You either love her, hate her or really hate her.
In truth, a lot of her advice is really good stuff. But some of it is teetering on the edge, and some advice is just plain bad.
Even though I questioned some of her advice I still respected what she's been able to do in educating the masses.
That all quickly was thrown out after she launched her pre-paid debit card program that grew immediate criticism. Instead of focusing on the benefits the card offers (none that I know of), she took the much nobler route of calling people names that questioned the cards merits as shown below.
@20andengaged Too bad you choose to believe an idiot over me- you just keep following others and see where it gets you –
— Suze Orman (@SuzeOrmanShow) January 11, 2012
In the above exchange, “@ptmoney” is my buddy Phil Taylor is a CPA, personal finance blogger at PTMoney.com and founder of the Financial Blogger Conference. So yeah, she called my “battle buddy” an idiot and that ain't cool.
What's even more funny about that exchange is that Suze was so quick to defend her “great product” and looks like she's quietly shutting it down.
Hmmmmm….who's the idiot now?
Here are 14 other reasons why you shouldn’t listen to Suze Orman.
1. All Advice Has to Be Taken With a Grain of Salt – Regardless of the Source
A lot of people pass themselves off as experts, when in truth there are no experts – only practitioners. No where is this more true than in the financial realm. There are dozens, maybe hundreds, of subtopics in the area of personal finance, and there are multiple opinions about every single one of them. Complicating this is the fact that no two people have the exact same financial situation.
You should consider financial advice, and use the knowledge you gain from it as a basis to help you make decisions about your financial life. But you should never mindlessly take action based on someone's advice, least of which that of a financial guru. That includes Suze Orman.
2. 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.
Though you may be impressed, or even comforted by Orman’s public delivery, she knows absolutely nothing about you. If she did, a single detail in your financial situation – or even one merely related to it – could change her recommendations completely.
3. Most of Her Advice is Very General
There’s a saying that goes, If it’s true it isn’t new, and if it’s new it isn’t true,“ and so it is with financial advice experts, including Suze Orman. 90% 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. Of course, this would be the group most likely to listen to her advice, and ironically, most likely to not follow it.
If you find yourself agreeing with all or even most of what Orman says, you could very well be in this group. And if you are, you need to spend a lot more time working on getting information from other sources. No one can magically turn you into a financial expert, not even in regard to your own finances. That can only happen if you commit to making it real in your life.
4. Your Own Financial Situation is Unique
When Orman addresses someone else’s problem, it may be similar to yours, but it’s never exactly like yours. A change in a single detail or two could invalidate her advice in your case.
Take, for example, a decision on investing in the stock market. Orman can put out the general advice that everyone should be in the stock market, but what if you have an unstable income, an high level of debt, and a lot of mouths to feed at home?
Sure, it might be recommended for everyone to be in the stock market, but in your case, that advice can be all wrong. Her advice can have you scrimping and saving to invest money in the stock market, when in reality you should be building up your emergency fund instead.
5. When You Get That Popular, There Are ALWAYS Commercial Biases
When Suze promotes one of her books or programs, or endorses a third party product, there’s money on the line – as in money to her. That should raise a red flag.
Orman is virtually a brand unto herself. She is a popularly recognized figure, and well heeded by her legions of fans. That creates monetization opportunities, and you know that she’s taking advantage of those. Virtually everyone in her position does.
I've already mentioned her infamous prepaid debit card fiasco. When you have that kind of star power, those kinds of offers come along, and they’re hard to resist.
For example, you can recommend one of a half a dozen debt consolidation services or with the best airline rewards credit card, but you choose to endorse the company with the fifth best program because they are paying you a fee to do so. It happens all the time with recognized gurus.
But that doesn’t mean that the product or service that’s being advanced is really in your best interests.
6. There’s a Bit Too Much Emphasis on The Little Things
I remember watching one of her programs when she discussed The Latte Factor. I must admit, her point was compelling – but this might have been a classic example of form-over-substance.
Orman’s point had to be well taken: by stopping at Starbucks every morning to buy a $4 latte, you are spending at least $1,000 per year that you don’t need to spend. You can save that money simply by making your own coffee at home, and preparing a cup or large container to bring with you to work.
The problem with that kind of advice is that you can spend a lot of time and effort looking to cut small expenses like lattes, and not come up with serious money to save when you’re done.
In addition, this may not be great advice for people who are struggling with financial survival. Many people in that situation have already cut the small expenses and are still sinking.
For a person who is in that situation, the best advice might be to take on major expenses, like housing or your car, and trading down on both. Many people who are in financial difficulty are there because they can barely afford the biggest expenses in their lives.
You can’t fix that problem by cutting out lattes.
More from GFC, Below
And on a personal note, keeping structural expenses low is what enables me to afford luxuries like lattes. I have no intention of being on the equivalent of a financial “diet” with virtually every spending category in my life.
But maybe that’s just me.
And yes, I'll be ordering a Grande Sugar-free Carmel Latte on my work tomorrow. 🙂
7. No, Everyone Shouldn’t Invest in Stocks
Orman enthusiastically recommends investing in the stock market to anyone who will listen. This is standard issue, one-size-fits-all advice, and maybe not even “advice” in the truest sense. Common sense should tell a “financial expert” that no, not everyone should invest in the stock market.
The advice becomes even more questionable after five years of a powerful run up of stock prices. Does she ever tell anyone to lower their exposure to stocks or invest with a service like Bettement that makes the adjustment for you? Does she ever tell anyone it’s time to get out completely? No. But to be fair, she does offer advice on when to sell an individual stock.
The absence of that kind of recommendation makes her stock advice look a little too standard – it’s what all the other self-styled experts are saying, too. And it seems that if you’re providing advice to a large number of people who are struggling with finances in general, urging caution or recommending closing out positions in a record market makes objective sense.
8. No, Everyone Won’t Get Rich in the Stock Market
I can’t pin this entirely on Suze Orman – Dave Ramsey does the same thing, only he cloaks it in mutual funds. But we should always be concerned about the intentions of any self-styled financial advisor who sounds even remotely like a get-rich-quick hustler.
Question to all financial gurus, including Suze Orman: Are you a financial advisor, or a cheerleader for the stock market?
Since there’s plenty of cheerleading coming from Wall Street and the financial media, it seems that a financial expert needs to be the person advising caution. The fact that she doesn’t should make us…suspicious.
While it’s true, statistically speaking, that the stock market has returned an average of something in the range of 8% to 11% per year since 1926 (depending on the source), it can vary widely from one year to another. It is also a fact that there have been entire decades that left investors financially devastated.
People who are in tight financial situations don’t need to be loading up in the stock market, as they have more immediate concerns. And even hinting at the possibility that they may become rich by investing in stocks is more than a little disingenuous.
9. Suze Doesn’t Always Follow Her Own Advice
While championing stocks for all, Suze invests her own money primarily in – drum roll – municipal bonds!
You always have to be careful of any expert who operates under the premise of “do as I say, not as I do”. When you’re a financial guru doling out advice that others are relying on, the hypocrisy is not just glaring.
10. Sometimes She’s Not Just Wrong, But VERY Wrong
Back in 2009, Cheryl Curran at Merriman Blog had this observation about stock recommendations by Suze Orman:
“In the interview, Suze told (Eric) Schurenberg (of Money Magazine) that even though all the evidence indicated index funds outperform 80 percent of managed funds, “Today I think you have to be more active.” She recommended exchange-traded funds specializing in emerging markets, U.S. oil and metals & mining. And what happened to investors who took those recommendations? From the time of her interview in June 2008, these sectors went down 44 percent, 71 percent and 71 percent respectively, through the end of the year…but her previously recommended funds, Vanguard 500 Index and Total Stock Market Index, dropped 28 percent and 29 percent, respectively, in that same time frame.”
Now to be fair, 2008 was a bad year in the stock market. But if we’re going to trust the advice of experts, it’s never more important than when the sky is falling. Had you followed Orman’s advice in the summer of 2008, it would have cost you serious money. That’s more than being a little bit wrong.
Any one of us can be wrong in calling the stock market, but this episode and others are proof that the near-religious faith people place in gurus like Suze Orman is never well advised.
11. 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 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.
When you’re worth millions of dollars, it can be hard to appreciate the role that fear plays in a person’s decisions.
For example, if you have $10,000 to your name, the consequences of investing the money and getting it wrong can be disastrous. But from the ivory tower of a millionaire, investing money aggressively when you have a small pile of it can be seen as the only way to move forward.
Perspective changes everything, and Orman is simply on a different financial plane from her disciples.
12. She’s an Entertainer, First and Foremost
There are people who are very good at what they do, and no one in the general public as any idea who they are. There are other people who are very good at what they do – or maybe not so good – but everyone knows who they are. That’s because they are experts at public presentation.
Some people just know how to work a room. Their adrenaline surges when they are holding a microphone and speaking before a large group. They thrive on attention. They are the people who we will know all about. And for that reason, they will be anointed as experts.
Anyone who reaches the level of Suze Orman gets there primarily because they have value as an entertainer. They’re not just informing; they’re entertaining, and that’s why you know who they are.
The problem with this mix is that you can never be certain when the informing ends, and the entertainment begins. The really good gurus know how to blend the two seamlessly.
13. Because Nobody’s Perfect – Not Even Suze Orman
Most of us desperately want to believe that there are people who are “in the know,” people we can turn to and know with absolute certainty that we’ll get the right answers. It makes us feel good, even if deep down inside, we know it’s not entirely true.
But even given that Suze Orman is smarter than your average financial expert, we can know beyond the shadow of a doubt that she’s not perfect. We can know this because she’s human.
No matter how much we want to believe in anyone, the reality is that doctors lose patients, lawyers lose cases, referees blow calls, and high-priced star athletes drop passes.
Moral of the story: Never assume a piece of advice to be right because it came from the lips of Suze Orman.
14. Because You Need to Think For Yourself – Especially With YOUR Finances
When we were kids, we relied on the adults around us to guide us through life. As we grew up, we began to realize that we have to do for ourselves what we once relied on others for. And so it is – or should be – especially when it comes to finances.
While it’s fine to rely on input from experts, there is no substitute for learning personal finance on your own. Only when you have some grasp of what you need to do, can you even apply the advice and recommendations that you’re given by others.
And that’s important. After all, any losses that you encounter will come out of your financial resources, not the experts’.
That should give you good reason for not listening to Suze Orman – or any other financial guru!