Suze Orman Won’t Stop Bashing Advisors
Personal-finance celebrity Suze Orman concluded the final installment of her long-running TV show on Saturday night by telling her audience, “If you want to find the best financial advisor of all, just look in the mirror.”
Orman has been blasting traditional financial services since the 1990s, when she began publishing self-help books. (One oft-repeated joke is that “a broker makes you broker.”) Don’t expect her to stop — another television program is in the works. And despite practices that many have found questionable, Orman enjoys the support of what CNN reporter Chris Cuomo last year called “the Orman cabal.”
She worked for Merrill Lynch and Prudential Bache, selling mostly insurance, before starting her own firm in 1987; at some point she got her CFP designation. But her real calling is entertainment of the Jerry Springer variety. The Suze Orman Show, which ran for 13 years, was noisy, self-congratulatory and heavily reliant on public shaming of call-in viewers who, say, coveted a $130,000 car even though they’d saved only $65,000 toward retirement.
You can’t fault Orman’s central message — that people should live within their means. And you can’t really fault her in-your-face style. After all, some clients respond well to tough love. But you can fault the many apparent conflicts of interest that have cropped up over the years. While excoriating advisors who accept commissions and even suggesting that only by-the-hour planners can be trusted, Orman has not only worked as a paid spokesman for assorted financial products but created and sold products of her own.
Most disastrous was a prepaid debit card on the market from 2012 to 2014. Like most such cards, it was positively infested with fees. Worse, Orman promised fans that using it would improve their credit scores — or even generate a FICO score for those who lacked one — as a result of a data-sharing agreement with credit-reporting agency TransUnion. As NerdWallet explained when the card was introduced, there’s just no way consumers’ behavior with a prepaid debit card can predict or affect their creditworthiness. Orman pulled the plug on her card last July.
A documentary called The Suze Orman Problem: Scams, Shams and Shenanigans, by a filmmaker who says she helped launch Orman’s career, raises questions about other commercial ventures. For example, although she has spoken before Congress about the student-debt crisis in the U.S., Orman taught a class at the University of Phoenix, the country’s largest for-profit college. According to The Huffington Post, “for-profit colleges have 13% of U.S. college students, but an astonishing 47% of student-loan defaults.”
On her website, Orman sells a “FICO kit” debt-management tool ($50 to $60 a year), an “insurance evaluator” ($30), “must-have documents” ($90 for generic will, trust and power-of-attorney forms) and — my favorite — a water-resistant blue plastic suitcase, with some folders inside, called a “protection portfolio” ($144). In television ads, she has sold General Motors’ car-financing programs and term life insurance. CNBC gets around the ethics problems because her program is licensed, not owned.
For a time, Orman also sold an investment newsletter, The Money Navigator ($63 a year), which was eviscerated by Reuters in 2012 and which she got rid of shortly afterward. Consumers who followed her bullish calls on housing in 2007 and on gold in 2012 lost their shirts. And according to the Shenanigans film, Orman has successfully been sued for fraud and for sharing her customers’ information with creditors.
Why should practicing, professional financial advisors care about all this? Two reasons. One, in our celebrity-besotted culture, even well-heeled clients may be susceptible to the recommendations of a big TV personality. If a client resists your advice because Suze Orman says nobody should ever, under any circumstances, buy whole life insurance, you can gently remind the client Suze Orman makes money by advertising SelectQuote term life policies.
Second, Orman has enlisted some powerful people to her cause. I don’t just mean Oprah Winfrey and Dr. Oz, both of whom promote her products and programs. I mean Senator Elizabeth Warren, Consumer Financial Protection Bureau head Richard Cordray and former FDIC chair Sheila Bair. (The latter group might be what Cuomo was referring to with his “cabal” remark.) Former General Electric CEO Jack Welch — hardly a mouthpiece for the 99% — likes Orman, too.
That’s why advisors should keep an eye on her agenda. It’s one thing to warn consumers against hiring an FA who makes house calls. It’s quite another to have Washington’s ear on the future of the industry.