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Selling fear, greed or both
I recently received several unsolicited copies of a new book “The Holy Grail of Investing” written by none other than motivational speaker Tony Robbins. Not only was I surprised to receive so many copies of the same book, but I also discovered that Robbins is now in the financial industry.
When I imagine Robbins, I tend to think of crowds the size of sports arenas and “You can do it!” Messages. But after a bit of Googling, I discovered that this is his third book on finance since 2016. It seems like personal improvement and financial planning are starting to overlap in a Venn diagram. But is this a bad thing?
On social media and YouTube, there is no shortage of experts, professional or not, offering financial “advice”. Don’t get me wrong; I believe everyone should have an interest in their money. It is important to understand concepts such as compound interest and the time value of money. I applaud the writers focused on educating readers about these concepts. But my impression is that many of these “gurus” acquire and increase their income not by the education they provide, but by the number of eyes they attract.
For example, consider Robert Kiyosaki, author of the “Rich Dad Poor Dad” personal finance books. You’re likely familiar with these books as they have sold more than 32 million copies since the first book was published in 1997, according to CNBC. What you may not know is that Kiyosaki’s track record is littered with bankruptcies, poor financial advice and expensive seminars.
Today he is on social media, where we can travel through time and follow his predictions. His profile on X (Twitter) shows no shortage of political banalities, bitcoin predictions and the word “CRASH” in capital letters repeated dozens of times. Although he may be an expert at marketing and selling his books, his earnings come when you sign up for one of his many seminars, not when you make sound financial decisions.
Another example is author Harry Dent. A hedge fund manager and publishing company owner (which should already be a huge red flag), Dent wrote a New York Times bestselling book, “The Great Depression Ahead,” in 2009. His follow-up, “The Great Crash Ahead,” in 2011, suggested that the Dow would begin to plummet in 2012, bottoming out sometime between 2019 and 2023.
Instead, the Dow Jones doubled in that period.
This did not stop Dent from publishing many other books about the Last Judgment. From “The Demographic Cliff: How to Survive and Thrive During the Great Deflation of 2014-2019” in 2014 to “The Sale of a Life: How the Great Bubble Burst of 2017 Can Make You Rich” in 2016, you have to admire his ability to be so confidently wrong.
That’s the problem I have with financial writers: their intentions are not to improve your finances, but rather to sell their products. They are encouraged to sell more books, seminars, TV ads, etc., and nothing sells like panic and desperation. Unfortunately, the topic of finance provides fertile ground for this particular brand of snake oil. It’s relevant to almost everyone, it’s constantly changing, and it’s fundamentally important. For these reasons, people tend to pay attention. Additionally, money tends to be deeply emotional. Whether they’re worried about the next crisis (fear), stressed about retirement (despair), or even celebrating a winning stock pick (greed), people are engaged on this topic.
For those who make money from attention, engaged viewers are a goldmine. While some of his advice may be meaningful, the rest is at best bad and at worst downright dangerous. Since their goal is attention, the more outrageous they are, the more attention they get. As such, they take advantage of the emotion. Do any of these approaches sound familiar?
• Take risks, make predictions — the weirder, the better
• Promising to make people rich
• Make accurate predictions — such as the timing of highs and lows — and at the same time offer numbers and goals to attract readers’ attention
• After this fails to materialize, write another book and hope that people forget the previous publication
• Reverse the narrative when necessary (readers have short memories)
• Using buzzwords, scare tactics and a sense of urgency
• No matter what happens, promise profits (in the future) by following your advice
Why do people fall for this nonsense? As with cigarettes, people are addicted to something that only causes harm. But, unlike with cigarettes, these posts and videos do not come with a warning. Have you ever imagined if books were printed with the author’s story on the cover? How would this change our trusted sources?
Negativity attracts people and forces them to remain “connected”, alert to dangers. Pessimism is like a virus. If fear drives consumption, eliminating it is a great way to sell books, newsletters, subscriptions and speaking engagements, and even get airtime on financial news programs. But it entrenches bad investor behavior and is a disservice to readers or investors. It promotes turnover or the activity from which financial companies profit in the form of commissions and transfers.
True financial advice is not fear-based or designed to scare you. Instead, it simplifies the complex. It helps you clarify what you want and offers steps to get there. A quality consultant should illustrate your options and capabilities, not scare you with imminent failures. They should help you navigate uncertainty, walk with courage, and move forward with investing.
Work with people who make you more confident in the future, not less. True financial advice aims to help people make wise choices with their resources.
As financial author Richard Bernstein once said, “The reason ‘guru’ is a popular word is because ‘charlatan’ is very difficult to spell.”
Mute the volume when financial promoters start peddling their gospel, and remember that those who talk the most often have the least to say. Work with a financial advisor who earns when you earn and let them build a plan that works for you.
Steve Booren is the founder of Prosperion Financial Advisors in Greenwood Village. He is the author of “Blind Spots: The Mental Mistakes Investors Make” and “Smart Investing: Your Guide to Growing Retirement Income.” He was named by Forbes as the 2021 Best State Wealth Advisor and the 2021 Barron’s Best Advisor by State. This column is not intended to provide specific investment advice or recommendations.