Looking at a picture of yourself when you're 95 years old is unlikely to get people to afford to save 15 percent for retirement. Then there's the fact that there are people like me out there, who used the tool and took a picture of themselves and then saw a frowning old woman. I basically slammed the computer off and ran out of the room.
Do people like Orman and Ramsey have good intentions, or are they looking to steer people toward purchasing their products, like the Suze Orman prepaid card and Dave Ramsey's Personal Finance Software?
I don't think people are deliberately giving bad advice, but I think we have an ability to rationalize the advice that we're giving. We're humans. People think they're doing well, and unfortunately, that's just not always the case.
Dave Ramsey, for example, is telling people they can still get a 12 percent annual profit in the stock market. That's arguably not very good advice; 12 percent in the stock market? Since when? That hasn't been true in years, or really ever.
[Read: Some Zen Investing Advice.]
The other issue I would say is experts are giving very general advice, and it's really hard to give general advice. Most people's financial situations are specific, not general.
Why do you say in the book that some local certified financial planners and financial advisers lie to their clients, or at least twist the truth?
Because it's often in their financial interest to not give their clients the exact advice they need. [Researchers at Harvard University, the University of Hamburg, and the Massachusetts Institute of Technology] did a study about a year ago. They sent a bunch of actors into banks and brokerage houses with fake portfolios, designed to see what sort of advice they would get. They found over and over again that people were told to change their portfolios, even when it was completely unnecessary; that they were moved into high-fee funds when they could have been put in low-cost index funds. The only conclusion you can really draw is that these financial-services providers had convinced themselves that what was in their financial best interest was in their client's financial best interest.
[Read: 50 Smart Money Moves.]
You write that people believe the mantra "If you live a good, healthy financial life, success will be yours," meaning bad things don't happen to good savers and smart investors. Do you think the book will be jarring for your readers if they're holding onto that idea?
[I think] people know objectively in their own life that that's not true. But because we live in a culture where there's such shame about money, people don't realize that it's not true for a lot of people, not just them.
Just how dark is the dark side of the personal finance industry?
There's a real dark side of the industry out there, and people fall prey to it every day. I truly feel telling a person that personal finance can save them is disingenuous at best—and a lie at worst.