Assessing the Worth of a Celebrity

For those of you – like me – who routinely review financial websites, it’s gratifying to see what useful information can be picked up. A few days ago I happened upon the site of Jeff Rose, a Certified Financial Planner in Carbondale, Illinois. As the founder and CEO of his firm, Alliance Wealth Management, and the author of a book on personal finance, he appears to be a credible investment advisor.

However, in reviewing his comments and recommendations, I stumbled upon his Online article with the title: “Here are 14 reasons why you shouldn’t listen to Suze Orman.”

Although I’m only somewhat familiar with Ms. Orman, I know she’s an extremely popular celebrity, with a reputation as an author, financial advisor, motivational speaker, and television host. For this reason alone, I wanted to know why she shouldn’t be listened to. The picture slowly formed as I began reading each of his reasons. I’ll list several of them so you’ll see where his discomfort is coming from.

“Suze Orman Doesn’t Know You. It’s one thing to take financial advice from a person who has intimate knowledge of your situation. It’s quite another to take it from someone who’s pontificating to a mass audience and has absolutely no knowledge of your situation whatsoever.

“Most of Her Advice is Very General. 90 percent of the advice spread to the masses coming from an expert in any field is generic – it’s common in the field and you can get it anywhere. What makes the advice unique is the personal spin added by the individual. That’s more about the personality of the guru than it is about the depth and quality of the advice itself. Orman also tends to aim her advice at people who lack much more than a rudimentary understanding of personal finance.

“When You Get That Popular, There Are Always Commercial Biases. Orman is virtually a brand unto herself. She is a popularly recognized figure, and well heeded by her legion of fans. That creates monetization opportunities, and you know that she’s taking advantage of those. Virtually everyone in her position does.

“Suze Doesn’t Always Follow Her Own Advice. While championing stocks for all, Suze invests her own money primarily in – drum roll – municipal bonds! When you’re a financial guru doling out advice that others are relying on, the hypocrisy is not just glaring. It’s intolerable.

“Orman is a Millionaire – Her Advice May Not Fit Your Financial Situation. The more successful a person becomes, the less he or she can relate to the plight of the everyday people. It’s just human nature. Suze Orman is worth somewhere between $10 million and $30 million, which is far more than the vast majority of people who follow her advice are worth. Life looks a lot different when you have that kind of money. An eight figure bankroll simply gives you a different perspective, and that affects your ability to process what’s happening from an emotional standpoint.”

With those comments from a presumably competent financial advisor, I wasted no time logging into Suze Orman’s website to see if she is, indeed, as unimpressive as Jeff Rose describes. With a bit of luck her site will contain a wellspring of sound advice, demonstrating that she’s in possession of the sort of information her audience needs and desires, rather than merely an unknowledgeable hypocrite as she’s described.

We’re in luck. Orman’s site contains an extensive list of her recommendations of all sorts on both purely financial as well as somewhat personal advisory matters. Sit back and relax as I reveal what she says on a variety of subjects.

“Don’t lease a car. If you lease, you’ll sink your money into several years’ worth of car payments and be empty-handed when the lease term is done. Financing is a better option, but if it will take longer than three years to pay off the car, then it’s out of your price range. Buying a used car is another way to go. Models that are just a few years old will have similar safety specifications to a new car, at a fraction of the price.

“Don’t co-sign a loan. When a friend or family member in need asks you to co-sign a loan, the only correct response is to turn them down. When you do such a thing, you become legally responsible for paying back the money. Life is unpredictable, and if anything happens to prevent the borrower from repaying it, you’ll be on the hook,

“Don’t put blind faith in a financial advisor. It’s important to have a financial advisor you can trust. Don’t think that they’re always going to have your best interests at heart, because probably they have their own best interests at heart.

“Don’t let debt linger. You will never, ever, have financial freedom if you have debt. Mortgage and student loans might be called ‘good debt,’ because home loans usually have fairly low interest rates and your degree is an investment that should generate a higher income over time. However, credit cards have much higher interest rates. The longer you put off paying down your credit balances, the more money you lose. You can easily wind up paying for your purchases three or four times over.

“Don’t spend on things you really don’t need. The next time you’re ready to buy something, ask yourself whether you really need it. Is it a necessity, such as medication, food or a solid pair of work shoes? If so, then buy it, but if it’s only a want, such as another drink at the bar or a second pair of knee-high boots, just walk away. Try this for six months and you’ll be shocked at how easy it is and how much money you’ll save.

“Don’t take out a reverse mortgage in your 60s. A reverse mortgage is a type of home equity loan for seniors, 62 or older, that allow you to receive money as a lump sum or in monthly installments. The loan is repaid – with interest – when you die or sell the house. It’s best to treat this as a last resort for an emergency only. They’re expensive, and if you have to sell the home you may end up giving most or all of the sale price back to the lender to settle up. Avoid them if you can.

“Don’t go without life insurance. You need life insurance to protect your children if something happens to you. It’s a product you can’t afford to go without. And it’s cheap: A healthy 40-year-old woman might pay less than $35 a month for a policy with a $500,000 death benefit. But it must be a level term policy where the premium never changes. Don’t tell me a dollar a day is too much to keep your family safe.”

There’s much more on Orman’s site, but you’ve gotten a fair idea of what she advocates. Perhaps, as Rose says, her advice is very general and it’s aimed at people with little more than a rudimentary understanding of personal finance. Nonetheless, it’s exceptionally sound advice, and if she can convey it enthusiastically to her many listeners in such a way that some take it to heart and follow what she preaches, then she deserves the acclaim she enjoys.

As for Jeff Rose, I can understand why he may not be a Suze Orman admirer. Although he’s quite possibly a thoroughly capable financial advisor, it’s my guess he doesn’t possess the captivating personality Orman displays. It’s also likely he tends to resent the celebrity status she acquired. Lastly, it’s my suspicion he hasn’t attained the eight figure bankroll he disparagingly attributes to her.

A final thought: Both Jeff Rose and Suze Orman share one thing in common. Neither appear to have any involvement whatever in the investment business. They are, instead, in the marketing business, selling advice and hope to their clients – as impressively as they’re able. If all their advice proves to be less than profitable, neither of them will lose a dime. This is how the field of marketing has always worked.

Al Jacobs, a professional investor for nearly a half-century, issues weekly financial articles in which he shares his financial knowledge and experience. You may view them on http://www.roadwaytoprosperity.com.

al@beachcomber.news