Robert Kiyosaki versus Suze Orman Smackdown

Two days ago, I got this message sent to me from a friend:The New York Post – iPhone – Page Six – Suze Orman feuding with financial guru

The other financial guru was Robert Kiyosaki. I went to Twitter to find their exchange.
What I found was more of a pebble in a puddle than a Tsunami. Here it is:

From Robert Kiyosaki

I can’t believe this lady – @suzeormanshow. No way in hell she believes what she
teaches. 10:25 AM Mar 1st via HootSuite

Suze Orman’s reply

AT LEAST @theRealKiyosaki I DID NOT LEAD MILLIONS OF PEOPLE DOWN THE PATH TO LOSE ALL THEIR MONEY IN REAL ESTATE AS YOU DID. SHAME ON YOU
1:06 PM Mar 1st via web

Robert Kiyosaki’s Reply

If we are talking losses @suzeormanshow how about the TRILLIONS lost through
401K’s http://ow.ly/1cZW4 4:51 PM Mar 1st via web

That was It. I checked Twitter 24 hours later to see if there had been an update, there
hadn’t been. The night of the smackdown, I Googled Robert Kiyosaki versus Suze
Orman and got very few seach results. Different story today. Huffingtonpost, ABC
news, Your Money Mogul all had basically nothing to say but repeat the exchange and
ask people what they thought. I have read both financial authors and have benefitted
from the advice of both, but I understand Kiyosaki’s limitations as well as Suze Orman’s
whose advice would I follow?  RKs hands down. With this latest financial downturn, I
came to the stark realization that if I only followed Suze Orman’s advice, my net worth
would be half of what it is. Because I also followed RKs advice, it is what it is.

What did I learn from Suze Orman?

To value people more than money. That was the central message of Nine Steps to
Financial Freedom. I also learned how stock brokers work and as a result I am
extremely distrustful of advice meted out by brokers as the path to wealth. I tried to
share the information about stock brokers I gleaned from Orman’s writings with my
mother. Convinced that her broker was her friend she ignored my pleas to liquidate her
holdings and move to a different brokerage house. She stayed with her broker ,
bought KMart right before it went into receivership, was told NOT to buy index funds by
the same broker and missed out on an opportunity to invest in Vanguard Health
Care before it was closed to new investors (the broker wouldn’t return her calls when
she wanted to liquidate some of her positions to make the investment). When she
finally realized she needed to move her money, she had been in under-performing funds
for several years and the funds had both back and front end loads. That broker clearly did not value people more than money.  Quite the opposite.  She had my mother coming and going.  Suze Orman explained that brokers are simply sales people hired by brokerage houses more for their moxy than any understanding they may have of the markets.  Lacking financial literacy, they rely on the brokerage houses sell side analysts to make buy recommendations to their clients.  A brokerage house may take up a large position in a stock and need to unload it on their clients.  To me this is akin to being told in a department store that I look great in brown and should buy something in brown simply because brown is the major color the store has.  It was this information that drove me to read all things financial and in many ways I have Suze Orman to thank for it.  But I also realized that once I took care of the basics, Orman has little to offer one truly seeking wealth.  She can tell me 6 ways from Sunday how to get out of debt, how much I should save for emergencies, what kind of insurance I should buy but she really cannot tell me how to get wealthy. The stock market is really too unreliable, in The Stock Market Scam I reviewed the true long term returns of the market. In my upcoming post, What did Warren Buffet Really Say? I argue that unlike most people who put money into stocks, Mr Buffett is not looking to retire on that money at age 65.  The need to live on the money in a Roth or 401K in retirement introduces all kinds of risk to a retiree that Suze Orman never addresses. For example, what if you need the money in a down market and are forced to withdraw principal?

What did I learn from Robert Kiyosaki?

I was given a copy of Rich Dad Poor Dad in 1998 before I had ever heard of Suze Orman.  I devoured the book in a weekend.  RDPD stresses financial literacy, frugality, and points out a novel concept, that your home is not an asset.   Many people today have finally gotten that message although not soon enough to prevent the loss of a trillion dollars in net worth in this latest housing bust.  As a result of what Kiyosaki teaches, I live in a modest home and I have positive cashflow investment real-estate.  Kiyosaki also teaches that for people to become wealthy they have to broaden their skill sets and advocates network marketing as a way to learn the skills of communication and selling: two skills at which both Kiyosaki and Orman excel.  Because of Kiyosaki, I know why I own the assets that I own.  Yes, Suze, I own whole life as well as term insurance.  Sometimes I feel that Suze Orman is so dogmatic that her entire philosophy can be expressed as follows:  1) Get out of debt 2) Never buy whole life insurance 3) Buy Term Insurance and invest the difference between the Term and Whole live premiums in the stock market. While Kiyosaki’s philosophy is that we must become financially literate.

What are your thoughts?  Please comment.