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Speaker 1: This is Masters in Business with Barry Ridholds on Bloomberg Radio.

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Speaker 1: This week on the podcast, I have an extra special guest.

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Speaker 1: Her name is Helene Olin, and she is the author

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Speaker 1: of Pound Foolish, exposing the dark side of the personal

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Speaker 1: finance industry, as well as the co author of the

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Speaker 1: Index Card Guide to Investing is the short version of

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Speaker 1: it with Professor Harold Harold Pollock. UM. What I really

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Speaker 1: love about Helene is she is a mold of cocktail thrower.

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Speaker 1: She basically um looks at the world of financial uh,

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Speaker 1: personal finance and financial advice UH with an oozy and

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Speaker 1: is absolutely heartless about machine gunning down people who give

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Speaker 1: bad advice. I think you'll find the entire podcast to

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Speaker 1: be quite interesting if you read or follow some of

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Speaker 1: the more popular financial gurus she has taken down were

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Speaker 1: taken on nearly all of them, especially in the book

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Speaker 1: Pound Foolish. But the slate column is pretty brutal as well.

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Speaker 1: That's what That's what I find so refreshing and fascinating

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Speaker 1: about it. So, without any further ado, my interview with

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Speaker 1: Helene Olan. This is Masters in Business with Barry Ridholts

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Speaker 1: on Bloomberg Radio. My special guest this week is Helene Olan.

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Speaker 1: She is an author and columnist and really focuses on

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Speaker 1: some of the issues in the personal finance area. She

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Speaker 1: writes a column for Slate called The Bills. She's a

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Speaker 1: regular columnist for inc. She has two really fascinating books.

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Speaker 1: One is Pound Foolish, exposing the dark side of the

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Speaker 1: personal finance industry. And some of you may remember Professor

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Speaker 1: Harold Pollock's Index Card, How to invest with just a

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Speaker 1: dozen bullet points on an index card, and and Helene

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Speaker 1: co wrote, um, why the index Card, Why personal finance

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Speaker 1: doesn't have to be so complicated? With Harold Pollock. She

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Speaker 1: is a graduate of Smith College and was named by

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Speaker 1: Business Insiders as one of the fifty women who are

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Speaker 1: changing the World's hell and Olan, Welcome to Bloomberg. Thank

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Speaker 1: you for having me on. So there's so much stuff, um,

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Speaker 1: I wanted to go over with you. You and I

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Speaker 1: really uh tread and we really fish in some of

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Speaker 1: the same waters, so to speak. So so let's start

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Speaker 1: out really broad. What's wrong with the personal finance industry today? Well,

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Speaker 1: what's wrong with it? Well, there's a lot of things

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Speaker 1: wrong with it, right, but the the overriding issue is

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Speaker 1: that it's being sold to people under false pretenses. There's

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Speaker 1: this idea that somehow, if you can just save up

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Speaker 1: enough money and invest correctly, you're going to work your

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Speaker 1: way out of what is a greater economic problem that

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Speaker 1: we have right now, which is wage sagnation, the growth

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Speaker 1: of the one percent, wealth inequality, and so on. That

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Speaker 1: is just simply untrue. It doesn't work for most people.

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Speaker 1: So so let's talk a little bit about um financial literacy,

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Speaker 1: which some people said, if only we teach people how

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Speaker 1: to invest, how to save everybody's in time, it will

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Speaker 1: be fantastic. Financial literacy broke my heart. Um. I started

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Speaker 1: looking at it several years ago as a solve. Um

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Speaker 1: I now always feel like when I talk about it,

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Speaker 1: I'm bad mouthing apple pie or thanksgiving people. Okay, so

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Speaker 1: here's really what what could be bad about people being

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Speaker 1: literate about their own find It doesn't work, and it

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Speaker 1: doesn't work for a bunch of different reasons. First of all,

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Speaker 1: people just don't remember stuff. Second, financial literacy doesn't work

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Speaker 1: for another basic reason, Um, it's people literally don't remember.

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Speaker 1: But more to the point, financial literacy is a movement

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Speaker 1: brought to us by the financial services sector, and it

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Speaker 1: was always set up to work around the fact that

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Speaker 1: they are doing what they want to do. So instead

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Speaker 1: of giving us financial um I hate using the word products,

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Speaker 1: but that's the word use, right, Instead of saying, you know,

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Speaker 1: a thirty year fixed mortgage, they're going to claim that

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Speaker 1: they can teach you how to read a hundred single

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Speaker 1: space pages with tiny little print, with more gotcha clauses

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Speaker 1: than than gotchas exist. This is obviously false and when

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Speaker 1: you look at the history of the movement, the modern

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Speaker 1: movement actually begins in the in the n nineties with

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Speaker 1: Ford Motor Credit. And Ford Motor Credit had something of

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Speaker 1: a problem. They were getting involved in some prime auto loans,

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Speaker 1: which of course all the automakers were, but Ford had

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Speaker 1: a problem because a publicity problem, a pr problem, because

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Speaker 1: Henry Ford was always against you credit like that. So

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Speaker 1: they came up with this idea that they're going to

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Speaker 1: teach people about financial literacy and they're going to teach

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Speaker 1: them how to do how to manage these loans. So

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Speaker 1: they hook up with some Washington people and some economists

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Speaker 1: and is sure enough their first um. Their first effort

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Speaker 1: is a p s A in late auto loans that

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Speaker 1: absolutely nobody remembers except for the fact it is in

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Speaker 1: the next database. And then they get this idea that

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Speaker 1: they're going to hook up and do children's personal finance.

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Speaker 1: And this is what takes off because it's the late nineties,

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Speaker 1: zero to three. And now I have to interrupt you.

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Speaker 1: What is children's personal finance? How? How to manage? Eliminate?

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Speaker 1: Stands well, it's like teaching financial literacy and in elementary

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Speaker 1: school and high school, and you know, and if we

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Speaker 1: can just teach children how to manage their money, they'll

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Speaker 1: remember it as adults. Now, of course this doesn't work. Again,

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Speaker 1: this doesn't work because they test these kids a year

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Speaker 1: in and year out. They kids who have taken these classes, no,

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Speaker 1: no more than the kids who haven't taken these classes.

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Speaker 1: But the other thing that's going on is the financial world, um,

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Speaker 1: you know, moves at a fast fast pace. What you're

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Speaker 1: teaching people in is not necessarily what they're going to

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Speaker 1: need to learn in two thousand five. Um. But at

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Speaker 1: the same time, of course they're not acknowledging that, right,

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Speaker 1: So the whole thing is kind of misbegotten, but we

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Speaker 1: all believe it because it just sounds so good. What

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Speaker 1: could it like you said, what could be wrong with

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Speaker 1: teaching personal finance? So what we're thick and so the

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Speaker 1: final kick to this is is it then turns around

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Speaker 1: and sets you up as the as the as the

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Speaker 1: person to be blamed when it goes wrong. So when

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Speaker 1: two thousand eight happened, the bags literally turned around and said, well,

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Speaker 1: if people had just managed their money right, they never

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Speaker 1: would have bought these houses they couldn't afford. Instead of saying, well,

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Speaker 1: we shouldn't have given loans to people we knew were lying,

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Speaker 1: or that our people you know, filled out the paperwork

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Speaker 1: for them, or you know, we gave them these loads.

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Speaker 1: We gotcha clauses. So in the last minute, we have

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Speaker 1: in this segment, how did you find your way into

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Speaker 1: this tiny niche? This is a really focused area. Oh

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Speaker 1: this is great. Um, it was totally by accident. I

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Speaker 1: was living out in l I with my husband and

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Speaker 1: someone in late December calls me up from the big

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Speaker 1: paper in town and says, we need someone to submit

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Speaker 1: at the money makeover. Fe sure over Christmas? Of course,

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Speaker 1: do you know anything about personal finance? And all I

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Speaker 1: know about personal finance is the fact that it pays

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Speaker 1: a heck of a lot better than anything else in

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Speaker 1: journalism except for tech writing, and I don't do tech writing, right.

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Speaker 1: So with this background in mind, I say, sure, I

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Speaker 1: know all sorts of things about personal finance. And just

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Speaker 1: to be clear, I didn't know a mutual fund from

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Speaker 1: mutual of Omaha. I mean, I want to make this

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Speaker 1: real clear. I didn't know anything. So I get I

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Speaker 1: get this gig, and I run down to the Best

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Speaker 1: Center I lived a couple of blocks from the Beverly Center,

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Speaker 1: and I buy a copy of Personal Finance for Dummies

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Speaker 1: and a couple of other personal finance books. And with

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Speaker 1: this background, I go off to do my story and

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Speaker 1: at some point I start asking the subject all about

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Speaker 1: her money life. Um, you know, makeovers work like fashion makeovers, right,

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Speaker 1: And I hadn't write this thing up, had the thing

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Speaker 1: in wait for my screaming phone call. And instead of

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Speaker 1: a screaming phone call, I get that was great. Can

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Speaker 1: you do another one? I'm thinking, well, they just paid

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Speaker 1: me double my usual fee. Sure, and I do another one,

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Speaker 1: and the same thing happens, and another one it. At

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Speaker 1: some point I realized I was something of an expert.

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Speaker 1: I'm Barry rid Halts. You're listening to masters in Business

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Speaker 1: on Bloomberg Radio. My special guest today is Helene Alan.

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Speaker 1: She is the author of, amongst other things, Pound Foolish,

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Speaker 1: and I love this description of of the book. Pound

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Speaker 1: Foolish looks at the gurus, pundits, self anointed experts, crackpots, cranks,

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Speaker 1: and outright frauds who populate the backwaters and slip streams

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Speaker 1: of American finance. Did you leave anybody out in that list?

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Speaker 1: That's a pretty good list. That's a good question. Um,

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Speaker 1: I probably left tons of people out. There's so many

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Speaker 1: of these people, right, So so let's go right to

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Speaker 1: the beginning, because you in the book, you wrote a

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Speaker 1: couple of things that really surprised me. Um. First, personal

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Speaker 1: finance industry started as a response to the Great Depression.

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Speaker 1: I had no idea about that. That's an amazing piece

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Speaker 1: of information. Give us the historical background of this, Okay,

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Speaker 1: So there was always like little bits of of like

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Speaker 1: budget guidance and papers, right, and there was also always

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Speaker 1: investment advice, you know, prior to the Great Depression. What

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Speaker 1: happens afterwards is a woman named Sylvia porter Um, who

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Speaker 1: is a nineteen at the time, nineteen year old college

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Speaker 1: student and hunter. When her mother loses the family fortune

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Speaker 1: in a stock market scam after the nine market crash,

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Speaker 1: and Sylvia Porter decides to make it her life'sbmission to

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Speaker 1: make sure something that like the Great Depression can't happen again,

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Speaker 1: and she begins she decides to go to journalism. Um,

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Speaker 1: at least of the days when you can actually make

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Speaker 1: a living in journalism, right, So anyway, she goes into journalism,

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Speaker 1: and she starts writing for the New York Post, and

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Speaker 1: she's got this sort of engaging voice, and over a

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Speaker 1: period of a number of years, they give her a column.

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Speaker 1: This turns into a regular feature and it's initially s F.

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Speaker 1: Porter says, they don't even say she's a woman until

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Speaker 1: the early nineteen forties. And over time, over a period

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Speaker 1: of several years, I mean, this isn't disputatious. Yeah, she's

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Speaker 1: sort of gates what we today call personal finance. And

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Speaker 1: by nineteen sixty she's on the cover of Time magazine.

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Speaker 1: She gives advice to jfk um Lyndon Johnson actually says

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Speaker 1: something like, why can't my economic advisors talk and give

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Speaker 1: advice more like Sylvia? She becomes this massive guru. And

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Speaker 1: of course today she's all but forgotten. I mean, it's

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Speaker 1: kind of wild to me. Nobody, almost no one under

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Speaker 1: the age of fifty even remembers who she is anymore.

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Speaker 1: What sort of advice did she give and was it

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Speaker 1: any good? Well, you know, she started very political. She

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Speaker 1: started off as an extremely political figure. She would get

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Speaker 1: into arguments with the Roosevelt administration over bond issues. She

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Speaker 1: um gave tax advice to JFK as I said. But

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Speaker 1: then over time, like a lot of gurus, she starts

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Speaker 1: becomes increasingly wealthy, increasingly prominent. She gets increasingly cut off.

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Speaker 1: And what starts happening is by the nineteen seventies, she's

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Speaker 1: giving inflation advice. She joins President Ford's Whip Inflation Now campaign,

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Speaker 1: which was really absurd. Um, you just think buttons helped

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Speaker 1: bring down inflation. I mean, a few years later inflation

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Speaker 1: was almost gone. So there's a correlation there, to say

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Speaker 1: the least, poor Sylvia, right, she never recovered from this.

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Speaker 1: So so she starts giving advice to people like don't

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Speaker 1: buy veal, which was then very expensive, buy chicken, and

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Speaker 1: of course most of her people were never buying veal.

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Speaker 1: And then what had to be my favorite and unfortunately

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Speaker 1: I found this column after I wrote pound Foolish actually

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Speaker 1: suggested to people they substitute, um, several teaspoons of peanut

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Speaker 1: butter for lean meat if they couldn't get their social

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Speaker 1: Security check to stretch far enough for meat. Um. Actually,

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Speaker 1: the United States government at the time had a better idea.

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Speaker 1: That's when we got the cost of living adjustment for

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Speaker 1: Social Security because the elderly were increasing trouble as the

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Speaker 1: inflation began to pick up in the nineteen sixties and

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Speaker 1: was fairly rampant way back right, it was when we

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Speaker 1: were children. Elder poverty was very still fairly significant. And um,

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Speaker 1: so that's Sylvia Porter. And then so let me jump

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Speaker 1: in right here be us the Silvia Porter. Those recommendations

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Speaker 1: are one of my pet peeves. I've always despised the advice. Hey,

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Speaker 1: you know, if you skip the latte and reinvest that

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Speaker 1: money every day for the next thirty years, by the

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Speaker 1: time you retire, you love millions of dollars. And my

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Speaker 1: perspective has always been, no, five dollars a day isn't

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Speaker 1: going to make a difference. And second, if five dollars

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Speaker 1: is the difference between you retiring comfortably or bankruptcy, there's

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Speaker 1: something wildly wrong with with your entire financial situation. You've

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Speaker 1: written even more aggressively about this. I think it's absolutely

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Speaker 1: us I mean, there's a couple of things wrong with it.

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Speaker 1: Um On a mathematical level, it makes what's going on

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Speaker 1: in our society it makes no sense. Right. Our problems

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Speaker 1: are not and I particularly use you know, a Starbucks

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Speaker 1: latte because it became so famous. Our problems are not

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Speaker 1: that people are drinking too many Starbucks latte's, though I'm

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Speaker 1: sure there are people who are spending too much money

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Speaker 1: at Starbucks right, too much money anywhere? All right. My

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Speaker 1: older son frankly be one of them. But that's neither

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Speaker 1: here nor there at the moment. But the the issue

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Speaker 1: is that what was going on is people salaries were

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Speaker 1: stagnating and falling relative to inflation. But what was going

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Speaker 1: up was healthcare, housing, education, childcare, stuff like that, and

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Speaker 1: that was going up at rates over inflation, not for years,

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Speaker 1: not for a decade, but for decades and continues to

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Speaker 1: this day. So the idea that you're throwing your money

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Speaker 1: away at Starbucks is absurd. What was really going on

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Speaker 1: is your can't keep up with the cost of living.

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Speaker 1: The other thing that really makes me crazy about this

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Speaker 1: is that the idea that we're spending too much kind

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Speaker 1: of falls into this sweet spot in the American you

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Speaker 1: know canon right where on the left wing, spending is

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Speaker 1: always seen as somehow morally wrong in some way. Right, Well,

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Speaker 1: it's a hobby of the rich, and therefore it's tainted,

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Speaker 1: right like, you shouldn't be wearing good clothes, you shouldn't

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Speaker 1: help me enjoying good food. There's something not right about it,

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Speaker 1: right And on the on the by the way, does

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Speaker 1: that still exists anymore? Because that might have been true

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Speaker 1: in the sixties and seventies, and you have this really

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Speaker 1: nascent movement about live small or the dumpster divers and

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Speaker 1: all that's a Mr money Mustache says, don't spend any money.

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Speaker 1: Retired at thirty. But that's a you know, consumerism is

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Speaker 1: a huge part of American culture. Well it is huge

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Speaker 1: because most of us like like luxuries. It's that great

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Speaker 1: experiences everything. It's that great line from three Petty Opera,

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Speaker 1: Live Life and luxury. That's what it's for, right, We

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Speaker 1: like luxury. There's nothing wrong with it as long as

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Speaker 1: you can afford it. Right. So on the other side, though,

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Speaker 1: on the right wing side. What you get is this

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Speaker 1: idea that people are wasting their money and that they're

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Speaker 1: somehow not deserving. And that's where you go out. You

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Speaker 1: see people at CNBC, and I always love this. They're

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Speaker 1: always dressed in like three hundred dollar suits and they're

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Speaker 1: ranting about poor people and they're smartphones. Smartphones have kind

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Speaker 1: of become the new latte factor now and smartphones of

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Speaker 1: the new welfare queen in a catalyze. Remember that line

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Speaker 1: of argument exactly. And you know, as I always say,

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Speaker 1: you know, try getting a job anywhere without a smartphone.

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Speaker 1: First of all, right, but second it's just absolutely again

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Speaker 1: untrue of anything. People with less money actually have less

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Speaker 1: smartphones than anybody else. They actually do surveys on this.

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Speaker 1: But so this whole idea that we're just spending ourselves

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Speaker 1: into oblivion is ridiculous. I'm Barry Rehults. You're listening to

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Speaker 1: Masters in Business on Bloomberg Radio. My special guest today

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Speaker 1: is Halleane Ollen. She is a personal finance author, most

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Speaker 1: recently co author with Harold Pollock of The Index Card,

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Speaker 1: the book which explains why personal finance does not have

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Speaker 1: to be complicated and the genesis of this is really

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Speaker 1: pretty simple. Professor Pollock wrote an index card with like

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Speaker 1: a dozen bullet points. I actually have it right here,

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Speaker 1: a dozen bullet points. It got tweeted and then became

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Speaker 1: a column or one off column, and it went completely viral.

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Speaker 1: And how did you end up meeting him? And how

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Speaker 1: did you guys decide to turn this into a book? Well,

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Speaker 1: he The way the index card came about is he

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Speaker 1: was interviewing me for a blog cast. Remember when people

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Speaker 1: used to do video blog casts all that way back

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Speaker 1: in two thousand, right, and he um interviewed me about

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Speaker 1: pound Foolish, and at some point in the interview he said, well,

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Speaker 1: this is just ridiculous. Everything you need to know about

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Speaker 1: personal finance can be put on an index card. Meeting,

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Speaker 1: of course, the industry is selling bs, right, And we

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Speaker 1: laughed about it, and we go on with the interview,

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Speaker 1: and neither of us thinks about it for the next

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Speaker 1: half hour or whatever we're doing, right, And then people

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Speaker 1: begin to write him and say that index card, that

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Speaker 1: sounds great, where is it, thinking like he had done

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Speaker 1: it index card. Of course, he had done no such thing.

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Speaker 1: So he decides to do it index card, which you

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Speaker 1: have right here. In front of I mean, really, this

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Speaker 1: is this is an index card MAXU four oh one

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Speaker 1: K buy an expensive diversified funds. You know, a whole

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Speaker 1: run of things that are basically just straightforward common sense advice, right,

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Speaker 1: And so he puts it online on the on the

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Speaker 1: same blog that he interviewed me with, and the next

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Speaker 1: thing I know is on Google alerts. I'm starting to

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Speaker 1: get you know, my name with index card, and I'm like,

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Speaker 1: what the heck index card? And then of course we

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Speaker 1: ended up you know, I knew what happened pretty fast,

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Speaker 1: and we ended up deciding to do a book together

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Speaker 1: that that's fantastic. And I saw this on Twitter with

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Speaker 1: like forty likes or some insane number it had. It

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Speaker 1: had just gone absolutely um absolutely viral. So of the

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Speaker 1: dozen or so bullet points he uses, what do you

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Speaker 1: think are the most important that people should be aware of? Well,

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Speaker 1: I think for people who are investing, and this is

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Speaker 1: a big you know, what if, right, because I'm not

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Speaker 1: what if, but you know big that's a subsett right

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Speaker 1: because but don't buy individual stocks, don't buy manage going

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Speaker 1: to manage mutual funds. I mean, the thing is is

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Speaker 1: people are being ripped off blind. Here people are. They're

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Speaker 1: being sold on this idea that there's a secret out

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Speaker 1: there and that you know, they're going to find the

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Speaker 1: person who's going to give them the secret, and they're

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Speaker 1: going to do better than the markets. Right. Couple of things. First,

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Speaker 1: this is a really expensive way to invest, so Wall

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Speaker 1: Street is making a killing. That's why you're being sold

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Speaker 1: on this idea. Second, every study we know shows that

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Speaker 1: the vast majority of people, by which I mean about

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Speaker 1: more than um have no ability to outguess the markets

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Speaker 1: you're in and you're out, especially after costs are taken

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Speaker 1: into account. And third, you then have to ask a

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Speaker 1: certain amount of common sense. If you have found that

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Speaker 1: rare person who actually has that ability, right, or you

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Speaker 1: think you are that person, why on earth would anybody

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Speaker 1: tell you this, Right, you and your ten thousand or

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Speaker 1: hundred thousand, or even million or two million dollars, Right,

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Speaker 1: Surely they're going to go find somebody with a couple

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Speaker 1: of billion to invest, or even better, set themselves up

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Speaker 1: on a yacht outside the Caymans or some other really

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Speaker 1: nice place in the Caribbean and trade for themselves and

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Speaker 1: make a lot of money. Why are they selling you

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Speaker 1: the secret makes no sense whatsoever. So let me let

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Speaker 1: me go to one of the last bullet points here,

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Speaker 1: which is something I've always found to be fascinating. Make

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Speaker 1: financial advisors admit to a fiduciary standard. So let's let's

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Speaker 1: just briefly explain what is the fiduciary standard, what are

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Speaker 1: the alternative and why uh, why should people adhere to

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Speaker 1: one over the other. Okay, we all think, or most

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Speaker 1: of us think that when we go off to seek

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Speaker 1: financial advice, we're gonna go off and see somebody and

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Speaker 1: they're the equivalent of a doctor. Right, they've got some

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Speaker 1: hippocratic account. Yeah, they've got some hippocratic oath to our finances.

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Speaker 1: This is absolute bus. They worked to something called the

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Speaker 1: most most of them, not all of them, work to

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Speaker 1: something called the suitability standard, which is sort of this

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Speaker 1: idea that as long as the financial advice they're giving

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Speaker 1: you as sort of okay, it could lie yeah, suitable,

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Speaker 1: it can line their pockets, you know, as much as yours.

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Speaker 1: And to to get a little technical, the broker dealer

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Speaker 1: side of the world, the commission based side of the

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Speaker 1: world UM, which is governed by an s r OH

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Speaker 1: called FINRA. They're the ones who regulate and manage the

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Speaker 1: suitability standard, which I'm fond of saying, don't sell some

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Speaker 1: high tech I pot to Grandma, that's my definition of suitability.

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Speaker 1: I think they would say that that's perfectly okay, and

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Speaker 1: you can even go further than that, right. So anyway,

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Speaker 1: so most people don't realize this though, because the kick

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Speaker 1: is of course they don't even have to tell you this.

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Speaker 1: So what the fiduciary standard is is what the registered

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Speaker 1: investment advisors and certified financial planners mostly work too, which

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Speaker 1: is this idea that they do have to act your

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Speaker 1: best interest and they have to put their your best

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Speaker 1: interest ahead of their own. The Department of about they

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Speaker 1: used to be under the suitability standard in the last minute,

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Speaker 1: tell us what's about to happen with the Department of

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Speaker 1: Labor change. Okay, So the Department of Labor is decides

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Speaker 1: a few years ago that they're going to bring individual

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Speaker 1: retirement accounts under the under the fiduciary standard as well. Okay,

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Speaker 1: And you have to understand something. Regular accounts are managed

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Speaker 1: by under the rule of the sec and retirement accounts

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Speaker 1: are under the Department of Labor. So that's a whole

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Speaker 1: other craziness. So the Department of Labor says, we're going

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Speaker 1: to deal with this, this with the with iris because

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Speaker 1: but for most people, they're investing their retirement money, right,

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Speaker 1: and the financial industry goes insane bonkers. This starts in

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Speaker 1: two thousand eight, it is going on to this day,

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Speaker 1: and essentially they are claiming people won't be able to

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Speaker 1: give get good advice, middle class people because they won't

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Speaker 1: be able to afford to give them advice, which when

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Speaker 1: you think about it, if you believe them, which I don't,

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Speaker 1: but will come to that in a minute. They are

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Speaker 1: essentially saying, if we have to act in our client's

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Speaker 1: best interest, we don't have a business model. Okay, this

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Speaker 1: is a logical follow through, but they don't admit that, right. So,

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Speaker 1: in fact, what we know is because the Center for

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Speaker 1: Retirement Research at Boston College studied this a couple of

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Speaker 1: years ago, it will cut into their profits. But they

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Speaker 1: can still make a profit giving financial advice. They just

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Speaker 1: can't make as much of a profit as before, and

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Speaker 1: they're really unhappy about that. So there's there's a fascinating

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Speaker 1: little history that correlates with this, because I've I've written

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Speaker 1: about it, and I just did another column about this.

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Speaker 1: What people don't realize about this whole debate and how

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Speaker 1: it came about is within So the financial crisis comes along,

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Speaker 1: and while there are many many causes of it, one

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Speaker 1: of them is something just called misaligned incentives, where you're

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Speaker 1: creating an incentive for people to do stuff that turns

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Speaker 1: out to be both really really stupid and personally lucrative.

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Speaker 1: Turns out that's not a great thing to have in finance,

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Speaker 1: really really dangerous, damaging stupid stuff and highly lucrative, bad combination. So,

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Speaker 1: as part of the Dodd Frank regulations, there is a

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Speaker 1: research report that the SEC has to do looking at

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Speaker 1: the various standards of incentives and compensation and conduct that

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Speaker 1: of which there's this patchwork, this dual um, this dual

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Speaker 1: system that doesn't seem to make any sense. The SEC

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Speaker 1: zoned owned staff releases this giant report in two thousand

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Speaker 1: eleven and recommendation is get rid of suitability, make it

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Speaker 1: fiduciary across the board, and the SEC, politically deadlocked, doesn't

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Speaker 1: vote on that, doesn't doesn't pass that, so that then

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Speaker 1: sits in lingers for the next five years. The Council

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Speaker 1: of Economic Advisors does some research into this, and the

427
00:23:21,560 --> 00:23:23,440
Speaker 1: White House put out I think it was last year

428
00:23:23,520 --> 00:23:25,639
Speaker 1: or earlier this year, they put out a report that

429
00:23:25,720 --> 00:23:30,760
Speaker 1: says the lack of fiduciary standard in just in retirement

430
00:23:30,800 --> 00:23:33,000
Speaker 1: accounts alone, just in four oh one case iras, what

431
00:23:33,080 --> 00:23:37,679
Speaker 1: have you costs investors seventeen billion dollars a year. And

432
00:23:37,800 --> 00:23:40,360
Speaker 1: someone comes up with the bright idea of saying, well,

433
00:23:40,400 --> 00:23:44,280
Speaker 1: since we can't get the SEC off the dime to

434
00:23:44,280 --> 00:23:47,560
Speaker 1: to vote on this and approve it, the industry really

435
00:23:47,600 --> 00:23:49,920
Speaker 1: doesn't want to see suitability. What doesn't want to see

436
00:23:49,920 --> 00:23:54,439
Speaker 1: fiduciary across the board? Hey, these retirement accounts are essentially

437
00:23:55,080 --> 00:23:58,040
Speaker 1: compensation four oh one K four oh three B. That's

438
00:23:58,040 --> 00:24:01,200
Speaker 1: why they're governed by Department of Labor and ARISSA. It's

439
00:24:01,200 --> 00:24:05,240
Speaker 1: a form of compensation, so they get to have reign

440
00:24:05,359 --> 00:24:10,000
Speaker 1: over that where the SEC doesn't. So really, because four

441
00:24:10,000 --> 00:24:12,119
Speaker 1: oh one k s are a form of compensation, the

442
00:24:12,119 --> 00:24:14,960
Speaker 1: White House gets the back door. The SEC go to

443
00:24:15,000 --> 00:24:17,800
Speaker 1: the d o L. And the thinking is that once

444
00:24:17,840 --> 00:24:20,320
Speaker 1: the fiduciary standard is on four oh one ks and

445
00:24:20,359 --> 00:24:24,479
Speaker 1: other retirement um accounts, that'll take us up to thirty

446
00:24:24,480 --> 00:24:28,840
Speaker 1: five and that's like a tipping point and eventually, look

447
00:24:28,880 --> 00:24:32,080
Speaker 1: when we look at Morgan Stanley and Merrill Lynch, they're

448
00:24:32,119 --> 00:24:34,560
Speaker 1: a hybrid. They're both the broker and an r I A.

449
00:24:35,160 --> 00:24:38,080
Speaker 1: They used to have like single digit percentage of fee

450
00:24:38,080 --> 00:24:41,520
Speaker 1: based are A stuff. It's now over two thirds of

451
00:24:41,560 --> 00:24:46,080
Speaker 1: their at least their retail business. It's all gravitated to that. So,

452
00:24:46,720 --> 00:24:51,600
Speaker 1: in a bizarre way, the financial crisis lead to to

453
00:24:51,800 --> 00:24:56,920
Speaker 1: this new fiduciary rule, which, by the way, the UK has,

454
00:24:57,000 --> 00:25:00,840
Speaker 1: it's a standard rule. The sec Zone staff wreck amended it.

455
00:25:00,840 --> 00:25:04,880
Speaker 1: It's amazing that we just haven't adopted it in the US.

456
00:25:05,000 --> 00:25:06,919
Speaker 1: It works in the UK is a bit different. They

457
00:25:07,359 --> 00:25:10,600
Speaker 1: they've banned commission sales, which we're not looking to do here.

458
00:25:11,320 --> 00:25:13,600
Speaker 1: Um and that scene, and you know, under the same

459
00:25:13,640 --> 00:25:15,520
Speaker 1: theory of course, because if you can't do a commission

460
00:25:15,560 --> 00:25:19,199
Speaker 1: and in the capital about fifty basis points and so

461
00:25:19,240 --> 00:25:20,959
Speaker 1: the idea is, of course you can't have a conflict

462
00:25:20,960 --> 00:25:22,960
Speaker 1: of interest if you are on commission. Because one of

463
00:25:22,960 --> 00:25:25,320
Speaker 1: the things that's going on right now is people are

464
00:25:26,080 --> 00:25:29,600
Speaker 1: um financial advisor types. UM by the way, and financial

465
00:25:29,640 --> 00:25:31,440
Speaker 1: advisor I have to say it's just an absolute junk

466
00:25:31,560 --> 00:25:34,359
Speaker 1: term that means absolutely nothing um and either a broker

467
00:25:34,359 --> 00:25:38,000
Speaker 1: in a CFP, there's got to be some real title there.

468
00:25:38,160 --> 00:25:41,400
Speaker 1: So you know the ideas. If there's no conflict, there's

469
00:25:41,400 --> 00:25:45,440
Speaker 1: no commission, you know, discrepancy, you won't be able to

470
00:25:45,600 --> 00:25:48,800
Speaker 1: have this conflict of interest. Over here, it looks like

471
00:25:48,800 --> 00:25:51,159
Speaker 1: the Department of Labor is not gonna do the do

472
00:25:51,240 --> 00:25:54,480
Speaker 1: the commission issue. They're going to allow commissions, but they

473
00:25:54,480 --> 00:25:57,040
Speaker 1: are going to insist that it can't affect your thinking.

474
00:25:57,920 --> 00:25:59,679
Speaker 1: I don't know how you do that, because you've so

475
00:25:59,800 --> 00:26:02,840
Speaker 1: here is the problem with the suitability standard for these

476
00:26:02,920 --> 00:26:07,560
Speaker 1: sort of accounts. When you have a incentive set up.

477
00:26:07,600 --> 00:26:11,120
Speaker 1: In the first rule of economics, incentives matter. So if

478
00:26:11,160 --> 00:26:15,640
Speaker 1: you're incentivizing someone to every transaction generates a commission, well,

479
00:26:15,760 --> 00:26:20,800
Speaker 1: essentially you are subconsciously, at the very least encouraging transactions

480
00:26:20,800 --> 00:26:23,800
Speaker 1: that will generate commission, which means you're generating costs, you're

481
00:26:23,800 --> 00:26:27,600
Speaker 1: generating taxes, generating turnover. All three of those things are

482
00:26:27,680 --> 00:26:32,320
Speaker 1: not good for long term performance. So someone had had

483
00:26:32,720 --> 00:26:36,359
Speaker 1: there's a really fascinating hashtag on Twitter, hashtag fiduciary, and

484
00:26:36,400 --> 00:26:38,760
Speaker 1: you'll see all the arguments pro and con. And I've

485
00:26:38,760 --> 00:26:41,720
Speaker 1: been looking for the arguments against the fiduciary standard that

486
00:26:41,760 --> 00:26:45,800
Speaker 1: carry water, and it's really hard to find them. The

487
00:26:45,840 --> 00:26:47,840
Speaker 1: best one of the best arguments I've seen, which is

488
00:26:47,840 --> 00:26:50,600
Speaker 1: still pretty weak, is well, it's much cheaper to set

489
00:26:50,600 --> 00:26:53,560
Speaker 1: this up with a one time commission you set up

490
00:26:53,560 --> 00:26:56,800
Speaker 1: the portfolio as opposed to an ongoing fee. But if

491
00:26:56,840 --> 00:26:59,480
Speaker 1: that's the case, aren't you better off just paying someone

492
00:26:59,520 --> 00:27:01,800
Speaker 1: in our rate? There are thousands of people who will

493
00:27:01,840 --> 00:27:05,480
Speaker 1: do that sort of financial work for you on a

494
00:27:05,520 --> 00:27:08,679
Speaker 1: per hour basis, charge you once and you never have

495
00:27:08,720 --> 00:27:12,320
Speaker 1: to pay them again. That's probably the cheapest, least conflicted

496
00:27:12,320 --> 00:27:15,840
Speaker 1: way to do it without is this mutual fund company

497
00:27:15,840 --> 00:27:18,600
Speaker 1: paying them without any of the obvious conflicts that are right. Well,

498
00:27:18,600 --> 00:27:21,280
Speaker 1: the turnaround claim is that people won't pay for it,

499
00:27:21,520 --> 00:27:23,480
Speaker 1: and of course they might be right, but one of

500
00:27:23,480 --> 00:27:26,480
Speaker 1: the reasons is because of the industry has basically told

501
00:27:26,520 --> 00:27:28,679
Speaker 1: people that they're getting the service for free, which is

502
00:27:28,720 --> 00:27:31,240
Speaker 1: not true but of course not but people don't see

503
00:27:31,280 --> 00:27:33,560
Speaker 1: it that way because again they don't have to tell them,

504
00:27:33,800 --> 00:27:36,040
Speaker 1: so people think that they're getting a free service when

505
00:27:36,080 --> 00:27:38,800
Speaker 1: in fact they're paying commissions. I'm Barry, what helps you're

506
00:27:38,840 --> 00:27:42,040
Speaker 1: listening to masters in business on Bloomberg Radio. My guest

507
00:27:42,119 --> 00:27:45,600
Speaker 1: today is Helene Olin. She is a personal finance author.

508
00:27:45,920 --> 00:27:49,520
Speaker 1: She's written the book Pound Foolish, as well as UH

509
00:27:49,560 --> 00:27:53,879
Speaker 1: Index Card Investing. Let's talk a little bit about some

510
00:27:54,000 --> 00:27:57,840
Speaker 1: of the columns you've done for Slate and elsewhere. You

511
00:27:57,840 --> 00:28:02,280
Speaker 1: You have some really really fascinating headlines and fascinating columns

512
00:28:02,280 --> 00:28:08,600
Speaker 1: that I've personally found very amusing. UM. So I understand

513
00:28:08,640 --> 00:28:12,600
Speaker 1: the Obama administration's new fiduciary rule is going to stop

514
00:28:12,640 --> 00:28:17,160
Speaker 1: people from discussing personal finance on the radio. Right, Well,

515
00:28:17,160 --> 00:28:19,840
Speaker 1: that's absolute falsehood. That's one of the things being put

516
00:28:19,840 --> 00:28:23,679
Speaker 1: out there by the opponents to expanding the fiduciary standard. Um.

517
00:28:23,760 --> 00:28:26,560
Speaker 1: It got linked to by the Drudge Report recently got

518
00:28:27,480 --> 00:28:29,960
Speaker 1: hundreds of thousands of hits, hundreds of I think last

519
00:28:30,000 --> 00:28:32,720
Speaker 1: time I checked about five thousand, and I of course

520
00:28:32,720 --> 00:28:34,520
Speaker 1: went and checked this out and I was like, really,

521
00:28:34,600 --> 00:28:38,280
Speaker 1: we should only be so lucky, right, And and the

522
00:28:38,280 --> 00:28:41,640
Speaker 1: answer is, of course, this is absolute falsehood. The fiduciary

523
00:28:41,720 --> 00:28:45,400
Speaker 1: standard only applies if you have a relationship with the person.

524
00:28:46,000 --> 00:28:49,520
Speaker 1: If you call a financial radio program or UM or

525
00:28:49,560 --> 00:28:52,480
Speaker 1: a TV show and you discuss you ask for advice,

526
00:28:52,760 --> 00:28:55,960
Speaker 1: let me explain something. You might think you're getting legal advice.

527
00:28:56,360 --> 00:29:01,440
Speaker 1: You are entertainment people. Nobody thinks if you give a

528
00:29:01,520 --> 00:29:05,440
Speaker 1: thirty second overview of your financial situation and somebody just

529
00:29:05,680 --> 00:29:09,440
Speaker 1: rants for a few minutes allah Dave Ramsey or Jim Kramer,

530
00:29:09,800 --> 00:29:13,400
Speaker 1: that you're in an advisory situation. In fact, Jim Cramer

531
00:29:13,400 --> 00:29:16,040
Speaker 1: doesn't even take personal finance clients. How could you be

532
00:29:16,080 --> 00:29:20,040
Speaker 1: an advisory situation within that makes perfect sense. So here's

533
00:29:20,040 --> 00:29:23,280
Speaker 1: another one that I think is fascinating. Why is financial

534
00:29:23,280 --> 00:29:28,680
Speaker 1: advice quote just for women a bad idea? Oh, it's ridiculous. Um.

535
00:29:28,680 --> 00:29:32,480
Speaker 1: The idea is that women have special financial needs. Um,

536
00:29:32,480 --> 00:29:36,160
Speaker 1: we do have special financial needs. Let me explain we. Um,

537
00:29:36,240 --> 00:29:39,520
Speaker 1: we earn less than men at all stages at our careers.

538
00:29:39,960 --> 00:29:44,240
Speaker 1: We have more responsibilities, we have more um, scattered careers

539
00:29:44,240 --> 00:29:46,719
Speaker 1: thanks to caregiving. And by caregiving I mean everything from

540
00:29:46,840 --> 00:29:50,600
Speaker 1: children to parents, to elderly relatives and friends. Um, we

541
00:29:50,640 --> 00:29:52,880
Speaker 1: will lose more money for that caretaking than a man

542
00:29:52,960 --> 00:29:55,120
Speaker 1: will if he takes it on. And of course the

543
00:29:55,160 --> 00:29:57,440
Speaker 1: final kick is we live longer, so we need more money.

544
00:29:58,600 --> 00:30:01,600
Speaker 1: Services industry says, oh, then you should save more money,

545
00:30:01,640 --> 00:30:04,200
Speaker 1: and we have special advice for you. Now understand if

546
00:30:04,200 --> 00:30:08,560
Speaker 1: you're underpaid, aren't working as steadily and living longer. I mean,

547
00:30:08,560 --> 00:30:10,400
Speaker 1: this is like asking This is like the old line

548
00:30:10,400 --> 00:30:12,920
Speaker 1: about ginger rogers that I think and Richards once said

549
00:30:13,040 --> 00:30:15,360
Speaker 1: she had to do everything fred Astaire did but backwards

550
00:30:15,360 --> 00:30:18,160
Speaker 1: in high heeled shoes. This is not going to work.

551
00:30:18,480 --> 00:30:21,080
Speaker 1: So there is no special financial advice for women. What

552
00:30:21,160 --> 00:30:23,560
Speaker 1: women have as a social and economic problem that needs

553
00:30:23,600 --> 00:30:25,320
Speaker 1: to be addressed. So you don't think that could be

554
00:30:25,360 --> 00:30:28,800
Speaker 1: solved by being condescended to that won't That won't resolve

555
00:30:28,800 --> 00:30:30,920
Speaker 1: that issue now and then the kicker is right, it

556
00:30:31,040 --> 00:30:34,320
Speaker 1: is condescending, thank you. And then so this women's financial

557
00:30:34,360 --> 00:30:39,440
Speaker 1: advice has this weird combination of sounding empowering and infantilizing

558
00:30:39,480 --> 00:30:41,760
Speaker 1: at the same time. It's kind of like, God, you're

559
00:30:41,880 --> 00:30:45,760
Speaker 1: multitasking so much, you have so many burdens. Here, we'll

560
00:30:45,760 --> 00:30:47,840
Speaker 1: take this one burden from you so that you don't

561
00:30:47,840 --> 00:30:50,800
Speaker 1: have to bother your little head about it. Right, So

562
00:30:50,880 --> 00:30:53,640
Speaker 1: let's let's talk about one of my favorite things. Tell

563
00:30:53,720 --> 00:30:57,160
Speaker 1: us about wealth therapy. Oh, I love wealth therapy. Right.

564
00:30:57,600 --> 00:31:01,800
Speaker 1: The the idea is is that people need um psychological

565
00:31:01,840 --> 00:31:06,120
Speaker 1: help managing the emotions around money. Right now, somehow this

566
00:31:06,320 --> 00:31:11,120
Speaker 1: mostly applies strangely enough to people who have the money

567
00:31:11,200 --> 00:31:14,360
Speaker 1: to pay the bills for therapy, because I understand financial

568
00:31:14,400 --> 00:31:19,120
Speaker 1: therapy is not cheap. It's two HUR and up. Yeah,

569
00:31:19,120 --> 00:31:22,280
Speaker 1: it's more right, it's more like four D. And understand

570
00:31:22,360 --> 00:31:24,600
Speaker 1: it's not in the D s M, so there's no

571
00:31:24,720 --> 00:31:30,680
Speaker 1: code for it diagnostic manual for for um, you know,

572
00:31:30,760 --> 00:31:35,080
Speaker 1: for medical reimbursements. Right. So, weirdly enough, financial therapy just

573
00:31:35,160 --> 00:31:38,280
Speaker 1: sort of presumes that, like, you know, wealthy people need help,

574
00:31:38,320 --> 00:31:41,280
Speaker 1: and it's like stuff like affluenzauh and like do you

575
00:31:41,320 --> 00:31:44,719
Speaker 1: feel bad about having to pay your housekeeper? And what

576
00:31:44,760 --> 00:31:47,120
Speaker 1: do you do if your friends are really jealous of

577
00:31:47,160 --> 00:31:50,440
Speaker 1: the money you have? I mean, this is absolutely ass right.

578
00:31:50,480 --> 00:31:52,440
Speaker 1: I mean, I'm sure people have issues if they have

579
00:31:52,480 --> 00:31:54,320
Speaker 1: a lot of money. Don't get me wrong. I have

580
00:31:54,440 --> 00:31:57,120
Speaker 1: met people over the years they do. But this is

581
00:31:57,160 --> 00:31:58,960
Speaker 1: not They do not have money problems in the way

582
00:31:59,000 --> 00:32:01,640
Speaker 1: somebody who can't get on their paycheck has money problems.

583
00:32:01,920 --> 00:32:05,200
Speaker 1: These are these are good money problems to have, as

584
00:32:05,200 --> 00:32:08,600
Speaker 1: opposed to can afford healthcare? How am I going to

585
00:32:08,680 --> 00:32:11,840
Speaker 1: pay for medicine? That's a horrific money problems. And when

586
00:32:11,880 --> 00:32:14,160
Speaker 1: I looked at financial therapy, what I found was a

587
00:32:14,160 --> 00:32:16,200
Speaker 1: lot of the financial therapists, and I don't say with

588
00:32:16,240 --> 00:32:17,800
Speaker 1: all of them, by the way, a lot of them

589
00:32:17,840 --> 00:32:20,920
Speaker 1: were former eating specialists. And there's a couple of reasons.

590
00:32:21,040 --> 00:32:23,640
Speaker 1: Wait a second. First of all, how do you find

591
00:32:23,680 --> 00:32:27,160
Speaker 1: that out? You just do research on people offering wealth

592
00:32:27,160 --> 00:32:30,880
Speaker 1: therapy and it turns out they're also obesity specialists or

593
00:32:31,280 --> 00:32:34,520
Speaker 1: or um. Right. Well, I would get disorder special pound

594
00:32:34,520 --> 00:32:36,440
Speaker 1: foolish like, talked to a whole bunch of them, and

595
00:32:36,480 --> 00:32:37,880
Speaker 1: a lot of them would tell me that they had

596
00:32:37,920 --> 00:32:41,400
Speaker 1: done time in food disorders, and they would make the link, right,

597
00:32:41,440 --> 00:32:43,600
Speaker 1: and they would say, well, you know, people binge when

598
00:32:43,600 --> 00:32:46,120
Speaker 1: they're unhappy, and they spend money when they're unhappy. Right,

599
00:32:46,440 --> 00:32:48,920
Speaker 1: And it actually is an interesting link because actually a

600
00:32:49,000 --> 00:32:52,520
Speaker 1: lot of people have weight issues not just because of

601
00:32:53,880 --> 00:32:56,840
Speaker 1: because they binge eat right, because the food supply has

602
00:32:57,000 --> 00:33:00,480
Speaker 1: changed and you know, they have put cord oil and everything,

603
00:33:00,520 --> 00:33:05,480
Speaker 1: which puts more weight on seria bright thank you. They

604
00:33:06,480 --> 00:33:09,120
Speaker 1: You know, people who have less money can't buy fresh

605
00:33:09,120 --> 00:33:14,000
Speaker 1: food because they're afraid it will go bad or so

606
00:33:14,040 --> 00:33:16,560
Speaker 1: they have to buy packaged, processed food, which puts weight

607
00:33:16,600 --> 00:33:18,360
Speaker 1: on as well, and you can go on. Right, So

608
00:33:18,400 --> 00:33:19,960
Speaker 1: there actually is a link, but that's not the link

609
00:33:20,040 --> 00:33:22,960
Speaker 1: they see. The link that's really going on here, of course,

610
00:33:23,280 --> 00:33:26,720
Speaker 1: is a god. You know, the insurance companies have cut

611
00:33:26,720 --> 00:33:30,240
Speaker 1: back on reimbursements um to a huge extent to people

612
00:33:30,280 --> 00:33:33,360
Speaker 1: have had to move on um. So in other words,

613
00:33:33,400 --> 00:33:36,800
Speaker 1: they weren't getting reimbursed. They couldn't. People coming in for

614
00:33:36,800 --> 00:33:40,320
Speaker 1: eating disorders were no longer being reimbursed. Well, they are reimbursed,

615
00:33:40,400 --> 00:33:42,640
Speaker 1: but like for instance, it's much harder to get there,

616
00:33:42,720 --> 00:33:44,920
Speaker 1: you know, get in patient therapy now than it used

617
00:33:44,920 --> 00:33:47,280
Speaker 1: to be. Right, remember back in the nineties, anybody could

618
00:33:47,280 --> 00:33:49,760
Speaker 1: get in patient therapy. Now of course, you know, the

619
00:33:49,760 --> 00:33:53,120
Speaker 1: insurance companies put you through gazillions of hoops. So you

620
00:33:53,280 --> 00:33:57,160
Speaker 1: set up instead and and you know an on site

621
00:33:57,240 --> 00:34:00,760
Speaker 1: you know, facility for money disorders, and people are just

622
00:34:01,040 --> 00:34:04,280
Speaker 1: paying cash out, cash out. It's like a doctor who

623
00:34:04,320 --> 00:34:06,960
Speaker 1: doesn't take insurance. I was gonna say, insurers aren't paying

624
00:34:07,040 --> 00:34:09,640
Speaker 1: for this, are they. If you're wealthy enough to have

625
00:34:09,920 --> 00:34:12,520
Speaker 1: to require wealth therapy, I think you have to pay

626
00:34:12,560 --> 00:34:15,839
Speaker 1: for that out of pocket, right exactly. So it's a great,

627
00:34:15,840 --> 00:34:18,399
Speaker 1: great business to get into and hey, you probably are

628
00:34:18,440 --> 00:34:21,440
Speaker 1: helping some wealthy people who need some handholding. But my

629
00:34:21,520 --> 00:34:24,240
Speaker 1: favorite was one of the Judd sisters, and I'm forgetting

630
00:34:24,239 --> 00:34:27,720
Speaker 1: which one it's in Pound Foolish did Um wealth therapy

631
00:34:28,080 --> 00:34:30,440
Speaker 1: and she becomes like the poster girl for it, and

632
00:34:30,480 --> 00:34:32,560
Speaker 1: she gives us interview in the New York Times in

633
00:34:32,600 --> 00:34:35,480
Speaker 1: two thousand eight the Fall of two thousand eight, mind you,

634
00:34:36,239 --> 00:34:38,600
Speaker 1: and she says, you know, yes, I went down from

635
00:34:38,600 --> 00:34:40,839
Speaker 1: five cars to one car, and if I could do

636
00:34:40,880 --> 00:34:44,560
Speaker 1: it anyone cat. That's true when you think about it,

637
00:34:44,560 --> 00:34:47,759
Speaker 1: it's very easy to just let those leases expire and

638
00:34:47,840 --> 00:34:51,160
Speaker 1: just stick with one or two regular vehicles. How many

639
00:34:51,280 --> 00:34:54,239
Speaker 1: of us really need five or six vehicles exactly? How

640
00:34:54,239 --> 00:34:56,520
Speaker 1: many of us have that problem? That's that's really good

641
00:34:56,560 --> 00:34:59,319
Speaker 1: advice for our listeners is to just cut it down

642
00:34:59,360 --> 00:35:01,759
Speaker 1: to one or two cars. And I find the same

643
00:35:01,800 --> 00:35:04,000
Speaker 1: with boats. Just keep it to one or two boats.

644
00:35:04,360 --> 00:35:09,080
Speaker 1: Your your budget will be much vacation houses to skiing vacations.

645
00:35:09,280 --> 00:35:12,200
Speaker 1: Is there really that much I know I'm being sarcastic

646
00:35:12,200 --> 00:35:13,839
Speaker 1: for those of you who may have missed that, but

647
00:35:14,400 --> 00:35:17,880
Speaker 1: is there really that much of a lack of self

648
00:35:17,880 --> 00:35:23,160
Speaker 1: awareness amongst that sort of cult of celebrity who just

649
00:35:23,280 --> 00:35:26,279
Speaker 1: as wholly unaware of how the average person lives. It's

650
00:35:26,280 --> 00:35:28,680
Speaker 1: more than the cult of celebrity. What it is else,

651
00:35:29,120 --> 00:35:31,840
Speaker 1: get very serious for a moment. It's really about the

652
00:35:31,840 --> 00:35:34,160
Speaker 1: one percent society because one of the many things that

653
00:35:34,200 --> 00:35:38,000
Speaker 1: our society has done is as as we have become

654
00:35:38,040 --> 00:35:42,680
Speaker 1: more economically stratified, we tend to only interact with people

655
00:35:42,719 --> 00:35:45,680
Speaker 1: who are like us. People. The society you and I

656
00:35:45,719 --> 00:35:49,600
Speaker 1: grew up in was more ethnically segregated, but it was

657
00:35:49,640 --> 00:35:52,600
Speaker 1: more economically open. Right, all the Jews lived in the

658
00:35:52,640 --> 00:35:56,439
Speaker 1: same neighborhood. Kind of you may need to meet people more,

659
00:35:56,560 --> 00:35:58,759
Speaker 1: and now it's kind of a little not so much

660
00:35:58,840 --> 00:36:02,080
Speaker 1: like that. And what happens is is you just interact

661
00:36:02,120 --> 00:36:04,920
Speaker 1: with people like yourself over and over and over again,

662
00:36:05,360 --> 00:36:08,080
Speaker 1: and so you kind of lose perspective. I mean, this

663
00:36:08,160 --> 00:36:12,000
Speaker 1: is a very common problem for people and so for

664
00:36:12,239 --> 00:36:14,320
Speaker 1: and that's why, by the way, you see people renting

665
00:36:14,320 --> 00:36:17,080
Speaker 1: on TVs about poor people in smartphones too, they think

666
00:36:17,120 --> 00:36:20,680
Speaker 1: that's really the problem because hey, probably for their kids.

667
00:36:20,719 --> 00:36:24,520
Speaker 1: It might be right, Well, nobody has landlines anymore. Everybody

668
00:36:24,719 --> 00:36:28,160
Speaker 1: who's under thirty has a smartphone, and if you need

669
00:36:28,239 --> 00:36:30,480
Speaker 1: to get a hold of them. What's your home number?

670
00:36:30,600 --> 00:36:32,719
Speaker 1: This is my only number. Half the time it's a

671
00:36:32,719 --> 00:36:35,279
Speaker 1: Google Voice number. Anyway, it's not even It goes with

672
00:36:35,320 --> 00:36:38,239
Speaker 1: whatever phone they happen to be near. Is that a

673
00:36:38,360 --> 00:36:45,480
Speaker 1: legitimate issue amongst amongst the public that poor people have smartphones?

674
00:36:45,600 --> 00:36:49,160
Speaker 1: Because I've read the argument that why are the poors complaining?

675
00:36:49,200 --> 00:36:53,040
Speaker 1: They have air conditioning and satellite TV. The argument is

676
00:36:53,160 --> 00:36:56,000
Speaker 1: that people shouldn't be complaining because hey, compared to poor

677
00:36:56,000 --> 00:36:58,200
Speaker 1: people a hundred years ago or two hundred years ago,

678
00:36:58,400 --> 00:37:01,160
Speaker 1: we've got air conditioning, we have refrigerators, and so I

679
00:37:01,160 --> 00:37:03,600
Speaker 1: wanted so forth. This is ridiculous. We live in the

680
00:37:03,640 --> 00:37:08,640
Speaker 1: here and now right and people are, you know, living

681
00:37:08,760 --> 00:37:14,600
Speaker 1: paycheck to paycheck. They they really are strapped. We live

682
00:37:14,640 --> 00:37:17,280
Speaker 1: in a society where if one thing goes wrong for you,

683
00:37:17,280 --> 00:37:21,080
Speaker 1: you can end up in bankruptcy corps. Medical not very

684
00:37:21,120 --> 00:37:24,919
Speaker 1: good still for a lot of people. The deductibles are absurd.

685
00:37:25,480 --> 00:37:28,719
Speaker 1: A lot of stuff is not covered. Um, you know,

686
00:37:28,760 --> 00:37:31,759
Speaker 1: people can't afford childcare. Um My last I do an

687
00:37:31,800 --> 00:37:35,160
Speaker 1: advice column over It's slate um called ask the Bills

688
00:37:35,200 --> 00:37:36,920
Speaker 1: every two weeks, and the last one I did is

689
00:37:36,960 --> 00:37:39,680
Speaker 1: somebody wrote it and you know, just laying out their situation.

690
00:37:39,760 --> 00:37:41,920
Speaker 1: It said, I don't think I can afford to have children?

691
00:37:41,960 --> 00:37:44,400
Speaker 1: What do I do? And I don't know what to

692
00:37:44,440 --> 00:37:46,839
Speaker 1: say to that, except for the fact that obviously, if

693
00:37:46,840 --> 00:37:49,000
Speaker 1: one wants to have children, they should not be able

694
00:37:49,040 --> 00:37:52,000
Speaker 1: to have children and figure it out as they go along.

695
00:37:52,080 --> 00:37:54,120
Speaker 1: But the fact is we live in a society with

696
00:37:54,160 --> 00:37:58,000
Speaker 1: no supports whatsoever. If people want to find more of

697
00:37:58,040 --> 00:38:00,399
Speaker 1: your writings, what's the best way for them to track

698
00:38:00,440 --> 00:38:03,120
Speaker 1: you down? UM? I write for Slate several times a week.

699
00:38:03,280 --> 00:38:06,440
Speaker 1: I have the column the Bills I contribute to money Box. UM.

700
00:38:06,480 --> 00:38:09,440
Speaker 1: You can also buy Pound Foolish or the index card

701
00:38:09,560 --> 00:38:13,920
Speaker 1: there on all sorts of sites, including Amazon and Powell's,

702
00:38:13,960 --> 00:38:16,920
Speaker 1: at the independent bookstore and the Strand. UM. I love

703
00:38:16,960 --> 00:38:19,640
Speaker 1: the Strand. I have to get that in UM and

704
00:38:19,880 --> 00:38:22,160
Speaker 1: UM all over the place. Oh and also I write

705
00:38:22,160 --> 00:38:25,040
Speaker 1: a column every couple of months rank. So if you've

706
00:38:25,160 --> 00:38:29,080
Speaker 1: enjoyed this conversation, be sure and check out our podcast extras,

707
00:38:29,080 --> 00:38:32,319
Speaker 1: where we keep the tape rolling and continuing chatting. You

708
00:38:32,360 --> 00:38:35,840
Speaker 1: can check out my daily column on Bloomberg View dot com.

709
00:38:36,160 --> 00:38:39,960
Speaker 1: Follow me on Twitter at rid Halts. I'm Barry rit Halts.

710
00:38:40,000 --> 00:38:44,520
Speaker 1: You're listening to Masters in Business on Bloomberg Radio. Welcome

711
00:38:44,560 --> 00:38:47,400
Speaker 1: to the podcast. Helloine, thank you so much for for

712
00:38:47,480 --> 00:38:49,799
Speaker 1: doing this. Thank you for having me and being so

713
00:38:49,880 --> 00:38:53,160
Speaker 1: generous with your time. So there's so many questions I

714
00:38:53,200 --> 00:38:56,920
Speaker 1: didn't get to. Before I get to my standard questions,

715
00:38:57,040 --> 00:38:59,120
Speaker 1: I have to go through some of the things that

716
00:38:59,120 --> 00:39:02,560
Speaker 1: that we missed, and we really plowed through a lot.

717
00:39:02,920 --> 00:39:04,600
Speaker 1: A lot of the stuff we missed had to do

718
00:39:04,680 --> 00:39:06,640
Speaker 1: with Pound Foolish, which I'm gonna have you signed for

719
00:39:06,680 --> 00:39:10,240
Speaker 1: me later. So so let's talk about I love this line.

720
00:39:10,880 --> 00:39:17,120
Speaker 1: You described a distinctly American tribe, the spiritual Savior posing

721
00:39:17,160 --> 00:39:20,560
Speaker 1: as financial expert. Well, I love that phrase. What does

722
00:39:20,560 --> 00:39:24,239
Speaker 1: that mean? Personal finance originates in the self help industry? Right,

723
00:39:24,239 --> 00:39:26,200
Speaker 1: People don't really understand this. The almost like it's some

724
00:39:26,239 --> 00:39:28,359
Speaker 1: form of business writing, and it kind of is, right,

725
00:39:28,680 --> 00:39:30,960
Speaker 1: But it's really an offshoot of the self help industry,

726
00:39:30,960 --> 00:39:34,320
Speaker 1: and the self help industry dates to, you know, the

727
00:39:34,400 --> 00:39:38,680
Speaker 1: nineteen thirties when, as with selfia porter, you know, people

728
00:39:38,719 --> 00:39:42,480
Speaker 1: were looking for answers and at the same time it

729
00:39:42,640 --> 00:39:46,920
Speaker 1: kind of met mass culture. So you know, during the nineties.

730
00:39:46,920 --> 00:39:48,480
Speaker 1: You have a lot of stuff going on. I mean

731
00:39:48,480 --> 00:39:51,680
Speaker 1: you could you know, you have communism, you have fascism.

732
00:39:51,760 --> 00:39:54,400
Speaker 1: People are looking for answers. The self help industry is

733
00:39:54,440 --> 00:39:56,960
Speaker 1: one of the isms of the nineteen thirties. So you

734
00:39:57,000 --> 00:39:59,879
Speaker 1: began to see things like Napoleon Hill, Think and Grow Rich.

735
00:40:00,200 --> 00:40:04,680
Speaker 1: Sure that when that came out, people are living in

736
00:40:04,840 --> 00:40:08,200
Speaker 1: Hooverville's And this book is a best seller. Right when

737
00:40:08,200 --> 00:40:10,960
Speaker 1: did the Dale Carnegie books calls the nineties and a

738
00:40:10,960 --> 00:40:13,320
Speaker 1: little bit before as well, but during the nineteen thirties

739
00:40:13,640 --> 00:40:16,440
Speaker 1: and thinking, um, you know how to win friends and

740
00:40:16,440 --> 00:40:19,520
Speaker 1: influence people. So but the thing is with all of

741
00:40:19,520 --> 00:40:22,719
Speaker 1: this stuff is you need the story, right and the

742
00:40:22,800 --> 00:40:25,799
Speaker 1: story is the story, and you have to somehow for

743
00:40:25,840 --> 00:40:28,759
Speaker 1: the people who become the big financial gurus, they have

744
00:40:28,920 --> 00:40:31,280
Speaker 1: the story of how they were lost and they were found.

745
00:40:31,320 --> 00:40:34,360
Speaker 1: It's like St. Augustine, except for personal finance. So like

746
00:40:34,400 --> 00:40:37,719
Speaker 1: Susie Ormond, for instance, So wait before you go into that.

747
00:40:37,920 --> 00:40:40,640
Speaker 1: You have a beef with a number of gurus in

748
00:40:40,840 --> 00:40:44,600
Speaker 1: Pound Foolish. You basically just caught her off at the knee.

749
00:40:44,600 --> 00:40:48,160
Speaker 1: Susie Orman. What's your beef with Susie Orman? Susie ormand

750
00:40:48,280 --> 00:40:50,880
Speaker 1: as all over the place she has given rampantly in

751
00:40:51,000 --> 00:40:55,400
Speaker 1: consistent advice. Um, she can be very judgmental, which was

752
00:40:55,440 --> 00:40:58,160
Speaker 1: not how she started. By the way, Susie Ormond comes

753
00:40:58,200 --> 00:41:01,840
Speaker 1: out of the nineteen seventies and nineteen eighties Bay Area

754
00:41:01,920 --> 00:41:07,960
Speaker 1: self actualization seed. Um you know, Um, I don't think

755
00:41:07,960 --> 00:41:10,439
Speaker 1: she ever did asked, but somebody would have to ask

756
00:41:10,440 --> 00:41:13,839
Speaker 1: her that she follows u or followed. I'm not sure

757
00:41:13,880 --> 00:41:16,120
Speaker 1: what the correct answer to this is. Now a big

758
00:41:16,200 --> 00:41:19,719
Speaker 1: yoga guru out there, and um, there's a lot of

759
00:41:19,719 --> 00:41:22,360
Speaker 1: this sort of emotional money stuff, right. She sort of

760
00:41:22,400 --> 00:41:26,160
Speaker 1: combines the personal finance of Sylvia Porter with the self

761
00:41:26,200 --> 00:41:29,520
Speaker 1: actualization of the nineteen sixties and nineteen seventies, And which

762
00:41:29,560 --> 00:41:31,800
Speaker 1: is why she's Susie Orman and everybody else is that

763
00:41:31,920 --> 00:41:35,759
Speaker 1: nobody else ever thought to do this, And so it

764
00:41:35,920 --> 00:41:39,560
Speaker 1: becomes this emotional money sort of how do you feel

765
00:41:39,600 --> 00:41:43,640
Speaker 1: about it? Combined with tough love, and as you can imagine,

766
00:41:43,640 --> 00:41:48,359
Speaker 1: since that doesn't sound very yeah, it becomes very inconsistent

767
00:41:48,480 --> 00:41:52,279
Speaker 1: over time, basically, and but it reinvented personal finance. For

768
00:41:52,320 --> 00:41:55,960
Speaker 1: the nineteen nineties. She started out doing an infomercial and

769
00:41:56,040 --> 00:42:01,120
Speaker 1: financial television and Eventually the infomercial got so popular they

770
00:42:01,200 --> 00:42:03,880
Speaker 1: offered her a show. Right she well, she you know,

771
00:42:03,960 --> 00:42:06,400
Speaker 1: did a number of books. She I mean, to her credit,

772
00:42:06,480 --> 00:42:08,960
Speaker 1: she hustled like crazy. I mean, it's not like she

773
00:42:09,040 --> 00:42:14,080
Speaker 1: was found overnight. And she became a big star in

774
00:42:14,200 --> 00:42:17,600
Speaker 1: part because women really liked this sort of you know,

775
00:42:17,719 --> 00:42:21,040
Speaker 1: more emotional approach, less about you know, here's the five

776
00:42:21,080 --> 00:42:23,640
Speaker 1: stocks you need, right, it was more about how you

777
00:42:23,680 --> 00:42:26,440
Speaker 1: feel about your money, which was perfect in the nineteen nineties.

778
00:42:26,520 --> 00:42:28,040
Speaker 1: So you're not a big fan of her as you

779
00:42:28,080 --> 00:42:31,040
Speaker 1: think that herd if I'm I'm paraphrasing from the book.

780
00:42:31,520 --> 00:42:33,640
Speaker 1: Some of the advice she gives is conflicted, some of

781
00:42:33,680 --> 00:42:37,839
Speaker 1: its inconsistent. What's really your biggest beef with her? Before

782
00:42:37,840 --> 00:42:40,040
Speaker 1: we go to the next two people? That's it, And

783
00:42:40,080 --> 00:42:42,600
Speaker 1: there's a judgmental thing that has crept in over the years.

784
00:42:42,760 --> 00:42:45,279
Speaker 1: So let's talk. Let's talk about Dave Ramsey because you

785
00:42:45,320 --> 00:42:47,840
Speaker 1: haven't had kind things to say about Dave. Well, Dave

786
00:42:48,160 --> 00:42:50,839
Speaker 1: is you know a guy, He's another one. He's got

787
00:42:50,880 --> 00:42:54,360
Speaker 1: the story right, you know that Dave Ramsey's story is

788
00:42:54,440 --> 00:42:56,640
Speaker 1: that he was a real estate wheeler and dealer in

789
00:42:56,719 --> 00:42:59,279
Speaker 1: his early twenties, he gets it over his head and

790
00:42:59,320 --> 00:43:02,000
Speaker 1: he has to declare bankruptcy. And then he decides to

791
00:43:02,040 --> 00:43:04,960
Speaker 1: reinvent his personal financial life and he never takes credit again,

792
00:43:05,000 --> 00:43:08,239
Speaker 1: which is apparently quite true, never uses credit at all. Right,

793
00:43:08,320 --> 00:43:11,359
Speaker 1: he boys his house outright everything. By the way, there's

794
00:43:11,360 --> 00:43:13,920
Speaker 1: not I have to say, there's nothing in the world

795
00:43:13,960 --> 00:43:17,640
Speaker 1: wrong with a thirty year fixed mortgage, assuming you can

796
00:43:17,680 --> 00:43:20,400
Speaker 1: afford it and the house. Yes, it's called leveraged money.

797
00:43:20,440 --> 00:43:22,520
Speaker 1: It's a really great thing. And I would urge anybody

798
00:43:22,520 --> 00:43:25,160
Speaker 1: who can come up with down payment to do it right,

799
00:43:25,760 --> 00:43:27,640
Speaker 1: so as long as they think they're going to stay put.

800
00:43:27,680 --> 00:43:29,879
Speaker 1: But that's a digression, right. So anyway, though, he gets

801
00:43:29,880 --> 00:43:31,879
Speaker 1: on the air and he starts with a radio show

802
00:43:31,920 --> 00:43:34,200
Speaker 1: as well, with the story, right, you know, I'm a

803
00:43:34,239 --> 00:43:37,160
Speaker 1: former bankrupt I've been saved. Well, my other things is

804
00:43:37,840 --> 00:43:40,160
Speaker 1: he says, nobody should be declaring bankruptcy, or almost no

805
00:43:40,200 --> 00:43:43,480
Speaker 1: one should be declaring bankruptcy. But he declared, right, I mean,

806
00:43:43,520 --> 00:43:46,000
Speaker 1: which is just utterly absurd. By the way, he is

807
00:43:46,160 --> 00:43:50,839
Speaker 1: rapidly against the fdician. Well, he has the whole empire, right,

808
00:43:51,040 --> 00:43:54,040
Speaker 1: he does. He has an advisory network that works to

809
00:43:54,120 --> 00:43:58,480
Speaker 1: the to the suitability standard. He does load funds of

810
00:43:58,560 --> 00:44:00,799
Speaker 1: more than five The last I might checked, I would

811
00:44:00,840 --> 00:44:03,880
Speaker 1: have to double chees do insurance. He only does term insurance.

812
00:44:03,880 --> 00:44:06,479
Speaker 1: Here's good things mean. I don't want to say he's

813
00:44:06,560 --> 00:44:09,440
Speaker 1: totally awful, but more to the point, I think the

814
00:44:09,440 --> 00:44:11,560
Speaker 1: thing that concerns me the most is people think of

815
00:44:11,640 --> 00:44:15,319
Speaker 1: him as a simple personal finance scurrew. He's not. This

816
00:44:15,400 --> 00:44:19,520
Speaker 1: is very political. Stuffy's conglomerate, and more than conglomerate, this

817
00:44:19,560 --> 00:44:21,799
Speaker 1: is real political stuff. He gets on the air five

818
00:44:21,880 --> 00:44:24,680
Speaker 1: days a week, five hundred plus stations, I believe, really

819
00:44:24,719 --> 00:44:28,560
Speaker 1: five fifty right now. He says social Security is a debacle,

820
00:44:29,239 --> 00:44:34,880
Speaker 1: he cannot stand um, the Affordable Care Act. He bashes Obama.

821
00:44:35,400 --> 00:44:37,000
Speaker 1: I mean, I can go on about this. This is

822
00:44:37,239 --> 00:44:39,279
Speaker 1: this is a lot of political stuff going on here.

823
00:44:39,440 --> 00:44:42,240
Speaker 1: The very first column I wrote for the Washington Post

824
00:44:42,360 --> 00:44:45,959
Speaker 1: was called was titled why investing in politics don't mix,

825
00:44:46,080 --> 00:44:50,640
Speaker 1: Because once you're bringing in the emotions of politics, you're

826
00:44:50,680 --> 00:44:53,680
Speaker 1: investing portfolio is just skewed. You lose the ability to

827
00:44:53,760 --> 00:44:56,840
Speaker 1: be objective. And we saw it with people when Bush

828
00:44:56,920 --> 00:44:59,480
Speaker 1: was in oh He's going to destroy the budget market

829
00:44:59,520 --> 00:45:02,200
Speaker 1: doubled from OH three to o seven we saw with Obama,

830
00:45:02,280 --> 00:45:05,719
Speaker 1: Oh nine famous wolfs Regeneral OpEd. Obama is going to

831
00:45:05,760 --> 00:45:07,600
Speaker 1: destroy the DOAO and and then the S and P

832
00:45:07,719 --> 00:45:10,800
Speaker 1: triples over the next seven years. It's a terrible way

833
00:45:11,200 --> 00:45:14,479
Speaker 1: to think about money. Well, I would say there's another

834
00:45:14,520 --> 00:45:16,000
Speaker 1: thing going on too, and I would agree with you.

835
00:45:16,080 --> 00:45:18,759
Speaker 1: But there's another thing going on to right, which is

836
00:45:18,880 --> 00:45:21,600
Speaker 1: again it's a lot of personal finance is kind of

837
00:45:22,040 --> 00:45:26,040
Speaker 1: very subtly political. And it's political because it accepts the

838
00:45:26,080 --> 00:45:29,000
Speaker 1: system as it is. It doesn't say, Allah of the

839
00:45:29,000 --> 00:45:31,960
Speaker 1: early nineteen seventies, we really need to do a cost

840
00:45:32,040 --> 00:45:35,120
Speaker 1: of living adjustment for social security. It puts the blame

841
00:45:35,239 --> 00:45:37,840
Speaker 1: on the individual. Now, in many cases, this is like

842
00:45:37,880 --> 00:45:40,600
Speaker 1: bailing out the Titanic with a bucket. I mean, it's

843
00:45:40,680 --> 00:45:44,040
Speaker 1: not going to work, um, But it accepts the world

844
00:45:44,120 --> 00:45:47,239
Speaker 1: as it is, and it then blames you, the individual

845
00:45:47,280 --> 00:45:49,920
Speaker 1: who might be suffering from unemployment, who might be suffering

846
00:45:49,960 --> 00:45:52,560
Speaker 1: from ill health, who might be forced to retire early

847
00:45:52,600 --> 00:45:54,759
Speaker 1: and be suffering from age discrimination and not be able

848
00:45:54,800 --> 00:45:56,640
Speaker 1: to get a job, who might be living in an

849
00:45:56,640 --> 00:45:59,600
Speaker 1: area where housing still has not recovered in two thousand sixteen,

850
00:46:00,040 --> 00:46:02,560
Speaker 1: It says the fault is yours. That you made the

851
00:46:02,600 --> 00:46:05,920
Speaker 1: mistake and that there's nothing government can do. There is

852
00:46:06,040 --> 00:46:08,120
Speaker 1: nothing to be done, and you're at fault and you

853
00:46:08,120 --> 00:46:10,880
Speaker 1: should suffer. And that's my main beef with us. So

854
00:46:10,880 --> 00:46:14,520
Speaker 1: so let's talk about one more guru. Robert Kayosaki. You've

855
00:46:14,600 --> 00:46:16,680
Speaker 1: you've thrown him under the bus as well. I think

856
00:46:16,680 --> 00:46:18,279
Speaker 1: a lot of people have thrown him under the bus,

857
00:46:18,280 --> 00:46:20,799
Speaker 1: including Susie Ormond to her credit. Oh really, you know

858
00:46:20,880 --> 00:46:23,960
Speaker 1: that there's some interesting Well you've written about some of

859
00:46:24,000 --> 00:46:29,320
Speaker 1: the crazy bankruptcy litigation that happened. He's been wildly successful

860
00:46:29,960 --> 00:46:32,960
Speaker 1: as a person who writes books and give seminars. Right. Well,

861
00:46:33,000 --> 00:46:35,399
Speaker 1: he came up with this idea, this book called Rich Dad,

862
00:46:35,400 --> 00:46:37,640
Speaker 1: Poor Dad, where he claimed he was mentored by a

863
00:46:37,760 --> 00:46:39,439
Speaker 1: rich dad who, by the way, nobody has been able

864
00:46:39,440 --> 00:46:42,200
Speaker 1: to prove existed, Um, you know, and rich Dad told

865
00:46:42,280 --> 00:46:44,600
Speaker 1: him he should take leveraged money. So it's the opposite

866
00:46:44,600 --> 00:46:47,640
Speaker 1: of Dave Ramsey, right, and you know, and by multiple

867
00:46:47,719 --> 00:46:50,960
Speaker 1: homes and multiple investments and you know, be really wealthy.

868
00:46:51,080 --> 00:46:52,879
Speaker 1: This is a sort of wealth grew thing. It's kind

869
00:46:52,880 --> 00:46:55,480
Speaker 1: of the opposite. You know, people like Dave Ramsey and

870
00:46:55,520 --> 00:46:58,080
Speaker 1: David Back came up with the latte factor are telling

871
00:46:58,120 --> 00:47:01,279
Speaker 1: you to send factor. Was that a book? It was

872
00:47:01,440 --> 00:47:03,359
Speaker 1: in the I don't think he ever wrote a book

873
00:47:03,440 --> 00:47:05,560
Speaker 1: named that. Um it was. I'll come back to it

874
00:47:05,600 --> 00:47:09,000
Speaker 1: in a minute. So anyway, but they're telling you to sacrifice, sacrifice, sacrifice,

875
00:47:09,040 --> 00:47:10,680
Speaker 1: and you know, if you save your five dollars a day,

876
00:47:10,719 --> 00:47:14,560
Speaker 1: you'll you'll retire with with millions of dollars. Kiyosaki is

877
00:47:14,760 --> 00:47:17,880
Speaker 1: coming in it from the opposite perspective. He's basically saying,

878
00:47:18,080 --> 00:47:21,080
Speaker 1: do what I'm telling you, you know, buy multiple properties

879
00:47:21,200 --> 00:47:24,000
Speaker 1: or investments with borrowed money, and you could buy the

880
00:47:24,320 --> 00:47:27,719
Speaker 1: you know, the coffee, the ground underneath the coffee shop,

881
00:47:27,760 --> 00:47:30,080
Speaker 1: and have as many lattes as you desire, which and

882
00:47:30,560 --> 00:47:34,480
Speaker 1: enough itself is you know, not unreasonable, like in terms

883
00:47:34,480 --> 00:47:37,640
Speaker 1: of well, yeah, people deserve their latte, right, But at

884
00:47:37,680 --> 00:47:40,239
Speaker 1: the same time, of course, this is wildly irresponsible. I mean,

885
00:47:40,280 --> 00:47:44,840
Speaker 1: my favorite Kiyosaki of all time was and Chuck Jaffee

886
00:47:44,840 --> 00:47:49,600
Speaker 1: caught this out at market Watch. I love his work,

887
00:47:49,680 --> 00:47:51,759
Speaker 1: as I have to give credit for us. He caught

888
00:47:51,800 --> 00:47:54,640
Speaker 1: him out once. Asked once telling people they could trade

889
00:47:54,640 --> 00:47:57,560
Speaker 1: on margin at a brokerage where they didn't have money

890
00:47:57,960 --> 00:48:01,400
Speaker 1: I'm that's absurd. Of course, you can't do that treade

891
00:48:01,480 --> 00:48:05,160
Speaker 1: on margin and and and for people who may not

892
00:48:05,239 --> 00:48:07,799
Speaker 1: be aware of the rules, margin is two to one

893
00:48:07,960 --> 00:48:10,720
Speaker 1: of whatever dollars you have, So if you have zero

894
00:48:10,880 --> 00:48:13,399
Speaker 1: two times zero is still zero. You can't really do that.

895
00:48:13,680 --> 00:48:16,239
Speaker 1: You can put stock and you can put other things in,

896
00:48:16,640 --> 00:48:19,480
Speaker 1: but there has to be some legitimate asset there. Right,

897
00:48:19,520 --> 00:48:21,680
Speaker 1: I have a standing offer in my slate column. If

898
00:48:21,680 --> 00:48:24,920
Speaker 1: anybody does this and it's successful, they should write me

899
00:48:24,960 --> 00:48:28,000
Speaker 1: immediately and I will write a column about them. Um.

900
00:48:28,080 --> 00:48:29,760
Speaker 1: At the same time, I will also write a column

901
00:48:29,800 --> 00:48:32,759
Speaker 1: if you seriously call up your your brokerage and just

902
00:48:32,840 --> 00:48:34,920
Speaker 1: ask and if you can tell me what the brokerage

903
00:48:34,920 --> 00:48:36,920
Speaker 1: says to you, I'd like to put that the column too.

904
00:48:37,120 --> 00:48:42,839
Speaker 1: So so Kaya, So we've talked just loosely about him,

905
00:48:42,880 --> 00:48:46,480
Speaker 1: but you've written about this thing that took place with

906
00:48:46,680 --> 00:48:49,960
Speaker 1: him and the people who were sponsoring him. There was

907
00:48:50,000 --> 00:48:52,520
Speaker 1: a break and and what happened, Well, there's been a

908
00:48:52,520 --> 00:48:56,040
Speaker 1: massive falling out between him and learning and learning. Do

909
00:48:56,040 --> 00:48:58,399
Speaker 1: you guys remember the learning add extra, this big thing

910
00:48:58,640 --> 00:49:02,960
Speaker 1: like you know, and fifteen twenty years ago we right,

911
00:49:03,560 --> 00:49:05,920
Speaker 1: and um, they would like bring people in and they

912
00:49:05,960 --> 00:49:09,279
Speaker 1: do lectures and whatnot, and so Kiyosaki actually they helped

913
00:49:09,360 --> 00:49:12,600
Speaker 1: Kyosaki get his start as a big time guru. And

914
00:49:12,640 --> 00:49:15,520
Speaker 1: then they were talking about doing these wealth seminars with him.

915
00:49:15,960 --> 00:49:19,759
Speaker 1: Allah Trump University now right where you know, you bring

916
00:49:19,800 --> 00:49:22,080
Speaker 1: people in and you say, you know, hey, spend thousand

917
00:49:22,080 --> 00:49:24,680
Speaker 1: dollars this weekend in Kyosaki will tell you the secrets. Right,

918
00:49:24,719 --> 00:49:28,080
Speaker 1: they they have these self appointed teachers. Well, Kiyosaki decided

919
00:49:28,120 --> 00:49:30,239
Speaker 1: this was such a great idea. He ultimately found another

920
00:49:30,280 --> 00:49:33,840
Speaker 1: partner to do it with, and not surprisingly, the Learning

921
00:49:33,840 --> 00:49:36,239
Speaker 1: Addics got a little annoyed because they felt they brought

922
00:49:36,239 --> 00:49:39,440
Speaker 1: the idea to him, and they sued him, and the

923
00:49:39,480 --> 00:49:42,760
Speaker 1: courts eventually, after several years, ruled in the Learning Addics.

924
00:49:42,800 --> 00:49:45,680
Speaker 1: Is between the two of them, Yes, it was, you know,

925
00:49:45,800 --> 00:49:51,200
Speaker 1: ongoing conversations and anyway, So the next thing is that

926
00:49:51,320 --> 00:49:55,560
Speaker 1: Kyosaki's business outfit that was negotiating with the Learning Addics

927
00:49:55,680 --> 00:49:58,440
Speaker 1: declare his bankruptcy. So there's now a whole thing in

928
00:49:58,520 --> 00:50:03,359
Speaker 1: Wyoming where there seems to be a case that is closed. Well,

929
00:50:03,400 --> 00:50:05,160
Speaker 1: there is a case that is closed to the public

930
00:50:05,480 --> 00:50:10,360
Speaker 1: that seems to be about where Kyosaki's money is. We

931
00:50:10,400 --> 00:50:12,440
Speaker 1: don't really know for sure that that's what it's like

932
00:50:12,480 --> 00:50:15,319
Speaker 1: twenty something. By the way, I don't know if if

933
00:50:15,320 --> 00:50:17,359
Speaker 1: there was a contract, I don't know how much it is.

934
00:50:17,520 --> 00:50:19,719
Speaker 1: I'm doing this off the top of my head. Memories

935
00:50:20,080 --> 00:50:22,440
Speaker 1: implies it was about four million dollars. I think it

936
00:50:22,520 --> 00:50:26,359
Speaker 1: might have been. But it's a big chunk of money.

937
00:50:26,440 --> 00:50:28,560
Speaker 1: It's a huge chunk of money, and every there's some

938
00:50:28,800 --> 00:50:31,480
Speaker 1: underlying I don't remember it was a contract relationship, but

939
00:50:31,719 --> 00:50:35,279
Speaker 1: some basis that the learning annex actually rings the court

940
00:50:35,360 --> 00:50:38,359
Speaker 1: case right, which leads to the bank corporate. I don't

941
00:50:38,400 --> 00:50:41,120
Speaker 1: believe there was a contract. I believe there was conversations

942
00:50:41,360 --> 00:50:44,759
Speaker 1: and emails and such. That's interesting, um, but I would

943
00:50:44,800 --> 00:50:47,640
Speaker 1: have to double check that actually, And yeah, so this

944
00:50:47,800 --> 00:50:50,160
Speaker 1: is what's going on now, and there's movements in this

945
00:50:50,239 --> 00:50:53,920
Speaker 1: Wyom case. Um learning Um is it the learning addicts

946
00:50:54,239 --> 00:50:57,160
Speaker 1: People have sued to get the case opened up basically

947
00:50:57,280 --> 00:50:59,720
Speaker 1: learning addics once the case opened up to the public,

948
00:51:00,320 --> 00:51:03,120
Speaker 1: so that they can see what on earth is going

949
00:51:03,200 --> 00:51:05,880
Speaker 1: on here, if indeed that is what's going on. Nobody

950
00:51:05,960 --> 00:51:08,239
Speaker 1: really was the basis of closing this is in a

951
00:51:08,360 --> 00:51:10,960
Speaker 1: child case with a child or anything. Why would this

952
00:51:11,040 --> 00:51:15,160
Speaker 1: be sealed? We don't know because it's sealed. That's fascinating.

953
00:51:15,320 --> 00:51:17,640
Speaker 1: So but I don't want people to think we're just

954
00:51:17,800 --> 00:51:21,719
Speaker 1: trashing Dave Ramsey, Susie Orman, Robert Kayasaki. There are people

955
00:51:21,760 --> 00:51:25,879
Speaker 1: who genuinely like what they say, who've benefited and learned

956
00:51:25,920 --> 00:51:28,759
Speaker 1: from them. But you raise some very credible issues as

957
00:51:28,840 --> 00:51:32,520
Speaker 1: to some problems with the advice they offer or some

958
00:51:32,640 --> 00:51:35,759
Speaker 1: of the conflicts conflicts they have. I only have you

959
00:51:35,840 --> 00:51:38,040
Speaker 1: for another ten minutes, and we could talk about these

960
00:51:38,080 --> 00:51:40,839
Speaker 1: guys and others for hours. So I want to get

961
00:51:40,920 --> 00:51:43,480
Speaker 1: to some of my favorite questions with you that I

962
00:51:43,600 --> 00:51:45,919
Speaker 1: asked all my guests, and I'm gonna do the abbreviated

963
00:51:46,000 --> 00:51:49,200
Speaker 1: version before they throw us out of here. Um. So,

964
00:51:49,320 --> 00:51:52,360
Speaker 1: who are your early mentors? How did you who helped

965
00:51:52,800 --> 00:51:57,080
Speaker 1: shape your worldview? Oh? Goodness, UM, I was always a reader, right, Um,

966
00:51:57,280 --> 00:52:01,240
Speaker 1: But that's my next question. I was. I was research

967
00:52:01,280 --> 00:52:03,279
Speaker 1: assistant for walt BYG. Danitch, who's now at The New

968
00:52:03,360 --> 00:52:06,320
Speaker 1: York Times and is either on his third or fourth Pulitzer.

969
00:52:06,400 --> 00:52:11,319
Speaker 1: I'm forgetting which he has so many Pulitzer He was amazing, um.

970
00:52:12,160 --> 00:52:14,480
Speaker 1: And one of the things he taught me, of course,

971
00:52:14,840 --> 00:52:18,239
Speaker 1: was the idea of don't be afraid of silence. Right

972
00:52:18,280 --> 00:52:21,279
Speaker 1: when you're interviewing someone, just let them talk like if

973
00:52:21,320 --> 00:52:24,239
Speaker 1: they The natural inclination of people is to fill the

974
00:52:24,360 --> 00:52:27,480
Speaker 1: silence and that's how they bill their guts. So he

975
00:52:27,680 --> 00:52:30,880
Speaker 1: was a huge mentor to mate. Um and then I

976
00:52:31,239 --> 00:52:33,719
Speaker 1: UM in personal finance. I mean I was at the

977
00:52:33,880 --> 00:52:36,520
Speaker 1: l A Times, which you know, really had had Kathy

978
00:52:36,640 --> 00:52:40,640
Speaker 1: Christoph who took over Sylvia Porter's column real died. I

979
00:52:40,760 --> 00:52:44,200
Speaker 1: had Liz Weston who now writes for Nerd Wallet. Um,

980
00:52:44,440 --> 00:52:47,560
Speaker 1: I had amazing people. To this day, the LA Times

981
00:52:47,600 --> 00:52:50,920
Speaker 1: has amazing people. Um. Lazarus is there and Mike Kiltzic

982
00:52:51,480 --> 00:52:54,640
Speaker 1: his work is They're both fantastic. Um. Lazarus. By the way,

983
00:52:54,640 --> 00:52:56,480
Speaker 1: I just have to say this wrote the great great

984
00:52:56,520 --> 00:52:59,720
Speaker 1: piece on Trump University in two thousand and seven. Really,

985
00:53:00,239 --> 00:53:04,120
Speaker 1: you have eight years ago, nine years ago, and it

986
00:53:04,360 --> 00:53:07,480
Speaker 1: is still an amazing place for this sort of writing. Um.

987
00:53:08,239 --> 00:53:10,600
Speaker 1: So let's go to let's go fast forward to books.

988
00:53:10,680 --> 00:53:13,280
Speaker 1: What are some of your favorite books, be it fiction

989
00:53:13,520 --> 00:53:16,520
Speaker 1: or nonfiction, finance related or not. Um. Oh god, I

990
00:53:16,600 --> 00:53:19,520
Speaker 1: was just thinking about this the other night because I

991
00:53:19,680 --> 00:53:21,719
Speaker 1: was like he's going to ask me about books and money, right,

992
00:53:22,440 --> 00:53:24,239
Speaker 1: doesn't have to be money. It could be it could

993
00:53:24,280 --> 00:53:27,279
Speaker 1: be the Bronte system, whatever you like. I love a

994
00:53:27,400 --> 00:53:29,560
Speaker 1: Tree Grose in Brooklyn. That was one of my favorite

995
00:53:29,600 --> 00:53:32,759
Speaker 1: books when I was growing up way back, which is

996
00:53:32,800 --> 00:53:36,040
Speaker 1: about money. Um. I think everybody should read it. Um.

997
00:53:36,160 --> 00:53:38,080
Speaker 1: One of the many things I at least reference it

998
00:53:38,120 --> 00:53:40,319
Speaker 1: at least once a year in a column. Um. It's

999
00:53:40,360 --> 00:53:43,760
Speaker 1: a poor girl growing up in Williamsburg. And it basically

1000
00:53:43,880 --> 00:53:46,520
Speaker 1: shows how this isn't why I love it, mind you.

1001
00:53:46,560 --> 00:53:48,720
Speaker 1: I love it for lots of reasons, but basically shows

1002
00:53:48,719 --> 00:53:51,360
Speaker 1: a lot of the lie of personal finance in it

1003
00:53:52,080 --> 00:53:53,520
Speaker 1: because one of the things that's going on in the

1004
00:53:53,600 --> 00:53:56,200
Speaker 1: book is the fact that the mom is trying to

1005
00:53:56,239 --> 00:53:58,280
Speaker 1: save money to buy land and they have a little

1006
00:53:58,320 --> 00:54:01,120
Speaker 1: bank because of course in those days, uh, poor people

1007
00:54:01,120 --> 00:54:03,000
Speaker 1: didn't have bank accounts. They have a can in the

1008
00:54:03,040 --> 00:54:05,439
Speaker 1: closet that they put money in, and they're always having

1009
00:54:05,480 --> 00:54:07,839
Speaker 1: to rate it. I mean, it's just ridiculous. And they

1010
00:54:07,880 --> 00:54:10,520
Speaker 1: finally end it when they're dead broke, after the father

1011
00:54:10,680 --> 00:54:13,040
Speaker 1: dies and they have to pay to have him buried

1012
00:54:13,280 --> 00:54:15,799
Speaker 1: and the mother and the mother looks at them ironically

1013
00:54:15,880 --> 00:54:18,359
Speaker 1: and says, well, we have our bit of land. Now.

1014
00:54:18,800 --> 00:54:21,280
Speaker 1: I never thought of that as a personal finance parable.

1015
00:54:21,400 --> 00:54:25,279
Speaker 1: But now that you say that, it reveals itself in

1016
00:54:25,560 --> 00:54:28,960
Speaker 1: a small way that in that in that direction. What

1017
00:54:29,080 --> 00:54:32,160
Speaker 1: other book, um, would you like to mention? What other books?

1018
00:54:32,280 --> 00:54:34,880
Speaker 1: I love books about New York or l A. Um.

1019
00:54:35,040 --> 00:54:36,560
Speaker 1: I lived in l A for a long time, so

1020
00:54:36,600 --> 00:54:40,080
Speaker 1: aside from Chinatown about New York that you like New York?

1021
00:54:40,480 --> 00:54:42,680
Speaker 1: Let the Great World Spin, which is about the trade

1022
00:54:42,760 --> 00:54:46,440
Speaker 1: center building being built in the seventies. Claire suits that

1023
00:54:46,560 --> 00:54:49,400
Speaker 1: I pronounced her name right. The Emperor's Children, which is

1024
00:54:49,440 --> 00:54:53,040
Speaker 1: about New York, also on the verge of of the

1025
00:54:53,120 --> 00:54:55,640
Speaker 1: Tree of what Happened at nine eleven, But it's really

1026
00:54:55,719 --> 00:54:59,600
Speaker 1: about how the money class took over from the literary

1027
00:54:59,640 --> 00:55:01,920
Speaker 1: class in New York. It's a really brilliant book about that.

1028
00:55:02,360 --> 00:55:04,800
Speaker 1: People don't realize that. About help. What's the name of

1029
00:55:04,840 --> 00:55:08,319
Speaker 1: that again? The Emperor's Children? The Emperor's Children? UM, give

1030
00:55:08,360 --> 00:55:10,160
Speaker 1: me one more, give me one more. I've got to

1031
00:55:10,200 --> 00:55:13,640
Speaker 1: think about this. UM. I love history. UM, what's the

1032
00:55:14,000 --> 00:55:17,200
Speaker 1: best biography you've read recently? I wouldn't say biography. What

1033
00:55:17,320 --> 00:55:19,480
Speaker 1: I would say one of the great historical works of

1034
00:55:19,719 --> 00:55:23,920
Speaker 1: all time is um John Demos is The Unredeemed Captive,

1035
00:55:24,200 --> 00:55:26,560
Speaker 1: about a girl who is kidnapped by the Indians in

1036
00:55:26,920 --> 00:55:30,239
Speaker 1: the early seventeen hundreds in New England and refuses to

1037
00:55:30,320 --> 00:55:34,480
Speaker 1: come home. Huh, The Unredeemed Captive. And it's a great,

1038
00:55:34,719 --> 00:55:37,640
Speaker 1: great book about American life. So let me ask you

1039
00:55:37,719 --> 00:55:42,320
Speaker 1: a question about personal finance, Uh, journalism. What do you

1040
00:55:42,400 --> 00:55:45,600
Speaker 1: see as changing in that space since you began covering

1041
00:55:45,680 --> 00:55:49,080
Speaker 1: that lo these twenty years ago. I don't think it

1042
00:55:49,200 --> 00:55:51,560
Speaker 1: much has changed. I think there's some great, great stuff

1043
00:55:51,600 --> 00:55:53,440
Speaker 1: that's done at the l A Times, at the New

1044
00:55:53,520 --> 00:55:56,480
Speaker 1: York Times, the Wall Street Journal, Um, but I think

1045
00:55:56,560 --> 00:56:00,440
Speaker 1: most of it has remained not particularly very good. Um.

1046
00:56:00,520 --> 00:56:02,759
Speaker 1: I think there's a lot of judgment. There's a lot

1047
00:56:02,800 --> 00:56:05,520
Speaker 1: of scolding. If anything, the Internet has made that worse

1048
00:56:05,640 --> 00:56:09,920
Speaker 1: because there's just this reflexive instinct now to just throw

1049
00:56:10,080 --> 00:56:13,480
Speaker 1: everything up there. So these scolding things get put up constantly.

1050
00:56:13,680 --> 00:56:17,279
Speaker 1: Americans aren't saving enough for retirement, you know, Americans, you

1051
00:56:17,320 --> 00:56:20,000
Speaker 1: need to save more money. Not this thoughtful. Well, why

1052
00:56:20,040 --> 00:56:25,560
Speaker 1: aren't people saving more money for Retire's a bigger and

1053
00:56:25,640 --> 00:56:27,840
Speaker 1: it's just totally neglected and I guess the last thing

1054
00:56:27,880 --> 00:56:30,200
Speaker 1: I'll say is this is in keeping with the history

1055
00:56:30,239 --> 00:56:34,040
Speaker 1: of personal finance reporting the if you study this, and

1056
00:56:34,160 --> 00:56:36,839
Speaker 1: I want to credit Trudy Lieberman at c JR, who's

1057
00:56:36,880 --> 00:56:40,520
Speaker 1: really written about this extensively. Personal finance writing became very

1058
00:56:40,640 --> 00:56:43,239
Speaker 1: big in the sixties and seventies as an offshoot of

1059
00:56:43,239 --> 00:56:46,399
Speaker 1: the consumer movement, and it was initially seen by newspapers

1060
00:56:46,560 --> 00:56:48,719
Speaker 1: as a way around some of the problems of the

1061
00:56:48,760 --> 00:56:53,640
Speaker 1: consumer movement had given them advertising objections, right with cars

1062
00:56:53,719 --> 00:56:56,680
Speaker 1: in particular, car dealers were very angry, so they thought, oh, well,

1063
00:56:56,719 --> 00:56:59,320
Speaker 1: write about this personal finance stuff and it'll be a

1064
00:56:59,360 --> 00:57:02,719
Speaker 1: way of giving people some hard hitting consumer coverage and

1065
00:57:02,840 --> 00:57:05,480
Speaker 1: their money and still get advertising dollars, right, and still

1066
00:57:05,480 --> 00:57:08,560
Speaker 1: get advertising dollars. But they didn't realize because they just

1067
00:57:08,600 --> 00:57:11,440
Speaker 1: thought they were still thinking car dealerships and department stores.

1068
00:57:12,000 --> 00:57:14,600
Speaker 1: But they didn't realize was how big the financial services

1069
00:57:14,640 --> 00:57:17,200
Speaker 1: sector would be common advertising and what a conflict of

1070
00:57:17,240 --> 00:57:20,800
Speaker 1: interest that would ultimately cause on the consumer side. And

1071
00:57:21,320 --> 00:57:23,760
Speaker 1: I think some of what he writes is of value.

1072
00:57:24,160 --> 00:57:26,800
Speaker 1: There's a guy called Mr money Mustache, and his whole

1073
00:57:26,880 --> 00:57:29,680
Speaker 1: stick is if you save up enough money when you're early,

1074
00:57:29,760 --> 00:57:34,320
Speaker 1: you could retire at filling the blank and enjoy your life.

1075
00:57:34,440 --> 00:57:38,520
Speaker 1: And where I agree with him, it's not so much

1076
00:57:38,600 --> 00:57:41,120
Speaker 1: on these self deprivation, no lats, no this, no. That

1077
00:57:41,840 --> 00:57:46,280
Speaker 1: is that we have this blind fealty to consumerism. And look,

1078
00:57:46,480 --> 00:57:50,280
Speaker 1: I'm a consumer, but it's not what drives me. And

1079
00:57:50,400 --> 00:57:55,280
Speaker 1: I think people are somewhat just stumbling into spending money

1080
00:57:55,360 --> 00:57:58,720
Speaker 1: without thinking about it. And he raises that issue in

1081
00:57:58,760 --> 00:58:01,400
Speaker 1: a way that I think is very but again, that's

1082
00:58:01,440 --> 00:58:04,080
Speaker 1: not most people's problem. Most people's problems they can't keep

1083
00:58:04,160 --> 00:58:06,680
Speaker 1: up in the society because their incomes are stagnating while

1084
00:58:06,720 --> 00:58:09,840
Speaker 1: costs are going up. What I would say is, we're

1085
00:58:09,880 --> 00:58:13,720
Speaker 1: not talking about iPhones and iPads. We're talking about healthcare

1086
00:58:13,760 --> 00:58:16,160
Speaker 1: in college, right, And what I would say is, I

1087
00:58:16,240 --> 00:58:19,480
Speaker 1: think Mr money Mustache makes a very valuable argument about

1088
00:58:19,600 --> 00:58:21,760
Speaker 1: how you can be tied to jobs that you hate,

1089
00:58:22,320 --> 00:58:24,080
Speaker 1: and that you need to think about this because I

1090
00:58:24,120 --> 00:58:26,720
Speaker 1: think that is a huge problem in our society, right,

1091
00:58:27,280 --> 00:58:30,400
Speaker 1: that people really feel trapped. But I think his answer

1092
00:58:31,280 --> 00:58:35,080
Speaker 1: it just simply blaming the consumerism, is completely and utterly wrong.

1093
00:58:35,440 --> 00:58:37,400
Speaker 1: What you really need to say is why don't we

1094
00:58:37,440 --> 00:58:40,360
Speaker 1: have single pay or healthcare? Why don't we, you know,

1095
00:58:40,600 --> 00:58:42,920
Speaker 1: help people have some sort of base income if that's

1096
00:58:42,920 --> 00:58:46,080
Speaker 1: what you believe in, UM, Why or why don't we

1097
00:58:46,160 --> 00:58:49,040
Speaker 1: support people having children? Why do we only revere children

1098
00:58:49,080 --> 00:58:50,720
Speaker 1: as long as they're in the womb and then the

1099
00:58:50,800 --> 00:58:54,400
Speaker 1: day they come out. No, there's no support whatsoever. Only

1100
00:58:54,440 --> 00:58:57,760
Speaker 1: industrialized country with no paid maternity leave. That's us, right,

1101
00:58:58,000 --> 00:59:00,640
Speaker 1: I mean it's and to me, I would take what

1102
00:59:00,800 --> 00:59:02,960
Speaker 1: he's saying a lot more seriously if he would start

1103
00:59:03,040 --> 00:59:06,000
Speaker 1: pounding on those topics. All right, So, now a millennial

1104
00:59:06,120 --> 00:59:08,480
Speaker 1: comes to you when they say, I'm thinking about going

1105
00:59:08,600 --> 00:59:12,800
Speaker 1: into journalism, personal finance, what have you? What sort of

1106
00:59:12,800 --> 00:59:15,480
Speaker 1: advice do you give them? There's no operating business model

1107
00:59:15,520 --> 00:59:17,560
Speaker 1: in journalism. Don't go into it. Of course I tell

1108
00:59:17,640 --> 00:59:20,000
Speaker 1: them not to do it. Really, Yeah, there's no operating

1109
00:59:20,000 --> 00:59:23,400
Speaker 1: business model here. No, the business model is simple, have

1110
00:59:23,600 --> 00:59:29,600
Speaker 1: an expensive terminal adjacent to your your journalism, and there's

1111
00:59:29,640 --> 00:59:32,840
Speaker 1: plenty money for everybody. The amount of jobs in journalism

1112
00:59:32,960 --> 00:59:35,760
Speaker 1: has fallen by a huge percentage since I got into

1113
00:59:35,840 --> 00:59:39,520
Speaker 1: it in the late eighties. Early it has fallen even

1114
00:59:39,600 --> 00:59:43,640
Speaker 1: more significantly. You know, since two thousand, UM, nobody has

1115
00:59:43,680 --> 00:59:46,880
Speaker 1: worked out a sustainable model that I am aware of

1116
00:59:47,200 --> 00:59:53,680
Speaker 1: accept online um and I basically aside from basically a

1117
00:59:53,760 --> 00:59:57,160
Speaker 1: business in but I just got sold. They're not making money.

1118
00:59:57,200 --> 01:00:00,960
Speaker 1: Did you see their losses? Yeah, well my point right,

1119
01:00:01,200 --> 01:00:03,080
Speaker 1: as far as I could tell that the main model

1120
01:00:03,160 --> 01:00:05,400
Speaker 1: that's going on here is one of two things is

1121
01:00:05,440 --> 01:00:07,920
Speaker 1: what I call either rich guy with hobby and that

1122
01:00:08,040 --> 01:00:11,280
Speaker 1: means somebody who wants to support journalism for whatever. The

1123
01:00:11,400 --> 01:00:15,320
Speaker 1: Guardian has a huge, huge and then the same thing

1124
01:00:15,440 --> 01:00:18,760
Speaker 1: with the Pro Publica right, that's rich guy with hobby, right.

1125
01:00:19,200 --> 01:00:23,240
Speaker 1: And then the other, of course Washington Post, right, is

1126
01:00:23,480 --> 01:00:27,280
Speaker 1: you know, selling some service with it um like Bloomberg

1127
01:00:27,400 --> 01:00:29,520
Speaker 1: or third I'm sorry, there's one other and that is

1128
01:00:29,600 --> 01:00:32,520
Speaker 1: venture money like BuzzFeed or Fox. And we really have

1129
01:00:32,680 --> 01:00:34,840
Speaker 1: no idea what's going on at those diseases right now.

1130
01:00:35,160 --> 01:00:38,400
Speaker 1: Aren't making money, but we don't know so so really,

1131
01:00:38,600 --> 01:00:40,720
Speaker 1: you have the Wall Street Journal in the New York Times.

1132
01:00:40,840 --> 01:00:44,200
Speaker 1: I believe both of those are fairly profitable there massive

1133
01:00:44,280 --> 01:00:47,440
Speaker 1: both of them are under severe constraints. They took on

1134
01:00:47,560 --> 01:00:50,439
Speaker 1: too much debt. See it's their own fault. No, they're

1135
01:00:50,520 --> 01:00:53,920
Speaker 1: dealing with the fact that the print is still bringing

1136
01:00:53,960 --> 01:00:56,800
Speaker 1: in most of the profits. But in fact, the move

1137
01:00:57,000 --> 01:00:59,320
Speaker 1: is towards digital and nobody seems to know how to

1138
01:00:59,360 --> 01:01:00,960
Speaker 1: deal with this. There is no one has come up

1139
01:01:00,960 --> 01:01:04,120
Speaker 1: with an answer to this yet. So your advice is don't.

1140
01:01:04,360 --> 01:01:06,840
Speaker 1: My advice is don't. And then the less less you

1141
01:01:06,960 --> 01:01:08,600
Speaker 1: have an independent source of income. If you have an

1142
01:01:08,600 --> 01:01:11,360
Speaker 1: independent source of income, my advice is, it's a great job.

1143
01:01:11,520 --> 01:01:14,320
Speaker 1: I love it. Do it. And then the last question

1144
01:01:14,400 --> 01:01:16,200
Speaker 1: I have for you, what is it that you know

1145
01:01:16,320 --> 01:01:21,439
Speaker 1: about the personal finance journalism industry today that you wish

1146
01:01:21,520 --> 01:01:24,040
Speaker 1: you knew when you started out twenty years ago? Oh?

1147
01:01:24,320 --> 01:01:28,080
Speaker 1: Just how in the pocket of the financial services sector

1148
01:01:28,200 --> 01:01:31,000
Speaker 1: so much of it is. It didn't even occur to

1149
01:01:31,120 --> 01:01:33,680
Speaker 1: me when I first got into it at all. How

1150
01:01:33,720 --> 01:01:36,320
Speaker 1: long did it take before that, actually you came to

1151
01:01:36,400 --> 01:01:39,720
Speaker 1: that realism. It's a gradual realization over a number of years.

1152
01:01:39,760 --> 01:01:41,280
Speaker 1: I don't think I had a moment where I woke

1153
01:01:41,400 --> 01:01:43,800
Speaker 1: up and said, oh my god, this is awful. But

1154
01:01:44,000 --> 01:01:46,160
Speaker 1: what I do remember is even when I was doing

1155
01:01:46,240 --> 01:01:49,080
Speaker 1: money makeover, I remember the thought would creep into my hat,

1156
01:01:49,680 --> 01:01:52,520
Speaker 1: like the stock market, this is really for rich people

1157
01:01:52,760 --> 01:01:56,920
Speaker 1: like this, Like it wasn't just that, like ten dollars

1158
01:01:57,000 --> 01:01:59,520
Speaker 1: really can't turn into a million dollars. It was worth

1159
01:01:59,560 --> 01:02:02,080
Speaker 1: this idea. Yeah, that I understood instinctively that this was

1160
01:02:02,160 --> 01:02:05,040
Speaker 1: going to be careening all over the place, and that

1161
01:02:06,240 --> 01:02:08,720
Speaker 1: you know this idea that well, what if it doesn't

1162
01:02:08,720 --> 01:02:10,760
Speaker 1: go up. At the time, they were claiming ten percent

1163
01:02:10,840 --> 01:02:14,280
Speaker 1: after janual returned, as you might remember with dividends reinvestor, right,

1164
01:02:14,280 --> 01:02:15,640
Speaker 1: and I was like, well, what if it doesn't go

1165
01:02:15,800 --> 01:02:17,760
Speaker 1: up like that? And one of the issues that has

1166
01:02:17,760 --> 01:02:19,640
Speaker 1: actually crept in is one of the reasons the number

1167
01:02:19,720 --> 01:02:22,320
Speaker 1: is going down now is because dividends have been cutting

1168
01:02:22,440 --> 01:02:24,760
Speaker 1: more than in cut in half since the early nineteen eighties.

1169
01:02:24,920 --> 01:02:28,400
Speaker 1: You've seen much more buybacks increases than you've seen dividends.

1170
01:02:28,440 --> 01:02:31,680
Speaker 1: When dividends or something that are far more valuable to

1171
01:02:31,760 --> 01:02:35,360
Speaker 1: an investor, especially a long term investor, than a stock

1172
01:02:35,440 --> 01:02:37,800
Speaker 1: by well, that's part of the issue, right, The dividends

1173
01:02:37,800 --> 01:02:40,400
Speaker 1: are a huge value to long term investors or people

1174
01:02:40,440 --> 01:02:43,520
Speaker 1: who need money for it. From this Hello, this has

1175
01:02:43,560 --> 01:02:47,160
Speaker 1: been fantastic. Thank you for being so generous with your time.

1176
01:02:47,720 --> 01:02:50,800
Speaker 1: I want to thank Michael bat Nick, my head of research,

1177
01:02:50,960 --> 01:02:54,480
Speaker 1: for helping me do the deep dive here. Taylor Riggs

1178
01:02:54,640 --> 01:02:58,080
Speaker 1: is our producer Slash booker along with Charlie Vollmer, my

1179
01:02:58,200 --> 01:03:02,120
Speaker 1: recording engineer Mark. If you've enjoyed this conversation, be sure

1180
01:03:02,160 --> 01:03:04,440
Speaker 1: and looked up an Inch or down an inch on

1181
01:03:04,720 --> 01:03:07,640
Speaker 1: iTunes and you could see the other eighties six or

1182
01:03:07,760 --> 01:03:10,920
Speaker 1: so such conversations we've had over the past two years.

1183
01:03:11,640 --> 01:03:14,520
Speaker 1: I'm Barry Ridhults. You're listening to Masters in Business on

1184
01:03:14,600 --> 01:03:15,479
Speaker 1: Bloomberg Radio.