm gonna get a screaming phone call they are gonna pay me I am never gonna write for this place again right and instead I get a phone call saying hey this was great can you do another one and I'm like okay sure all right so I do another one and I do another one and at some point I realize I'm a personal finance writer and that's how a career was born by the way and I think there's two lessons you can take away from this story and the first is of course that a lot of the stuff is very basic learning what a mutual fund is really isn't that hard learning the difference between the terms fee based and fee only and Commission not that hard but in another sense I could be an expert because everybody's an expert since this is Los Angeles I'll quote the great William Goldman line about the film industry nobody knows anything in fact I will tell you we had experts say don't buy gold this is in the 1990s we all know what happened don't you know don't worry about real estate your houses are never coming back in value this is the late 90s in California you know everything cried had crashed there in the 80s well we all know about that too conversely stock markets gonna go up 10% 12% an average annual returns just put your money and you're going to be fine to the best of my knowledge nobody said hey housing prices are gonna double between 2000 and 2005 and then they're gonna crash be prepared nobody said the stock market's gonna do this great run-up and that it's going to crash in 2000 and 2008 and most important as it turned out nobody knew when anybody was going to get fired if they were gonna lose a job if they were gonna suffer ill health if they were gonna die at 65 or 95 because we can't project any of this so my take was as good as anybody else so anyway I stopped doing this feature around 2001 moved back east at some point do a lot of different types of writing do some parenting play with essay writing always in the back of my mind thinking I really want to write about money make over one day because believe it or not I was actually thinking about a lot of my people over the years and wondering what had ever happened to them but couldn't quite ever bring myself to just call them up and say gosh you know I've really been wondering if you're okay you don't just let me know so I am in 2009 I wrote a very short essay finally for slates the big money which was then their website about money just looking back at my time money makeover wondering if we had misled people had we you know had we presented this formula as a sure thing when it was not and that in turn led to this book I set this book up as an idea of what I really wanted to do was explore the idea of whether we had I don't want to say mislead people really but how the whole idea that personal finance an investment could really do it all for when in fact we know now that it can't and how the world developed I wasn't in retrospect I probably should have been faking this but it really still didn't occur to me how much money was flowing through the system how it had been sold to all of us in a way that was making money for lots of people and how conflicted it truly truly was till I started looking it was a one-year book contract it took two I say to have done it correctly it probably would have taken five and five hundred thousand words at which point I would have junked half of it because there would be a whole new round of stuff I should have written about and I'd be starting all over again and the thing would be published after I died because I couldn't work on it anymore it's really a world in which you turn over a rock and not one snake comes out but ten snakes come out there are some good people out there they are overwhelmed by people who are either not good or not acting in your best interests and as we all know the numbers are pretty bad we've had the 401k now for 30 years the average person has less than $100,000 saved in fact a lot have a lot less than that about one-third have nothing saved we know it does not work at this point and yet we keep going on and I guess these are the questions I started exploring in the book how did we get here and what do we do now so on that note I will sit down that's great thanks Elaine yeah I I think that you know that backstory is really is really sort of tremendous and it must have put you in sort of an awkward situation as you were doing some of the some of the exploration that you did for the book right I choked it's lucky I have a friend left it did it's you know I was really questioning things that people don't normally question we take I always say the thing about social change is that when it's successful we don't remember what it was like before so for people I'm in my mid 40s for people my age the idea of having pensions is just unheard of now so I was saying to a lot of people I don't think your 401k is working for you and that's a pretty powerful thing to say to people so I want to start a little bit a little bit at the beginning and part of this is at the beginning of the book and part of it is is for us sort of where the idea of asset building starts and that's really sort of with the idea of sort of a core cushion of basic savings and you know that when you're opening chapters in the book is that you know the latte is a lie and the latte is sort of a code for whatever your personal vice is and the idea is that if you cut this thing out then you're gonna be rich sort of over the long run and you know tell us a little bit about sort of the the the nut of that idea and and and what I'm really interested in is you know I think a lot of people might hear you talk about some of this and they might think well of course we have to live beneath our means right that thrift is is a core part of building wealth over the long time and and to tell us a little bit about sort of what your experience with with people's reaction has been but also the state of sort of thrift in America today okay so what we know is in 1980 the savings rate was 10% it has fallen since then by the mid part of the last decade it actually goes negative for a while I believe as we're speaking it's somewhere between three and four percent it went back up a little bit after the recession though Kathy Kristof one of the people who was my mentors at the LA Times says that a lot of that just has to do with debt write-offs by the way so what began to happen though is in the by the mid 90s people are quite concerned about the savings rate you know we're 15 20 years into the 401 K we know that T rowe Price does a study in 1994 saying that people are only saving about a third as much as they need to be saving and what on earth are we going to do so you start hearing more and more talk about the savings people are aware of the fact we have a problem so what we don't really have an awareness of though and we won't for another several years is that part of the problem really is this idea that our incomes had begun to fall in relative starting in the late 1970s that the income inequality had also began to open up in the late 1970s I mean you see blips of it here and there people are aware of it but it's not part of the common discourse what is part of the common discourse is this idea that people are spending like drunken sailors on leave basically that they're all running off to you know the department store for the sale they're all going to Starbucks and spending every penny they have and so what you start hearing and I remember hearing this in California by the mid-1990s is this idea of hey if you just give up your latte you will be fine you're a latte cost a couple about bucks a day you've run in you get a muffin with it you're out five dollars this is where your problem is coming from as I always like to say you know that's partly because people don't see you spending your money on health education and housing which is really what was going up at rates well beyond that of inflation people see you spending money on your latte so but the story goes is a money manager in San Francisco named David Bock starts talking about this as well and he unlike everybody else who's just sort of saying it has the wit to put it in a book called smart women finished rich which was published in 1999 and he calculates a number where he conveniently forgets to include inflation and taxes that we if we give up our latte which and hey who needs a latte right we can save up between one and two million dollars because we by the time we reach higher and people are desperate and they love this message and David Bach starts going out and promoting this message like crazy so this thing that we'd all been sort of hearing about you start hearing about more and more he takes a trademark on the name he moves to New York to spread from from San Francisco to spread the message and finally of course the Holy Grail he gets on Oprah and Oprah says wouldn't you like to know how you can retire or a multi-millionaire right because of course who the heck doesn't want to know that I still want to know that and meet David Bach and out comes David Bach and he starts explaining his latte based theory of life and from there the idea goes insane and this is part of why to this day people say you don't have enough money it's not because your salary hasn't kept up it's not because of your healthcare bills we know that healthcare is the leading cause of bankruptcy it's because you must have been going to buying your money your stuff at Starbucks way too often yeah yeah no I mean I think that's one of the things that for me is really powerful about the book is you're really pointing an arrow at our structures right and that our structures are broken and that there is this sort of fundamental challenge that people are facing that we're actually starting to see it talked about now right right we're starting to see sort of occupy we're starting to see sort of conversations about wealth inequality there was a really sort of well done video sort of demonstrating wealth inequality than a you know that went viral you know in something like five million views in the course of less than a week and that's of course in the last in the last couple of months so you know are you encouraged by what you see right now are you sort of optimistic that we are sort of having a conversation about about inequality that's going to mean something I hope so I mean I'm definitely more encouraged than I was when I started the book I mean it's funny because people have always said you know what did you do with your money after you finish this book did you like take it out of the bank bury it in the backyard and go like move off the grid and I was like no I'm both encouraged and discouraged I should say I'm discouraged because of course our political climate is what it is it feels like any change even the most incremental tiny change is next to impossible so in that sense I'm very discouraged I am encouraged that more and more people seem to be engaging in this more and more people seem to be talking about this whenever anybody says to me occupy was a failure my response was nobody was talking about this in a mainstream way before Occupy and they truly were not the 99% versus the 1% it will go down probably an ad making history is one of the great slogans ever it got people to engage in a way that they just hadn't engaged before and it was the first movement I felt in many many years probably pretty much in my lifetime where you got people saying things like little hey you know you've got student debt that you can't pay you're about to declare bankruptcy because of your why medical bills and your house has been foreclosed on maybe we all have a common problem because the ideology of personal finance says that we're in this alone that you can't make it well that's your problem if I can't make it that's my problem what occupy did is it took all this other talk that was out there and it was out there I mean I knew about it other people you probably knew about and other people working in the field knew about it and brought it into the mainstream so I want to I want to return a little bit to some of the personalities in the field you can't you know you mentioned david bach you know i I was sort of discussing this event with my wife and you know the the name in the field for a lot of people is Suze Orman and I I got a really hard time about you talking and saying something bad about Suze Orman for my life she said you know listen I had this sort of basics book when I was 23 and it was really helpful to me and and then I decided we should talk about something else and and so you know there are people out there that that I'm sure have been helped by by these personalities in this broad that a lot of them come in for a really hard time from you and you know I guess you know one thing tell us a little bit about about generally speaking where some of the big flaws are in these sort of personality driven these cults of sort of financial personality and also sort of what the response has been like from people who who are followers of the advice that that's expanded out there everything I mean has it been you've seen the comment section I imagine on some of your articles must be terrific you should check out my Amazon book reviews there's two real issues here the first is there's massive conflict of interest issues with a lot of these people Suze Orman has some the person I really like to talk about right now is a guy named Dave Ramsey does anybody in this room know who he is in New York you mentioned his name nobody knows who Dave Ramsey is so for people watching this elsewhere let me save Dave Ramsey is a Bible Belt personal finance guru on radio he's on over 500 stay Shen's I believe he's on in Washington he's only recently gotten on the air in New York i within the last six months or so he is tremendously huge he makes Suze Orman look like you know she's down there somewhere and she is on the radio five days a week and his shtick first of all his backstory is Dave Ramsey was a wheeler dealer in the 1980s lands in bankruptcy court comes out and says nobody should be in debt ever again and he takes to the radio and 20 years later here we are with 500 stations so first his take as don't declare bankruptcy which I find you know amazing but you know if he found it very hard so you shouldn't do it second he develops an entire financial network and when I say a network I mean he has the lamp oh group which has Dave Ramsey's LPS endorsed local providers and then he goes on the radio and says things like and on Twitter you know you can still get 12% average annual returns in the market and now anybody in this room think you're getting it where Helene Dave Ramsey LPS can help you people right and these are Commission based providers and Dave gets on the radio and says you know there's nothing wrong with not paying a commission but there's nothing wrong with paying a commission and you should be paying a commission and don't worry about it and my endorsed local providers have the heart of a teacher quote unquote and you should be consider this I mean this is essentially a three-hour commercial on the radio every day you know in pretty much every major market there is so there's that problem the second problem is of course once again this feeds into this whole ideology of you can do it when I started to talk to people who were considered themselves Dave Ramsey not only followers but success stories it was horrifying I mean there were people paying down hundreds of thousands of dollars in debt that anybody credible would have said you need to declare bankruptcy in one case I spoke to somebody who came to me truly when I was looking for see people and he was several hundred thousand and dat and I said well when did the death start and he says oh I did an ill-timed home renovation I'm like oh okay so Dave well I was a pilot for the airlines and this was just before 9/11 now we all know what happened a lot of these airlines including the one this guy worked for salaries were cut by 40% and eventually they declare bankruptcy and toss the pensions into the you know pension guarantee board where the pensions get cut massively so he's got this major problem right so he's already in debt he and his wife then decide to start up a small business to make good on their losses which again this is something that we're told to do there's a whole other book called The Millionaire Next Door which advocates for this okay and of course as it turns out like many of us the sky is a great pilot but he's not got the mind of a small businessman and this business goes belly up and he and his wife for an even more debt at this point and he I said to him I said have you thought about declaring bankruptcy and he says well dave says not to and this is what you get for listening to people on the radio right no it's an individualized problem and and broadcast advice and they right I mean we've seen you know in the mortgage crisis the idea don't take advice from somebody that's selling you products it's something it's sort of true across the board I want to see euro in a little bit on retirement as you said you know sort of you know 401ks or a failure they haven't worked you know we've had Teresa Gillard uchi on this stage before and highlighted her research Bloomberg's Josh barro had a great line last week he was talking about sort of the the classic idea of the three-legged stool and you know the three-legged stool is supposed to you know social security is supposed to be supplementing private savings but for most folks as you said we have private savings just barely supplementing social security and and I want to push you a little bit sort of on on the what's next on the policy side a little bit because I think you know we're in Washington DC we have a I think a policy oriented audience with us here today and and and in this column Josh barro writing from Bloomberg says listen it's it's time to pull back on sort of on tax supported savings products that that really only benefit wealthy people and we and we need to gross up Social Security because this is the only way that we're gonna be able to take care of people sort of in the long run and and I think you know that's a policy response right and that's and it's and it's a choice that one could make you know and the other thing that I think we see sort of frequently as people talk about this is you know well the for okayed 401 K isn't working very well but if we double down on them a little bit and if we make them more like pensions used to be with guaranteed contributions greater coverage through and greater automatic decision-making then we're gonna have a better system than the one we have now and so I was wondering sort of you know through this process do you have in the book you sort of you don't and I and I come I think I understand why come out for specific policy solutions to specific problems but do you have thoughts about which way we really should be going I think so I I don't think you can read my book and think I'm not a huge fan of Teresa killer dude she by the way I should just say that straight out though I don't quite being a trained mainstream daily journalist I had a little trouble saying that flat out I I look at it this way if the 401 K was going to work were at close to 35 years now it would have worked okay we know it doesn't work I don't everybody has who had is defending it many of whom have a financial interest in defending it the fact is it doesn't work people are not saving enough money in them and they're not saving enough money for a lot of reasons okay the survey data shows and it's some of this comes out of Scandinavia that you give people tax incentives the people most people are just going to save who were going to save anyway and as a result they're just getting tax benefit for doing savings that they otherwise would have done so we know that second again we're living in a country where the income stagnation is quite extreme at this point okay and the inequality is extreme you're not going to get tremendous savings from people under those circumstances there's always going to be something else that seems like a better idea you know Suze Orman's very fond of now getting on TV and telling people don't pay for your children's college education I have two children I would live in poverty before I did not pay for my children's college education I think a lot of us who have children would agree with that I think this is not taking into account how humans really think about things but the most important point is the 401 K doesn't work for a lot of reasons it doesn't work because people don't put enough money in they can't afford to put enough money in if they do put money in they can't afford to fund it an adequate level and still maintain emergency savings still save for their children's college education and still save for the occasional vacation because do we really want to condemn people to some ghastly life in which they just work and work until that you know and don't do anything fun until they they go it doesn't work because in our country we have limited social safety nets which have really been decreasing over the years and as a result you can get completely wiped out in a matter of weeks in this country by a bad bout of unemployment a health care crisis you know you know you get sued I mean other things can happen to people in this country that just don't seem to happen in other places and one person I spoke to for the book whose Kate Michael Mann who's to run a role went through a seven-figure retirement plan after her old one of her daughters was in a horseback riding accident and was an adult and not insured again I think some of these financial gurus would get on television and say well you know you can't bankrupt yourself to pay for your kids medical expenses you know I'm not sure I would have made done that and Kate Michael Minh certainly did not do that she said she turned up at the hospital and they said to her as they're saying how her daughter is and by the way who's responsible for this and of course she said me and then her husband got ill and even though they had good long-term care insurance as she put it to me it's still $10,000 here and ten thousand dollars there and pretty soon seven figures was no more there's more than I want to get to I want to talk about financial education I want to talk about automation and a couple of other things but I think this is a good time to bring the audience in we've got a microphone out here and so if we have questions we'll start over here on the right hand side and if can please remember we have a web audience so if you can go ahead and introduce yourselves and then statements are welcome but but we prefer a question mark at the end of the collection of words we'll start right over here about half way back on the right hi I was wondering if I could get your thoughts on the situation in Japan where what you have is elderly Japanese savers but they tend to do is they buy government debt but now there's this fear of inflation and there's this talk now that all of these good dutiful Japanese savers lifetime savers are going to be wiped out and they're not gonna have retirement when I hear those stories it impacts me you know I'm in my late 20s it's like even less on the same thing here in the United States it's like what if that happens here like is there is it worth while like really dutifully saving when there are just so many uncertainties you know I can't address the Japanese situation specifically cuz I would not say I'm an expert at this at all what we do know is that the Japanese stock market has not really gone anywhere now in 20 years and they also have a massive demographic problem which is they have a lot more older people than younger people who can support them they're also dealing with a society where it used to be that you took older people into your home to live with you like your parents and your elderly aunts and uncles and people are less inclined to do that now for any number of reasons so that's a lot of their issues over there but your question points to another thing which is we're presenting a lot of what personal finance an investment advice right now as a kind of done deal by which I mean hey put your money in the stock market Jeremy Siegel wrote this book fits the stocks for the long run they'll go up you know nine ten percent average annual returns a year don't worry about it and in fact that might be true but it might not be true we don't really know how a particular investment is going to be in six months or six years that's why every prospectus contains a line saying you know you know past performance is no guarantee of future returns does it doesn't work that way and there are other people who would say that our stock market has been a lucky beneficiary of a lot of trends over the past 100 years specifically World War one in World War two which did not destroy us the way it destroyed a lot of other countries which first allowed our stock market to grow but second gave us no economic rivals for a nice 30 year period you look at our histories of other stock markets in the 20th century you is only one or two countries with returns similar to ours so there's really no way to know and you can follow the other thing I'd say right now is to follow the debate over the bottom bubble whether there's a bond bubble if there's a bond bubble if it is what will happen if it goes should you be investing in bonds what will happen to people and nobody knows the answer and anybody who by the way claims to know the answer doesn't know the answer because if they did know the answer they wouldn't be on television telling you the answer I mean there's no doubt that there's tremendous it's you know there's a lot of uncertainty out there for folks right if you save your money in your bank account you're very fortunate to be getting 1% right right if you want a more stable investment you want to buy bonds the US government has actually made it very difficult for citizens to buy bonds over a course of the last couple of years it's you know getting savings bonds is not as easy as it once was that's right and then we you know there's a series of flawed products on the other end as well so let's stay on the right side here and we'll go right here and then Hannah will come up front afterwards I have a question about um you know the books that you've mentioned and this one theme that rolls through them become a millionaire get rich overnight and you know our cultures move toward one where the people on the images that people receive you have to drink Cristal and you have to die so being wealthy and I mean I think back to my mother's generation my mother she's older she's a depression baby but you know it wasn't a point of getting rich and when you put that expectation out there of getting rich so all of these personal finance people are telling you you know Rich Dad Poor Dad rich wealth whatever but there what do you think about how can you combat that because so the ladies come in here you can save and have a very reasonable lifestyle but you won't be rich right so how do you do you address that in the book and what are your thoughts on this whole culture of you know if you're not rich you're not anything I address it a little bit in the book and I can talk more about it in the book I point out that we've had this sort of false idea of what we're spending our money on when in you know one of the reasons there's so much stuff floating around for lack of a better word is because stuff became cheaper you know we began manufacturing in China the cost of clothing fell with the result that to this day even though we probably own a lot more clothes than we did we in 1975 we're still spending a lot less on them so some of it is that what I didn't talk as much about in the book which I would have liked to but my editor is limited me to 85 thousand words so at a certain point we had to say enough is how this whole culture grew up and I've had a lot of talks with people about this my dad is a market researcher and he remembers the days before television and if you would ask him he feels that one of the changes was was just getting all the stuff in the house the way he puts it to me is he says I remember when skiing was something you saw rich people do in a movie for five seconds I had in the matinee in 1950 and then suddenly it was in your house and it seemed like something everybody else was doing so I don't know how you go back from that is the answer because the answer that has come up from a lot of these people and I've certainly put Suze Orman and Dave Ramsey on this camp is that you should just accept your status sacrifice and not spend money as I say a lot of the stuff starts sounding like some weird mix of a Victorian morality track with a 9r and self-determination view of life well you know if you can make it you can make it big as for the rest of you you know just take the sack cloth and learn to be grateful and that becomes a real real problem but the third thing I would say is there's a reason a lot of these books that promote being a millionaire exist and it's because it's something a lot of us want to know and we think there's a secret out there and that I do blame the personal finance an investment industry for because that's how they market they market that they've got a secret and they're going to share it with you now nobody wants to know the secret of how to live a reasonable little life and to not worry about things that's just not going to make for a best-seller or there are people who want to know that but it's not enough to really make it big you want to make it big you're doing The Millionaire Next Door Rich Dad Poor Dad and other secrets as to how to be a multimillionaire because that's what people really want to know and the more money you dedicate towards obtaining those products that are going to tell you that the less money you have offering these things and the one other thing I would say is Robert Kiyosaki is the Rich Dad Poor Dad guy and the thing that to me resonated about his message in the past couple of years at least is a lot of people are starting to give you this version of sacrifice this tough love like Dave Ramsey does and Kiyosaki is getting it one truth that a lot of these other people are forgetting which is we do want to be rich and we do want to have our lattes so as I say Dave Bach is telling you to give up your lattes Robert Kiyosaki is telling you not only don't you have to give up your lattes you can buy the ground underneath where the latte stand is located and then you can drink as many lattes as you want it's a compelling message right here is there any personal finance advisor that you do respect and one person in the Washington DC area Rick Adelman seems to be well-regarded I just wondered if you had heard about him and who do you recommend who I always recommend are I will say the two people who have columns that taught me everything I needed to know at the LA Times after I talked my way into this gig that I shouldn't have had where Liz Westin who writes now for MSN and Kathy Kristof who could honestly be a little right-wing for my tastes sometimes but it's still a good friend writes for Kiplinger's and they're both terrific and you should read them I also read Ron Lieber at the New York Times Jason Zweig at the Wall Street Journal religiously I I also just think generally Reuters and Bloomberg are doing fantastic coverage and these are all places you should check out I should also say I'm starting to write for the British Guardian which has an American edition there they're going to have a lot of very decent stuff too because trust me if they don't I won't be there Rick Adelman gives decent advice my one concern with Rick and I openly say this is I wish he wasn't charging people 2% fie management which strikes me is a little high but he is a huge promoter of index funds which I believe in as well you know one of the things I wanted to I wanted to ask you a little bit about is so I you know I spend a fair amount of my time I see some colleagues in the in the audience that I know do as well up on Capitol Hill talking about issues about savings talking about their problems with products that are in the marketplace and problems with our systems and structures and one of the most common responses that I get and I at the risk of speaking for some of my colleagues I'd wagered that they get as well is that well listen you know the answer is that people just don't understand these products and if they if they knew if they were taught the right way to sort of engage with them then then they would they would make better decisions and and you know truth be told like everybody's in the financial literacy space in one's in one way or another right that there's my money gov from the federal government there's jump start there's a bill in front of the Florida Legislature right now to take personal financial education and make it a graduation requirement and I think the default thing that a lot of people sort of out there generally think when they hear about that sort of stuff is you know good you know people should know they should be taught the basics and they should be taught and and yes if they do receive appropriate information then they'll be able to do better especially if they receive appropriate information as kids they'll do better as adults and and your take on this does not line up with with that yeah I and I should say financial literacy broke my heart I am the proposal that became this book I actually included it as a salt and I wrote one sentence saying but intriguingly as all this personal finance information and investment advice flowed over us over the past 20 years the needle on financial literacy did not move at all it stayed very low how could this be so I start to look to answer this one sentence in my proposal and I have the chapter in the book now on it coming out against financial literacy is like coming out against apple pie you think how could this be wrong in fact financial literacy is a really fan see way of saying why should we give people proper legislative and government protection when we should just teach them how to get around gotcha products offered up by the financial services industry that's what financial literacy boils down to unfortunately wish I wasn't saying this but you've what we find and in some ways it can make sense right the idea that's being promoted right now is kids aren't learning financial skills from their parents so they need to take a class at school and then 20 years later they will understand that when the salesman is telling them something or they're getting you know a fight they're being shown a mortgage that seems to have it's a hundred pages small print with a lot of gotcha clauses and the the broker is saying it has one thing in there when in fact it doesn't have that you'll take a class in financial literacy and you'll be able to know your way around this this makes no sense as I like to say to people talk to me about what you learned in high school tell me about the French and Indian War and how did that impact the frettin the American Revolution there's probably people in this room who can answer that question in New York there's no one trust me you know we don't first we don't remember what we learned in high school or we don't remember a lot so to reliably assume that we will is a little nuts but second even if we did let's assume there's a perfect world I went to high school in the early 1980s I probably would not have learned about gotcha mortgages I probably wouldn't have learned about a lot of the stuff out there and whether you should buy numerous houses and try to rent them out and see if you could make money or perhaps even a better way to put this is I was born in the mid 1960s mid 1960s credit card is less than ten years old married woman would have no right to one for almost another ten years probably they probably would have never taught me about a credit card in other words in high school no ATM machines I still remember seeing my first ATM machine it was really cool all right my eyes were popping out in my head there were no gotcha mortgages more important there were no retirement accounts the IRA doesn't come in till the late 1970s the if for one case for the early 80s so that I never would have learned about any of this so somebody in their 60s for example would never learn about any of this in school why would assume that they would because they could take a class they would know this does it make sense again the pace of financial innovation essentially ensures that any class you take even if it works isn't going to work for a long time finally when you look at the rest of the data a couple other things students who take a class in financial literacy know no more I think students who have not taken a class so never mind remembering it in 20 years they can't remember it two months later second the financial establishment knows this and you got a start saying why are they promoting this and then you start looking who's promoting this and the answer is this is not a lot of disinterested parties it's people like Capital One visa all sorts of groups that have a vested interest in preserving the system as is yeah you know we we you know one of the things that we've often talked about is is that there's move there seems to be more product more promise in education that's paired with actually the product at the time right we've seen lower rates of foreclosure on families that receive sort of appropriate levels of housing counseling and of course a decent product at the same time and if you you pair a kid with an account and it comes with the education there seems to be more more promise in that what we've called a and others of course have called the financial capability approach as opposed to that pure sort of financial education approach and now I'm actually gonna explain the French and Indian War actually no I won't do that I think it's probably smart to go back to the audience can we come right up front here Robert shredder with international investor quick comment first of all with the lady with the question about Japan our calculations show us that the average Japanese household has about 220,000 and savings most all of them avoid the stock market because they know the pearls within so there are different ways to achieve your financial goals without all the risk and that's my question it seems that a lot of Americans feel compelled to enter the stock market or more risky investments because they've all been told by their advisers and they all know by simple mathematics that they're not getting anything from bank interest or or those safer alternatives in such a world aren't we really kind of pushing them in that direction and it seems that even the government entities continue to reinforce this idea in this notion that you have to sit down with your adviser to allocate your funds in a way that will provide some sort of you know inflationary hedge the stock market can feel like our national culture now I admit it there's definitely a push you know because it has worked for the past 100 years for the most part so you can understand where the suppose from on the other hand there's also a lot of money behind this push a lot of forces saying you know who are donating money on Capitol Hill to various campaigns who are doing well off of this so that's part of it too as a culture however the stock market works for us because we are something of a get-rich-quick culture we do like these promises and people are I don't want to see people are falling for it because what we're seeing actually in the post 2008 world is people being quite afraid of it and when you see them coming in at all it's and this is again one of the reasons why people like Teresa Gillard uchi argue that people should have nothing to do with their own retirement savings is people will only put money in when the market is going up so the past several weeks have seen an inflow into the stock market funds again last year there was only a couple of weeks where you saw a flow in of people were withdrawing money constantly certainly when you should have been putting money in in 2009 nobody was putting money in I I know like two people personally who put money in I wish I was one of them I wasn't I the fact is is we're not going to behave like rational actors there seems to this whole idea out there that we can teach people how to invest properly and that's assuming the idea of investing properly exists as you just pointed out but even if it does exist you're never going to teach people to do it it's not possible we're never going to overcome our own biases and we're never going to invest in the market one say it's March 2009 when it's exactly when you should have been stuffing all your money yet do you find that it's natural tendency for people to overestimate their returns I underestimate their losses I think it's both inadvertent and sometimes purposeful both of the above is the answer what you find is when the going is good people overestimate the returns I have a favorite Gallup survey from late 1990s I think it's 1999 where people were queried and we're told we're told Gallup they expected 30% average annual returns in perpetuity okay so you know hey it was a couple of great years there okay conversely now if you look at the numbers people are expecting nothing great obviously the truth is somewhere well in between these two places what we seem to do is I think financial behaviorist would call this the recency effect what just happened in the past and I mean the past is in two weeks ago is what we expect to be in the future so the markets up we expect the market to go up the markets down we expect the market to go down bonds are up we expect bonds to stay up bonds are down we expect them to stay down and as a result we're not very good at forecasting where our money is going to be I would argue the issue with retirement savings as less that then the first the fact again that people couldn't afford to put the money away and second another thing we all do is we try not to think about things that are unpleasant let some give me your take on on automation a little bit you know we you know one of the big concerns it's sort of the crash and people being sort of heavily into the market is what happens when you're 63 or 62 or 64 and a half and you're heavily exposed and the market goes down you're really that's the worst case scenario for people who have something not having anything is obviously worse than that and there's a lot of people that are out there who who have that financial experience but you know more and more there's been a push for funds and for individuals to adopt you know life cycle funds where you sort of reduce your exposure all the time and this is an example of automation is supposed to take care of this problem and and you know there's been a lot of work that done that we've advocated for automating people's entry into the market and automating their sort of amount of savings and sort of setting appropriate defaults for people so that we know people are going to make bad decisions and if we set them up to a low hurdle path for generally speaking good decisions that we're gonna see sort of better outcomes in the long run is there a lot of promise there or we ease selling ourselves short there's both promise and we're selling ourselves short and we're selling ourselves very short automation sounds like a great idea and in a perfect world it will work we live in the United States we do not live in anything resembling a perfect world okay there's a lot of problems with automation as of right now and I'm gonna try to be very brief and go through some of them first right now the default rates in are very low the reasons the default rates in are very low is because they're roughly usually 3 percent or so is because if they were any higher no one would put their money in because people can't really afford to save lots of more money second problem we have right now is we have a massive 401k what they call a leakage problem and this is not a commercial for certain products on TV this is a problem of people taking their money out and the reason they're taking their money out is because they need it okay so we're defaulting people in and they're often using it as their emergency savings okay as so putting them in stock funds as it's been pointed out by other people is not always the best idea because people are often using this as emergency short-term savings often not meaning to but the result is is they're pulling money out of funds where they should be invested for 20 30 40 years that's not a good outcome if you just tell people they're gonna automate you can't take it out unless you make this mandatory for everybody which I don't think there's any movement to do in this country that people like Theresa Gillard uchi or strongly arguing for it it's not people are not are going to opt out more and the reason they're going to opt out more is because they need that money and they need that money because first again most of us don't have emergency savings sucking about all we don't have we have other needs and third because you start falling into if you remember Elizabeth Warren's taken the great the to income trap where people sent their wives to work and then pretty soon the people who had wives working were able to buy more expensive homes and the better school districts and then more people sent their wives to work you're going to get into the same problem people are still theirs if not everybody saving their money some people are gonna be living better than others and people are gonna stop saving making it automatic that's common sense the last issue is is the idea of these target and lifecycle date funds themselves there are in theory a good idea and if it works I'm all for it first it's a very broad term everybody seems to have a slightly different definition of what an appropriate long term investment is people don't seem to realize this I mean and I should stress here the ignorance of the average investor should never ever be underestimated it's not possible to do this so that's going on surveys have shown repeatedly that the majority of investors see target-date funds not as a target but there's a guarantee and you could guess it reasons for this it probably includes everything from advertising that made it sound that way I don't think deliberately to the fact again that people are just fantastically uh knowledgeable about these things but third for every target date fund that's run quite well there are other mutual funds who have discovered that this is really a great way to ratchet up the fees and for people who don't know mutual funds come with fees attached to them now people who are being opted into these lifecycle funds are often the most ignorant of investors they're not people who are looking so they're actually quite an easy group to go after in a way so you see lifecycle funds and target date funds that are run with incredibly reasonable 20 basis points and then you see lifecycle funds that are run with you know 168 basis points and nobody seems to know the difference who are investing in them and often they don't have a choice if they do because it's through their 401k and we all know 401ks are a pretty limited menu for the most part so there's a lot of issues there and it's why I think in the end if you're gonna go that route you need a much greater solve like something Teresa is talking about go back to the audience here more questions well start on the left and then come to the right Joe Joe Joe Valente Center for American Progress you've spoken a lot about savings and on the debt side you've spoken about bankruptcy what about credit more broadly if we look at access to student loans access to mortgages credit cards as you had mentioned it's a very different world from 30 or 40 years ago how does that play into this environment um it's playing a greater and greater role and one of my regrets in the book is I did not discuss student loans anywhere near enough I should say I think I mentioned them as part of a debt crisis but I didn't really go into what is going on there student loans have really become a way in which costs can be I really believe this the costs for colleges have gone up it rates well beyond that of inflation now and there's no question in my mind that this is a very hard thing to prove that the loan industry is in part responsible for this because what people are doing is essentially turning to temporary third-party payers so that they can pay these bills because we're telling them if you don't go to college you're never gonna have a decent job you're never gonna earn a decent income and of course everybody's going to go to college and I believe people should go to college by the way that's not an argument for not going but what has changed and changed dramatically as we all know is that over the years it became harder and harder to get rid of these debts in bankruptcy court until finally in 2005 and the bankruptcy reform legislation you could no longer get rid of private student loan debt in college from colleges I mean from college lines and this is where the real trouble really begins because those are the loans that have the highest interest rates that are next to impossible to renegotiate that are really with the most gotcha terms and surprise surprise what happens the loan debt ratio starts to go up dramatically and we now have a situation where we have people in their 20s who are still in a very fraught economic environment or having very hard time getting jobs or if they do get jobs they're not anywhere near the levels they were 10 12 years ago in terms of payment and they're stuck paying these massive bills and you can't renegotiate them because nobody's gonna renegotiate with you why would you renegotiate you know you're the bank right these kids can't declare bankruptcy where's the incentive for you so it's becoming this huge drag on the economy I believe there are people who believe it is a drag on the housing market there are people who believe it is a drag on housing formation it is appearing to be a drag on marriage by which I mean we now have data that shows that well for men having student loan debt doesn't seem to have any impact on their marriage rates for women as I joked in her column I published today in The Guardian I said men don't make permanent passes at girls with student loan debts they don't get married where they get married later or they have a less likelihood all in all to get married and that's becoming a real issue I find it hard to believe that women who just have student loan debts are in some group that just doesn't feel like getting married right here we go these one-two my name is Bruce Murray I'm a retired federal employee from the US Department of Education I used to do student loan statistics but anyway actually my question though is about long-term care insurance that seems to be rather universally recommended I had an experience with it with my mother who lived to be 98 and was see now for 17 or 18 years and she you know kind of went through her long-term care it helped a little that in the long run not a whole lot do you record do you feel that that is truly a good thing for a person well I'm getting pretty old myself now to think about having it again but I didn't bother to get it when I was in my late 50s or early 60s is it something to anything is really worthwhile it was worthwhile and you're probably if you're not in your late fifties early sixties any longer you probably can't afford it any longer unfortunately the problem is and we really won't know this now for several more years is that the terms of the long-term care insurance are now changing because the actuarial tables from these great things that helped your mother for instance turned out to lose the insurance companies a heck of a lot of money they counting on people living is long they weren't counting on them living is sick so now you're starting to see stuff being sold without the same inflation protectors without the same guaranteed structure in terms of what you'll be paying so you're starting to hear stories of people whose long term health care insurance bill has suddenly doubled on them making it unaffordable after years of paying the bill they're covering less they are also charging women a heck of a lot more than they're charging men because women live both longer and sicker so while I don't necessarily wouldn't necessarily say don't buy it I wouldn't run out there I'm not in the crowd of people who says you must have this either the other issue is of course it depends and this is why I hate blanket answers it depends on how much money you have if you've got ten million dollars you probably don't need long-term health care insurance if you have less than a hundred thousand dollars same issue you probably don't need it the government will probably step in and cover you probably don't even have enough money to pay the premium anyway it's everybody in between that it starts becoming a sort of guessing game for and you can play with various tables and go to various financial planners who will give you different answers on this and of course the real challenge is is that there's a guessing game involved in what your Social Security is gonna look like what your 401k is gonna look like what your IRA is gonna look like what your long-term care insurance is gonna look like what your HSA is gonna look like what your 529 it's gonna look it's a very very complicated world across a variety of things and we have to sort of ask whether that increasing diversification and shifting risk for all of these different things onto individuals where that's going to get us in the long run and whether it's gonna be any better or worse than today I want to take a couple more questions and then we're gonna sort of move towards wrapping up can I see one last show of hands we'll go one two three we'll take those three questions Hannah and then we'll we'll hold a response until we've heard all three of the questions I'm Monique Cohen I'm interested when you talked about financial education your conversation your critique was primarily about school aid school based financial education and I would totally agree with you about that but what about financial education at more important moments in people's lives when they're making transitions when they're acquiring a house when they're getting their first job they're exposed to the world I love a Mobile Money there seems to be a role for financial education but probably not in the way they we think of classroom training that's great and then we'll and then we'll ask we'll hand the mic over there thank you so much hi Lera Hines with the Women's Institute for a secure retirement and one of the challenges that I feel like we're always facing in in trying to get out there and provide a lot of education on these issues help individuals especially women sort of feel like they can take some control over their financial futures is that we are bombarded in the media everywhere with information that people don't know what they're doing there the systems aren't working financial industry is corrupt all these sorts of messages Social Security's going away and and and in the face of that you know it's like well why bother I'm just gonna throw my hands up I don't know what to do and so my question for you is is until we can get some of these bigger fixes that may help what what what should we be telling people on an individual daily basis who have to work within these systems that aren't going to change anytime soon it's great and we have one more question in the back so I kind of feel like people we've there's been a lot of diagnoses of what what's wrong with the issue and so now I'm thinking about well what are some solutions you thought you touched on massive inequality and what the Occupy Wall Street movement brought brought to it by identifying that it's in the hands of you know a tiny tiny minority the wealth what I guess I would like to hear if you have any thoughts even if you didn't suggest in the book is the solution something like you know requiring you know corporations to invest profits more in if we can't get back the pension the 401k I mean what from a policy standpoint can we do because we're kind of getting around the getting around to video that it's not fair to put all of the onus on the individual to to save for the retirement ok I'll try to do these in order first what you described isn't financial literacy that people like to say it's financial literacy it's called coaching and it's actually something I've become a bigger fan of over time the trick is to make sure people have access to coaches this is that we actually met was talking about this together online have access to coaches and that these coaches are non conflicted I will tell you I use the coach myself now it is wonderful however it is not at this point in time a very cost efficient and going to a coach privately you know can cost you a couple of hundred dollars an hour I don't necessarily think that's a huge burden given what you're going to be paying out otherwise but for a lot of people it is but there's a lot of promise in that area but it is often confused with financial literacy the problem of courses is that doesn't solve the problem you just articulated which is that there's a ton of barrage coming at you constantly you're going to go to a coach for a very specific thing the chances are you're still going to be barrage with all of this stuff and to me there is no solve for teaching people how to retain this barrage it's why I walked away from financial literacy saying we need laws there there's no way you're never going to beat the financial services sector at their game I'm not you're not no one is not ok and as a result we have to stop pretending that it's past and I guess this is where my conclusion for the book was we need to talk about this what I didn't want to do was write a list of ten policy suggestions that everybody would go not virtuously as they were reading the book then shut the book and never discuss again which as we all know is sort of the standard formula out there right now is I really wanted people to engage with that and while I have gotten flack for not putting suggestions in the book I have to say I'm having great conversations as a result of not putting those suggestions in so I think I was right in the end what do I think needs to be done it's all over the place I think I don't think you're really gonna truly get at this till you get at the wealth inequality gap I don't see how it's possible they doubt the salary issues that involves a lot of Taxation issues in our country you know the while these gaps have opened up in many first world countries in fact ours is much more significant than most others and the reason that is is likely because of the tax policy issues that were encouraging this insane growth of inequality the carry tax exemption is a perfect example of this I live in New York so that one really hits me at home I am not paying 15% on anything but somehow if you're running a hedge fund you are that's the problem getting people to engage though and really one of the things the individual culture of personal finance and our individual culture in general has done is it's made us all feel like personal failures and it has for a large extent stopped a lot of social engagement I believe and that we have stopped seeing ourselves as a group and we see ourselves as individuals so if we fail it's individual to bring this back to some of the Occupy stuff so the only way you're going to get change is by demanding change I mean I know that sounds kind of simple but we haven't done it for a very long time we have simply accepted it we've privately grossed about it but most of us are way too embarrassed to say anything about it you know the average person hears the word retirement did their screamin massive panic but it doesn't occur to them that everybody in this room's got the same problem so until we reach that point and we're willing to start taking action and talking to Congress and writing to Congress and God alone dude there's maybe a mass of people in their 50s who don't have enough money in their 401ks let's talk to them you're not going to get anywhere because as long as we present this as an individual solution I might be able to save two people in this room but I'm not going to be able to save everybody else that's great that's actually that's the question I wanted to end on is what do we do about it and and I think you know you you've pointed out a great starting place the people need to have more open more honest conversations it's easier to get people to talk about just about anything than it is to get them to actually talk about their their personal financial lives and I'm also really glad you brought up coaching because I think that's something where we see there's a lot of promise as well and we're starting to see municipal efforts right to provide this service to people we're starting to see some some interesting nonprofit and state-level efforts to provide those kind of services to target populations and and you're right it's a it's not particularly cost effective yet but we're seeing some really interesting progress being made there and that's something that I hope that we'll be highlighting here at new America later this year Thank You audience very much if you can join me in thanking Coleen Nolan for being here with us today we look forward to seeing you again soon thank you very much

43 thoughts on “Pound Foolish: Exposing the Dark Side of the Personal Finance Industry

  1. She is rather out there…. I believe parents should not be burden with paying for their kids college education.. i dont like suze orman but she right on this one..

  2. I see a lot of moronically negative comments here and it reminds me of a mark twain quote: "it's easier to fool people than to convince them that they have been fooled"

  3. the 401k is only an account type with tax advantages…individuals need to take advantage and actually fund the account, choose the proper asset allocation that matches their risk level, and keep fees to a minimum. 401k accounts certainly does work for millions of people across the country as 1) contributions lower taxable income today, 2) companies may have an employer match, 3) when people don't fund properly or not capture any free matching money, they are not fully harnessing the power of compounding growth for an investing lifetime. People also need to avoid fear-based investing decisions like panic selling during a downturn, borrowing from a 401k, cashing out early and being held responsible for taxes and IRS penalties, etc. In addition, anyone not satisfied with their 401k plan can always skip and fund a Roth IRA for themselves and any spouse. Ms Olen is part of a movement to eliminate the 401k in favor of a forced low-risk, low-return government annuity funded by additional 5% pay withholding…uh, no thanks.

  4. What?  Charging 2%. That is not just a little high.  That is outrages!  I am a fiduciary for a 401K for our company.  I know more about 401ks than I ever thought I would because that is not what I really do for a living but someone needs to be responsible.  We made the fee for the employee only 0.5% which is accomplished by attention to detail instead of picking off a menu provided by a financial institution.   The difference between 0.5% and 2% is HUGE!!!!   Our employees have about 3 times saved in 401K than the average.  That is significant for a few reasons.  The first is that we are doing a good job.  Second, we match 50% of the contribution. Third we try to get employees to consolidate their other savings into our 401K because this gives us more bargaining leverage because we have significantly more money per employees and that results in less work for the 401K book keepers  and advisors.   Usually the fees for small accounts are much higher in that 2% range.  By moving small accounts into ours the employees fees drop.   If you can't get out of the 1.5-2% range you are doomed and wasting money.

    We, the company, pays a financial advisor.  The people in the 401K do not pay his fees.  Therefore he has no conflict of interest.  He must only convince me and my partner he is doing the best for us.
    We review the 401K plan 4 times a year but try to make changes in it only 1 a year.  We sometimes exchange poor performing mutual funds for better ones but we track what the old funds did just to make sure we made a right decision.

    The little things make a big difference.  How your company runs the 401K makes a huge difference.

    When I look at the younger people I see too many that are too cautious because of 2008 and 2009.
    Another HUGE problem is financial literacy.  Too many don't know the basics or how world events affect them.
    I do have to agree with the lady that the rules don't allow one to contribute enough or there are too many young people that just don't contribute enough to really make one rich.  With SS one can just get by in most cases.

    Here is the good part, actually not.  I have a friend that teaches people how to pass the tests to become certified stock brokers and financial advisors.  Sometimes where we are together he gets calls from his students and I hear the conversations.  What I hear makes me want to cringe.  You can't believe how stupid these conversations are.  My friend and I are at retirement age.  We have seen and done a lot in the market.  30 year old financial advisors and stock brokers don't know sh!t.  If they did they would be independently wealthy and not need a job.    The whole idea of taking a test is stupid.  The potential stock brokers should earn their certification by showing they can double their wealth in 7 years or at least do much better than the market than a whole.  Otherwise why pay for advise and just buy the S&P 500 "moneky score" or ETF?   Stock brokers are not your friends.

    I haven't written a book.  I have just lived it and got my education from the school of hard knocks.
    Beware, educate yourself!

  5. The 401K is not a failure. People who don't fund them are failures. They work great for my wife and I. This lady is a dyed in the wool liberal. JUST TRUST THE GOVERNMENT!

  6. Dave Ramsey is against bankruptcy because of his personal experience with it, but he understands that sometimes there's no other option. https://www.daveramsey.com/blog/the-truth-about-bankruptcy/

  7. Anybody who disagrees….lookup Suze Orman's background. She has no financial accreditation and her prediction for gold and other market related items have historically been way off. She gets paid by FICO to keep mentioning them and credit score and on the side was selling an "approved" debit card with retarded fees. I can go on but becareful with the self help gurus, lots are simply unqualified for the advice they dish out.

  8. A pension fund can be roughly approximated with half in stock index funds, and half in bond index funds. The trick is to have enough saved, and in the right asset mix by retirement. Of course all the issues the author talked about are very relevant and thought provoking. But it still remained true that knowledge is power, and those who have knowledge will tend to do better.

  9. I'm glad I haven't saved a penny for retirement. Instead I have traveled all over the world sometimes spending months in diffrent places. Much better philosophy than saving money for when you are old and gray.

  10. 1) people like tony robbins make nothing from his advice and his books, not everyone has there own interests at heart

    2) this woman has only made her millions from selling her opinion

    3) if the "save/invest your way rich" doesn't work… that what is the solution?

    All this woman has done is slag off people who are trying to help.

  11. There is no doubt Helaine exposed some American fairy tales of the personal financial advice industry. However, our financial future is in our control more than she claims.

  12. In essence, this foolish lady says when things go bad financial, just declare bankruptcy.

    Don't swallow her Marxist lies. She's largely saying you can't financially plan. Wow… just wait for government to fix things.

  13. Everyone is entitled to there options, But this women seem to be focusing on putting others down for no better reason than she doesn't agree with their views or that they have not under gone the "standard" forms of training to be so called expert  who in my personal experience are more concerned about they own interests than mine. Taking control of your own life from the ground up and breaking the chains of slavery of whatever masters you currently serve and making your own choices can never be a bad thing. People like Dave Ramsey, Suze Oman our offering you a different way to live, take from it what works for you no one is trying to say that everyone should take all the advice offered from these people…Have to say that I have benefited from there views, and yes I have had to change the way I live but I am happier for taking control of my own life.

  14. Hmmm While i agree with her on one aspect. The 401k does not work. When the market drops 38 percent and takes a ton of wealth from people who are retired and there is no way for them to recover… That tells me it doesn't work. Not to mention when a person dies that account is taxed 2 times on the beneficiary receiving it. There is a better way although she is does not know it. Her book pound foolish sounds like she should educate herself more.

  15. I can see where this is going…. The Government should redistribute wealth from the 1% to all the poor people who can't help themselves. Public policy to the rescue!

  16. As if savings will save you in a recession! A pile rubbish promoting obsolete ideas of financial independence.

  17. Sounded interesting at first, but it sounds like she's justifying the "I can't do it" mindset. I have no degree but have been able to take care of my family through hard work and self education—for decades. If you want to depend on handouts, you're going to be broke all of your life. Successful people want a chance to pay the price for success, not a freebie that may not be there tomorrow.

  18. You can't trust anybody who is selling you something? Did you hear what you just said? What the heck is this woman doing!? Trying to SELL books.
    You liberals need to take some responsibility and ownership. 401k works, IRA works, staying out of debt works. It's changed mine and my families lives!
    Rack up debt then file bankruptcy and depend on the government to take care of us? Sounds like a piss poor plan!

  19. She really pushes college a lot. That is one thing I completely disagree with. Some, people should attend college. The good majority have no right being there. If during high school years someone was not a book warm and not getting straight A's, then why in the world would someone want to spend the time and money for college?

  20. "its time to pull back on tax-supported savings products that really only benefit wealthy people"?  really?  I am not wealthy and benefit greatly from 401k contributions lowering my AGI.  Lefties ignore the facts just to bag on the wealthy…makes no sense.

  21. why doesn't she just come out and say that those who don't invest/save deserve a portion from those who did.

  22. Fantastic personal finance app called Value – 'Personal Finance Manager' if anyone is interested! http://getvalueapp.com

  23. Amazing. Thank you for telling the truth. Every American should see this. We need a new system and a new democracy in order for ppl to make it. My financial stresses are not my fault. And I rarely buy lattes!

  24. Just one thing:  I am so relieved to find somebody who claims nobody was predicting the crash of 08.  Because nobody was, but now, it seems every third guy claims he was clairvoyant back then.  Tired of hucksters within hucksters within a sham.

  25. i think it is funny that the basic essence of her argument is that money is not your individual responsibility and we need to look to government to tax and regulate for your retirement. I am sure this is reassuring for people who want to stick their heads in the sand, but it doesn't actually work, just look at greece.

  26. 401K doesn't work? Fine…that means the $13T in retirement funds will be easily confiscated by the govt to 'balance' it's books (so they can borrow even more!). They'll issue 'shares' to those who gave up their retirement (patriotic thing to do…) to save the Nation… and pay them a social security type stipend. Because the govt is so much better at managing money…

  27. We have exterminated the property owners in Russia.We are going to do the same thing in Europe and America.
    (The Jew, December 1925,Zinobit
    The world revolution which we will experience will be exclusively our affair and will rest in our hands. This revolution will tighten the Jewish domination over all other people."
    – Le Peuple Juif, February 8, 1919
    Here is their plan for you.Read this SCRIBD book
    WHO IS ESAU-EDOM

  28. yes sir. penny stocks must be traded with good advices from veterans. just listen for now, my father making lots from penny stocks with the help of these professionals. have a try and make the most of them 🙂 -> bit.ly/14Gj6eN?=hcvczz

  29. Yes, all sorts, including the choice of bought and paid for legislators to invest taxpayers' money in unpopular wars which make everyone less safe, while transfering the earnings of workers into the pockets of the contractors who make billions from lobbying for more mass killings.

  30. Brilliant argument. But despite your assertion, it isn't nonsense at all. Corporations and rich investors aren't stupid; they expect and receive key benefits from the billions they pump into our political system. Among the best of those benefits is a tax system that lets them pay a much smaller percentage of their real incomes than average wage workers, and even lower wage workers. That unfortunate fact can't be erased by pretending it's "nonsense".

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