Three years ago I wrote a column critical of some investing advice offered by Dave Ramsey, the radio show host who specializes in helping people follow budgets and pay off debt. I have a great deal of respect for Ramsey and recommend his books, but on this particular issue I believed he was wrong, and I said so.
You'd have thought I suggested Mother Teresa wore combat boots. I received comments attacking my intelligence, my judgment, my investment knowledge, and my ethics. (To be fair, I also received some comments agreeing with me.)
The video of that column has over 44,000 views on YouTube and is still attracting new comments. One person pointed out indignantly that Dave had recommended LONG TERM GROWTH (shouted in all caps for emphasis) funds, while I was falsely claiming bond funds were superior. Excuse me? The column was actually about real estate investment trusts (REITS) and never mentioned bond funds.
And, just for the record, REITS long term returns are still beating those of “good growth stock mutual funds.” A recent study done by Francis and Ibbotson comparing the 30-year returns on stocks and REITs (from 1978 to 2008) found that stocks had an average annual return of 10.84% while REITs averaged 11.94%.
Another poster wrote, "Are you just mad that he's making it big and no one even knows who you are? . . . So, sorry homie. Looks like he beat you again." Hmm. I hadn't realized Ramsey and I were in competition.
The intensity and personal attacks in some of the responses to this piece puzzled me at first. Then I started thinking about some of the money scripts that might be behind them:
"Someone who is famous certainly knows how to manage money."
"A person who is famous must be wise and rich."
"I will only take financial advice from people I perceive as wealthy and successful."
"Someone whose advice has helped me can't be wrong about anything."
"Someone who is well-known in one financial area must know everything about money."
Apparently, many of those who posted strong negative comments were unable or unwilling to accept a simple financial fact because of their money scripts around their allegiance to a well-known personality. In other words, "My guru is my guru, and don't confuse me with the facts."
It's certainly important to find a financial advisor you respect and can trust to act in your best interests, and then to follow that person's advice. You're on shaky ground, however, if you follow anyone's advice completely and blindly without using your own common sense or taking any responsibility for your own affairs.
No advisor is an "expert" in every single financial area. As a fee-only financial planner, for example, one aspect of my work is tax planning. Yet I am not an accountant or a tax expert. If clients need detailed tax advice, I refer them to a CPA who has the necessary expertise. My job is to know enough to know when to make that referral.
As a second example, you almost certainly wouldn't expect your family doctor to perform heart surgery. That wouldn't imply a lack of trust; it would simply acknowledge that her expertise was in family practice rather than cardiology.
It's a great idea to consult and learn from financial experts. It's also a great idea not to assume any of those experts have the "one right answer" to every financial question. A "guru," after all, is a teacher, not an idol. Following any expert blindly can lead you toward financial disaster rather than financial enlightenment.
Rick Kahler, Certified Financial Planner(r), MS, ChFC, CCIM, founded Kahler Financial Group, and became South Dakota’s first fee-only financial planner in 1983. In 2009, Wealth Manager named Kahler Financial Group as the largest financial planning firm in a seven-state area. A pioneer in the evolution of integrating financial psychology with traditional financial planning profession, Rick is co-founder and co-facilitator of the five-day intensive Healing Money Issues Workshop offered by Onsite Workshops of Nashville, Tennessee. He is one of only a handful of planners nationwide who partner with professional coaches and financial therapists to deliver financial coaching and therapy to his clients. Visit KahlerFinancial.com today!