Rich Dad Poor Dad scam, Robert Kiyosaki scam?

Some love Rich Dad Poor Dad Author Robert Kiyosaki. Some can’t stand him. Why is it about this this guy that provokes such strong reactions?
Set forth below are five things I see as positives and five things I see as negatives.

The first thing I like about Robert Kiyosaki is that he is talking about my favorite personal finance topic--how to win financial freedom early in life.

Robert Kyosaki is hugely successful. The Rich Dad Poor Dad book has remained on the bestseller lists for years. He has sold over 20 million books. He offer all sorts of spin-off products and services--games, seminars, tapes, consulting. The guy is an industry unto himself.

There are some in the Financial Freedom Discussion-Board Community who sneer at his success, suggesting that anyone that successful must be all sizzle and no steak. I don’t buy it. To become that successful, Robert Kiyosaki must have been heard by a lot of people to be saying something worth listening to.

There was an album title once that argued something to the effect that six million Elvis Presley fans couldn’t all be wrong. Robert Kiyosaki is the Elvis Presley of personal finance.

Let’s agree that Robert Kiyosaki is not without his flaws. Still, there just has to be something important and real in his message too. Otherwise, there is no way that it could have hit the spot for so many readers. The biggest thing that sells books is word-of-mouth praise for them. I think it is fair to say that Robert Kiyosaki is winning a lot of positive word-of-mouth reviews. So the Robert Kiyosaki phenomenon needs to be taken seriously.

I think that the thing that Robert Kiyosaki has going for him is much the same thing that the Financial Freedom Discussion-Board Community has going for it. We have seen how people react at our boards when we keep our discussions focused on how to attain early retirement through more effective saving or investing or career change strategies. They go nuts. They love that stuff. I think that Robert Kiyosaki is tapping into the same desire for new approaches to money management issues that has been driving the success of our discussion boards for the past six years.

In short, I think this guy is one of us. He says some things that most of us don’t say, and he fails to say some things that most of us do say. But he is directing his energies to addressing the same basic questions. He is seen by many people who are frustrated with the conventional work and money rules to be offering a more rewarding path to follow. That’s a good thing, and, to the extent he has offered real help to those people, he should be recognized as having done so.

The second thing I like about Robert Kiyosaki is that he rejects outright a lot of the conventional money management advice.

I once read a quote by Robert Kiyosaki that I liked a lot. He said something to the effect that, unless one-third of your readers don’t like you, you are doing something wrong. It sounds funny to put it that way, but there is a good bit of truth in that observation.

There have been two phases to my posting career on our boards. The pre-May 13, 2002, version of “hocus” (that’s the screen-name I use when posting to our boards) was one of the most loved posters in the history of the Motley Fool boards. The post-May 13, 2002, version of hocus is one of the most controversial. It’s the same guy writing the posts, of course. The difference is that on May 13, 2002, I reported accurately what the historical stock-return data says about safe withdrawal rates. I was the first poster in our community to do that, and there are a good number in our community who were happier not knowing what the data really says. So I stirred things up more than a little bit with that post. I think it is fair to say that I got people’s juices flowing with that one.


I think that was a healthy development, both for the community as a whole and for me as a poster. The community needed a little shaking up at the time; our conversations had grown stale. And I needed to stretch myself a bit. Things had reached a point where people were giving recommendations to my posts without even thinking about them, perhaps without even reading them. Since the May 13, 2002, post, it’s been different. I get as many boinks on the head now as I used to get pats on the back. But people are reading my stuff with care again and people are arguing about on-topic stuff again, and we are growing as a community again. So I think we had to go down that road.
Robert Kiyosaki shakes things up. He rejects the conventional advice to get a good education and to get a safe job and to stay out of debt and to invest for the long-term. I don’t think he is always right in the criticisms of the conventional advice that he puts forward. But I think he serves a good purpose in questioning ideas that too many have too readily come to put their faith in. The ideas that are rooted in something real will withstand his attacks. Those that are not deserve to fall, and Robert Kiyosaki will be doing a good thing if the push he gives to them causes them to do so a little sooner.

The third thing I like about Robert Kiyosaki is that he is entrepreneurial.

One of the things that bugs people about Robert Kiyosaki is that he makes so gosh-darned much money offering personal finance advice. It’s hard for me to relate too much to this one. If the guy offers products and services of value, he should get compensated for it. If there is no value in what he offers, I don’t see how he has managed to get so many to buy. It’s not easy persuading people to part with their money. I have a hard time finding too much fault with those who manage to pull it off, so long as they are not doing anything outright fraudulent.

One entrepreneurial thing Robert Kiyosaki does is to sell a game that teaches people his approach to money management, and to advertise the game in his books. Good for him. It’s hard to make money selling books because people have little time to read today and most are not accustomed to paying too much for the few books they do buy. Robert Kiyosaki is essentially using his books as advertisements to sell higher-margin products and services.

There are lots of people who would turn up their noses at paying $20 for a book who would gladly part with $100 for a game teaching much the same lessons. If people would rather obtain their money management insights through games than through books, why shouldn’t Robert Kiyosaki package the information in the form in which those people would like to obtain it? He’s meeting a strongly felt need for money management insights packaged in non-book form. How can that be viewed as a bad thing?

The fourth thing I like about Robert Kiyosaki is that he gets people talking.

Let’s say that Robert Kiyosaki doesn’t have all the answers. I personally do not believe that he does. He at least seems to possess a talent for asking some provocative questions, does he not? He gets people talking.

A writer is not always required to provide the answers to the questions he raises, in my view. Sometimes a writer does a good thing just by getting a conversation started. The old money management rules do not work. People don’t save effectively. People don’t invest effectively. Something needs to change. Kiyosaki is not providing all the answers, but the conversations he is sparking are getting others to come up with new ideas. I see that as a positive.

I think that we are in a transition stage in our thinking about how to manage our money effectively. The old rules used to make sense. It used to be that, if you got a good job, you just needed to hold onto it and all would be well. I don’t think that is so anymore. I think that is why there is such a thirst for Robert Kiyosaki’s insights. I think that a good number of the conversations that he is getting started are someday going to lead to someplace good.
The fifth thing I like about Robert Kiyosaki is that he hits on an important point in the distinction he draws between possessions that constitute assets and possessions that constitute liabilities.

Robert Kiyosaki makes a big point in his Rich Dad Poor Dad book of the importance of distinguishing assets from liabilities. He doesn’t explore the question with enough clarity or depth, in my view. But he is on the right track in making the point that the distinction is one of significance. It is a point that I hope we will be addressing with more clarity and depth in the discussions that we hold at our boards in days and weeks and months and years to come.

The first thing I don’t like about Robert Kiyosaki is that he is a tease.

i have read several of Robert Kiyosaki’s books and have been tempted to buy more of them. But he has a tendency to promise and promise and promise to address something and not get around to doing it for many paragraphs and pages and chapters and even books. That is frustrating and annoying.

There are useful things to be learned from reading the books, in my view. But it should not take so much time and effort to learn them. The tease factor in Rich Dad Poor Dad is way too high, in my estimation. And it is also too high in those of his others books that I have either read or skimmed.

This tease factor is a stone cold drag, in my view. My advice to Robert Kiyosaki is to just say it.

The second thing I don’t like about Robert Kiyosaki is that he does not make it clear to what extent Rich Dad Poor Dad contains elements of fiction.

Is rich dad a real person? Is poor dad a real person? Are they totally real or partly real and partly fictional?

The answers are not entirely clear in my mind. They should be. I see nothing wrong with the idea of using fiction to convey money management insights. But it is important that fiction be labeled fiction clearly enough so that everyone reading it knows that that is what it is.




The links at the bottom of this page indicate that a good number of people have doubts in their minds as to the extent to which the Rich Dad Poor Dad book contains fictional passages. That troubles me.
The third thing I don’t like about Robert Kiyosaki is that he underplays the risks inherent in many financial freedom strategies.

I’m all for raising doubts in people's minds about the value of the conventional advice on how to save and of the conventional advice on how to invest and of the conventional advice on how to advance in one’s career. And I understand that it sometimes takes strong language to break the inertia that causes people to stick with established ways of doing things.

That said, there is a danger in going too far, in suggesting that the road less traveled is an easy road. The road less traveled is often not an easy road. Many people who do things differently enjoy big rewards for doing so, but many other people who do things differently endure big hardships for doing so.

I think that Robert Kiyosaki sometimes underplays the risks inherent in his money management strategies. I think that is a disservice to his readers. People need to know the downside of a money management approach they are considering before they can make an informed decision as to whether to go with it or not.

Robert Kiyosaki’s job is not just to persuade. It is to inform too. I think there are times in the Rich Dad Poor Dad book when the persuasion effort takes center stage and the informing project obtains less attention than it merits.

The fourth thing I don’t like about Robert Kiyosaki is that he charges too much for his game and sometimes promotes his products too heavily in his books.

It’s one thing to be entrepreneurial. It’s something else to take advantage of people’s enthusiasm for the idea of learning how to win financial freedom early in life. It’s not always clear where to draw the line. But I think it is fair to say that Robert Kiyosaki offers a lot of products and services, cross-promotes them a lot, and perhaps charges more for some of them than it is neccesary for him to charge. If he doesn’t cross the line, he sometimes travels closer to the line that I think it is necessary to go.

The books are generally not too expensive. But the game I mentioned above is offered at a surprisingly high price. I can see why he needs to earn a nice markup on the game to permit him to create the books and still have the overall business generating a nice profit. But does the game really need to cost as much as it does? I have my doubts.

It sometimes seems that the world is divided into two classes of people: (1) those who possess no entrepreneurial skills whatsoever and who therefore are not able to create successful business enterprises; and (2) those who are unable to see the need for reasonable limits on their monetization strategies. I am glad that Robert Kiyosaki is successful because, if he were not, lots of people who have learned things from him would have never been exposed to his ideas. That said, it is my sense that he could turn down the volume on the money machine a few notches and thereby interest an even larger group of middle-class workers in his ideas.




The fifth thing I don’t like about Robert Kiyosaki is that he is too dismissive of the safety-first approach followed by Poor Dad.

Risk-taking is not always good. Playing it safe is not always bad.

I think there are many middle-class workers who think they are playing it safe but who are really taking on more risk than they realize because the rules of the money-management game have changed in ways that make strategies that appear on the surface to be safe to in reality come with a good bit of long-term risk attached to them. Robert Kiyosaki is doing a good thing by shaking up the thinking of a lot of people on these sorts of questions.

He is wrong, though, to be as dismissive as he sometimes is of the play-it-safe-and-conventional approach. There are reasons why many follow that path. In some cases, people question whether their skill sets are such that they can be effective risk-takers. In some cases, people are concerned about the effect that their decisions to embrace risk might have on their families. In some cases, people are too busy to do the research needed to take on risks in an informed way, and so an idea that they are open to gets put on the back-burner for a long stretch of time.

Making the case for risk-taking is a good thing. Selling it too hard can be a mistake. That’s the Practical Dreamer’s way of looking at things, in my view.

To learn more about Robert Kiyosaki's financial freedom ideas, please check out his web site.

John T. Reed is a critic of Robert Kiyosaki.

Participants in an Early Retirement Forum discussion of the Robert Kiyosaki phenomenon point to both pros and cons.

John Bogle's Big Mistake

From: passionsaving