Stop listening to Suze Orman The personal-finance guru favors supersimple mantras -- even when they're wrong -- and psychological explanations for all your money problems. Maybe it's time to stop trusting her. By James Scurlock, The Big Money "'Tell me what I need to know,' people often say to me. 'Here is what you need to know,' I answer." -- Suze Orman, "The Road to Wealth" How a bottle-blond former waitress and self-described "55-year-old virgin" with a taste for the good life became the financial messiah for millions of Americans might be a fun Lifetime original movie. Why the masses continue to invest their faith in Suze Orman after a financial meltdown she never saw coming is a more timely question. The answer is complicated. If you've managed to avoid Orman over the past decade, you don't watch "Oprah," CNBC or the Public Broadcasting Service, and you've probably never entered an airport bookstore, where her toothy visage graces the covers of numerous best-sellers, the latest of which, "Suze Orman's 2009 Action Plan," has more than 1 million copies in print and has, according to her publisher, been downloaded 2.2 million times from the author's Web site. • Talk back: Do you listen to Suze Orman? There, you might also be persuaded to open an Orman-sponsored TD Ameritrade brokerage account or buy one of the products that she also sells on QVC, including the Suze Orman FICO Kit Platinum Version w/Action Planner ($47.70), the Suze Orman Identity Theft Protection Kit w/Anti-Spyware ($39.78), and Suze Orman's Organize and Protect Financial System ($66 plus S&H; Easy Pay! installment plan available). Orman is that most modern breed of capitalist: the human-industry, self-mythologizing. "Suze has a unique grasp of the role money plays in our lives, as well as the gift of timing: She tells us exactly what we need to know, precisely when we need to know it." So, at least, claims the jacket copy of one of her books. She addresses her fans either as "my friends" (learned from John McCain, perhaps?) or as "girlfriend." Although she published a comprehensive -- and very useful -- guide to personal finance in 2001, her first two best-sellers focused on the "emotional roadblocks" to financial freedom. Orman has a lot to say about emotional roadblocks, among other things: "Falling in love is simple -- or so it often seems in retrospect"; "Tears are God's way of forgiving you"; "You will never achieve a sense of power over your life until you have power over your money"; and "The stock market is like a pot of soup." She has less patience for statistics. Although study after study has shown that personal bankruptcies are caused primarily by catastrophic events such as divorce, job loss and, above all, medical bills, and that most of us are struggling with a gap between our income growth and the soaring cost of necessities like housing, Orman tends toward psychological causes that invariably blame the victim. • Read the Smart Spending blog Who is struggling these days, according to Orman? "People who grew up without much money and later earn a comfortable living sometimes spend too much to make up for what they didn't get as children. . . . People who feel entitled to the good life or are unconsciously copying a mother or father who lived beyond her or his means. . . . If you feel the need to impress people with what you have rather than with who you are, you are at high risk for credit card abuse." This from a woman who spends half a million dollars a year chartering private jets and who sells "Cruise With Suze" packages on an Italian luxury liner. (She has also hawked for GM, claiming that leasing a luxury car -- you know, the kind that people drive to impress other people -- is a terrific financial decision: "If you ask me, that's smart money!") No wonder she winks more than Sarah Palin, girlfriend. But it is not Orman's hypocrisy or even her intellectual laziness that really bothers me; no, that would be something Orman "loves" called "dollar-cost averaging," which involves buying the same stock over and over again as it falls. "It's a great opportunity for you when the value of the shares drops," claims Orman in the inaptly named "The Road to Wealth," "because you can buy shares at 'bargain' prices and average down your cost per share." Oh, where to begin? Maybe with the obvious: Since when does throwing good money after bad make you rich? It doesn't. And although one of Orman's mantras is how much she loves stocks -- "(S)tocks, in my opinion, are the best investment vehicle for the growth of your money over time" -- less than 3% of Orman's net worth happens to be invested in them. Instead, she's tucked away the vast majority of those royalties ($32 million-plus, after taxes) into insured, government-backed bonds. As she trilled to The New York Times Magazine a couple of years ago, "I have a million dollars in the stock market, because if I lose a million dollars, I don't personally care." Of course, Orman is no worse than the financial tabloids, which have been pushing no-load mutual funds as the "new" path to financial security for as long as anyone can remember despite mounting evidence to the contrary. I remember hearing a favorite Orman statistic -- that stocks average 11% return a year -- from my mother's financial adviser at Merrill Lynch just before the bottom fell out of her portfolio in 2000. I won't feign surprise that Orman recommends becoming an informed investor by watching cable financial shows such as her own; more disturbing is her ridiculing of people who don't think that financial companies are on their side as "paranoid." These days, if that isn't reason enough to dump her as your financial adviser -- or as your friend -- how about this whopper: The long bull market, sayeth Orman, was a result of the economy's "remarkable state of balance." All this while income inequality, the federal deficit, the imbalance of trade, foreclosures, defaults and personal bankruptcies were skyrocketing. At least we know why she didn't see the meltdown coming. Orman, my friends, has been lying to us, and we know she knows she's been lying because she herself tells us that she ignores her own advice. (Apparently it's more important to brag about how many books you've sold than to hang with your peeps.) Which brings us to the awful truth: What we're supposed to love about Suze Orman is not her knowledge and certainly not her prescience, but her ability to turn circumstances to her advantage, the resilience of a waitress- turned-bank-vice-president who squandered a great gig only to make a fortune off you and me by having the courage to be rich. We are to admire her, just as many of us secretly admire Bernard Madoff (who promised remarkably similar returns to Orman's 11% stock market) and the equally smarmy CEOs of those crooked banks that she tells us to trust for their gumption. Despite her obvious flaws, we admire Orman so much that millions of us will fork over more of our dwindling dollars for her new FICO kit -- co-branded with Fair Isaac, the largest credit-scoring company in the country -- because she now assures us that a high FICO score is the key to our financial futures. True, her previous book promised us that we would never be financial victims again. Not only that, but we would receive the kind of lives we deserved, which sounds suspiciously like one of those insidious credit card offers, but whatever. When was the last time an evangelist predicted anything correctly or the phone psychic told you something that you didn't already know? So what if we cannot retire because Orman has been telling us to buy stocks and trust the fat cats? Orman, my friends, possesses the courage to be rich. The rest of us are suffering from a collective emotional roadblock. This article has been edited since it was originally published.
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