Dave Ramsey's ELP suggests Loaded Funds

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Is it okay for Dave Ramsey ELPs to recommend loaded funds

Yes
23
14%
Yes
23
14%
No
121
72%
 
Total votes : 167

Dave Ramsey's ELP suggests Loaded Funds

Postby joeples » Thu Feb 04, 2010 5:30 pm

First of all. I love Dave Ramsey, his show, and his advice on getting out of debt.

However, I contacted his Endorsed Local Provider (ELP) and they exclusively recommended loaded funds (saying they very rarely provide hourly based services). I complained to the Dave Ramsey people and below is the conversation. How can we convince Dave (in a loving way) that he is giving out bad investing advice and cowering to commission based investment firms?

From: ______
Sent: Thursday, February 04, 2010 10:26 AM
To: Dave Ramsey ELP department
Subject: ELP Concerns From Survey

Ms. _______,

I don’t believe you should allow any investing ELPs to sell “loaded” mutual funds. All ELPs should offer their education on an hourly based fee, rather than sell high-commission products. I hope Dave would agree.

Sincerely,
____________

RESPONSE:

From: Dave Ramsey ELP department
Sent: Thursday, February 04, 2010 1:11 PM
To: __________________
Subject: RE: ELP Concerns From Survey

Hi _________________,

Thanks for your email. Dave does not dwell on whether a fund has a load or no load as much as he pays attention to how well the fund has done over long periods of time. There are lots of good mutual funds and Dave says to put your money in them and just leave it alone.

But when deciding whether or not to use loaded or no-loaded funds, keep in mind one of the main weaknesses of a no load mutual fund is that you usually have the ability to make major changes (transferring funds, withdrawals, etc.) without having to talk to your financial planner first. The result is that many investors jump out of good funds during bad times. This turns into buying high and selling low, a bad plan. A good financial planner will slow you down, remind you of your long term goals, and give you the confidence to weather bad markets.

Also, when investing money five years out and further, you actually save money in the long run when you pay the upfront commissions versus the percentage year after year for the life of the account. Here’s a link to our website were Dave talks about the benefits of loaded funds:

See Dave Ramsey's Webpage: Ask Dave - Are loaded funds ok?

I hope that helps! Have a great day!

Ms, _______________
ELP Assistant
The Dave Ramsey Show
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Postby Taylor Larimore » Thu Feb 04, 2010 5:42 pm

Hi Joe:

How can we convince Dave (in a loving way) that he is giving out bad investing advice and cowering to commission based investment firms?


It is virtually impossible to convince someone of doing things differently if their income depends on the status quo.
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Postby mickeyd » Thu Feb 04, 2010 5:47 pm

I responded by saying "yes". Dave can recommend anything that he wants. Fans do not have to follow him down this path though.

The way that I see it that all of Dave's ELPs are "investment advisers" of some sort and they make their money selling funds that generate income for them and their family. Dave may like index funds in theory (as many investment pros do), but there is generally not a lot of income in the form of commissions or fees that they can spin off for themselves.

Let the buyer beware.
Last edited by mickeyd on Thu Feb 04, 2010 5:52 pm, edited 1 time in total.
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Postby Tall Grass » Thu Feb 04, 2010 5:48 pm

It's OK for Dave to recommend them, but it's foolish to follow his advice on that particular issue...
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Postby dbonnett » Thu Feb 04, 2010 5:49 pm

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Re: Dave Ramsey's ELP suggests Loaded Funds

Postby SpecialK22 » Thu Feb 04, 2010 5:51 pm

But when deciding whether or not to use loaded or no-loaded funds, keep in mind one of the main weaknesses of a no load mutual fund is that you usually have the ability to make major changes (transferring funds, withdrawals, etc.) without having to talk to your financial planner first. The result is that many investors jump out of good funds during bad times. This turns into buying high and selling low, a bad plan.


Wow, I never saw it this way. I never realized how the financial industry was looking out for my best interests by preventing me from buying high and selling low through the use of a load fee. :roll:
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Re: Dave Ramsey's ELP suggests Loaded Funds

Postby mickeyd » Thu Feb 04, 2010 5:56 pm

SpecialK22 wrote:
But when deciding whether or not to use loaded or no-loaded funds, keep in mind one of the main weaknesses of a no load mutual fund is that you usually have the ability to make major changes (transferring funds, withdrawals, etc.) without having to talk to your financial planner first. The result is that many investors jump out of good funds during bad times. This turns into buying high and selling low, a bad plan.


Wow, I never saw it this way. I never realized how the financial industry was looking out for my best interests by preventing me from buying high and selling low through the use of a load fee. :roll:


I have seen it on a number of occasions. If you don't know any better, it may make sense in a strange way. They are trying to confuse the investor and a confused investor tends to reach out for help...
Last edited by mickeyd on Thu Feb 04, 2010 6:49 pm, edited 1 time in total.
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Postby smallcapvalue » Thu Feb 04, 2010 5:57 pm

Of course it's fine. How else does the advisor make money unless they are fee only? On this forum we don't need an advisor, since many of us have done the research. Others haven't and don't want to.
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Postby joeples » Thu Feb 04, 2010 6:01 pm

smallcapvalue wrote:.... How else does the advisor make money unless they are fee only? .....


How about charging an honest hourly rate for financial planning advice rather than continually picking the pocket of the investor?
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Postby 3CT_Paddler » Thu Feb 04, 2010 6:16 pm

I hear you joeples. I think he has a lot of good common sense advice for people who are trying to get out of debt, and is a great motivator. But his advice on investing is sorely lacking some Boglehead wisdom. Maybe one day he will see the light. Like Dave says on his show from time to time (and I know this is not original to him)...
"Those convinced against their will, are of the same opinion still!"
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Postby Tall Grass » Thu Feb 04, 2010 6:17 pm

joeples wrote:
smallcapvalue wrote:.... How else does the advisor make money unless they are fee only? .....


How about charging an honest hourly rate for financial planning advice rather than continually picking the pocket of the investor?


Or get excellent free advice right here!
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Postby benali72 » Thu Feb 04, 2010 6:34 pm

Not familiar with Dave Ramsey -- and have learned from this thread I don't need to be.
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Postby joeples » Thu Feb 04, 2010 6:35 pm

Tall Grass wrote:Or get excellent free advice right here!


Amen to that... I've still got Ibonds from 2001 that Melindauer and Taylor recommended (paying wonderful returns), and I've stayed the course now for over 10 years...

Thanks Mel (if you're still here) and Taylor.
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Postby NYCPete » Thu Feb 04, 2010 6:43 pm

I used to listen to Dave Ramsey a lot and he is a major reason why I am debt free and saving 20%+ of my annual income. I distinctly remember him saying on the air that he had an S&P 500 Index fund in his taxable account because "it is low turnover so it reduces taxes." Since Dave Ramsey most likely has a LOT of money (more than he could ever tax shelter), I would venture to guess that a substantial amount of his money is in index funds. He is not dumb and would not pay extra fees or loads if he didn't have to do so.

Obviously, he is never going to say this because the ELPs pay him to be listed as ELPs. It's a sweet deal for them. They pay DR to send people their way, and he in turn doesn't talk up no-load investing or index funds. If I couldn't personally vouch for the other 99% of his advice (which I can, since it changed me into a saver), I would say he is the smartest scammer in the world.

Instead, I simply think when it comes to investing, he is an unethical opportunist. And since he holds index funds, he's also a hypocrite.

Best,
Peter

P.S. Thankfully, the DR Forum on his website has a noticeable amount of posters who totally trash DR's investing advice and plug DIY investing with index funds. I once even saw a link to the Bogleheads Forum! :)
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Postby mikep » Thu Feb 04, 2010 7:30 pm

His advice "You can earn 12% a year in any good growth stock mutual fund" is very careless.

His advice "I do not own any bonds and do not suggest them as part of your investment plan. " is even more careless.

His advice "I do not own any REITs and do not suggest them as part of your investment plan. " But Dave invests in "paid for real estate" right? Why is that better when its so undiversified?

http://www.daveramsey.com/articles/arti ... investing/

Why does Dave hate value stocks, REITs and bonds so much??

He is good for the people that need advice to get out of debt, but when they get Baby step 4 they should run from his advice.
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Postby alec » Thu Feb 04, 2010 8:59 pm

He was a real estate broker. Nuff said.
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Postby stratton » Thu Feb 04, 2010 9:32 pm

What's worse than load funds is the financial advistor spreading someone with say $1 million across several load fund companies so the investor doesn't get the break point discount. $1 million at most (all?) load fund companies will get the load fee waived.

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Postby Random Musings » Thu Feb 04, 2010 11:33 pm

I answered yes. It is legal. On the other hand, I hope people don't use them. The rationale that loads will dissuade investors to hold is a weak argument. Gamblers will take the loss in hopes for a better outcome the next time.

Is he still saying that 12% crap?

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Postby mlebuf » Fri Feb 05, 2010 12:15 am

The first law of expert advice is to never ask the barber if you need a haircut. If Dave Ramsey's ELPs sell load funds, chances are that Dave is being compensated one way or another.

Much of Dave's advice is excellent, given that most of the people who call his show are in a world of financial hurt. But any Boglehead knows there are less costly options to investing than the one's his ELP's offer.
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Postby joeples » Fri Feb 05, 2010 1:50 am

I am surprised that noone has commented on the third paragraph implying that its cheaper to buy funds with an up front load as long as they are held long term. Sounds like selling snake oil to me. I would like to see the math comparing this scenario to any equivelent vanguard fund.
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Re: Dave Ramsey's ELP suggests Loaded Funds

Postby Regal 56 » Fri Feb 05, 2010 8:56 am

See Dave Ramsey's Webpage: Ask Dave - Are loaded funds ok?


From the Dave Ramsey website:
    QUESTION: [...] asks how she should invest in mutual funds. Are loaded funds ok?

    ANSWER: Only look into mutual funds with a track record of at least five years, preferably 10 years, and research the mutual fund families carefully.

    A loaded fund simply means it pays a commission to a mutual fund broker. There are two types of expenses that come out of your mutual fund investments: the commission and the annual maintenance fee. A loaded fund is okay. You should not exclusively buy loaded funds, but you don’t have to avoid them either.

    There are actually several advantages to loaded funds. For example, lower annual maintenance fees are common with loaded funds, which means you can actually save money by getting a loaded fund over a mutual fund that’s not loaded.

    Here are a few tips for the best way to pick a mutual fund:

    1. Look at the average annual return since the fund started.
    2. Look at the expenses of the fund. To find this look at the expense ratio, which includes the mutual fund's management fees, advertising fees, administrative costs, and other daily operating costs. Just make sure you’re looking at it over a five to 10 year period because that’s how long you should have the mutual fund.
    3. Make sure the mutual fund company has a team of experts who are knowledgeable in picking the stock and portfolio mix. That will make the track record of the mutual fund families all the more valid.
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Postby rustymutt » Fri Feb 05, 2010 9:20 am

Ramsey is a great voice against debt. But he's tried to take on the roll of financial advisor on air. He was a real estate broker/investor who went into serious debt. I've asked him a question on his on line site in the past and didn't agree with his response. Had to do with why he advised growth funds only. The answer I got was not what I had expected from a good advisor. He's not an expert on financial advice was my conclusion.
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Postby nisiprius » Fri Feb 05, 2010 9:44 am

Load funds are a myth that should have been thoroughly exploded decades ago. They should have gone out with $100 stock-trade commissions. The persistence of load funds tells us volumes about the way investments are marketed and purchased, the degree to which ordinary investors get their "advice" from highly-self-interested sources, and the artfulness of salespeople.

No-load funds started to emerge in the mid -1960s or early 1970s--a quick Googling shows Kiplinger's discussing them in 1960s and mention "load or no-load" as a matter-of-fact choice in 1965. The question of whether you get what you pay for--whether load funds offer superior performance--has been thoroughly investigated over the decades and I don't believe there's ever been a scrap of evidence that it is anything but absolutely pure dead weight, sheer gravy for the seller.

The wonders of the stock market are that it has random fluctuations that are so large that any particular fund can easily overcome a load or a high expense ratio for an impressive period of time, just by pure luck, and the hucksters of load funds always can point to past performance.

The only good thing to be said about load funds is that a load is once but an expense ratio is forever. You can do the precise math, but if you hold a fund for ten years, to a rough approximation a 5% load is no worse than 0.5% added to the ER, so a load fund with low ERs might not be such a terrible thing.
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Postby kuttolas » Fri Feb 05, 2010 10:18 am

I like Dave Ramsey too, His radio show did provide some encouragement and validation that I was doing the right thing, when I was throwing substantial amount of money into my non-mortgage debts.

I did contact one of his ELP's in my area for investment advice after paying off all non-mortgage debts. The ELP tried to get me to Invest in American Funds at 5.75% load. At the same time he was also honest enough to tell me that if I could invest with Index funds with no-load. He was also upfront about how he get's paid, he said he would be paid by American Funds.

I then contacted another financial advisor from Dave Ramsey's site, he was not an ELP, just a financial advisor who helped people do budgets and make plans to get out of debt. When I met him, he listened to me for few minutes, then pulled out few sheets of paper, which was a listing of all Vanguard funds. He gave me some pointers on how to create a portfolio using Vanguard funds, suggested allocation percentage between stocks and bonds. I paid him $100 for his advice.

Then as I researched into Index funds, I ended up at BOGLEHEADS. I never went back to the ELP and ended up investing only in Index Funds.
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Postby haban01 » Fri Feb 05, 2010 10:29 am

What a joke!!!!!!! This reminds my of an Amerprise Advisor that said "Why do you want to be average??? LOL!

Seriously, How much is DV and his group getting back in fees!! It all boils down to money and who is getting it and the investor gets stuck holding the bag!!

Geez..
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Postby bradshaw1965 » Fri Feb 05, 2010 10:35 am

mikep wrote:His advice "You can earn 12% a year in any good growth stock mutual fund" is very careless.

His advice "I do not own any bonds and do not suggest them as part of your investment plan. " is even more careless.

His advice "I do not own any REITs and do not suggest them as part of your investment plan. " But Dave invests in "paid for real estate" right? Why is that better when its so undiversified?

http://www.daveramsey.com/articles/arti ... investing/

Why does Dave hate value stocks, REITs and bonds so much??

He is good for the people that need advice to get out of debt, but when they get Baby step 4 they should run from his advice.


His advice that you can withdraw 8% a year in retirement from your 12% earning good growth mutual funds adjusting for inflation is downright dangerous.
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How Dave Ramsey ELPs are compensated

Postby NYCPete » Fri Feb 05, 2010 11:00 am

mlebuf wrote:The first law of expert advice is to never ask the barber if you need a haircut. If Dave Ramsey's ELPs sell load funds, chances are that Dave is being compensated one way or another.


Yep.

DaveRamsey.com wrote:Do ELPs pay a fee?

Yes. For ELPs, the program is a form of local advertising. It’s a way for them to attract clients who love The Dave Ramsey Show just like they do. We use the fees to fund the large staff and technology required to operate the ELP program.


Source:
http://www.daveramsey.com/elp/faq/#a4

I guess one could at least give him a little credit for disclosing it on his website...

Best,
Peter
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Postby burnsh » Fri Feb 05, 2010 11:07 am

I was a huge fan of Dave Ramsey but I have lost a lot of respect for him. His invetment advise and investment ELP's are not the only bad recommendations you will get from him.

I have used in the past his Tax Services ELP, and will never do so again. His advice was lacking, at times I thought I knew more than this CPA, and he probably ended costing several thousand dollars worth of bad tax advice or no advice at all. I should have known better since when you request an ELP, they tell you what Baby Step they are in, and this guy was only in Baby Step two ($1K in savings and currently paying debt snowball) and the reason I was lookning for expert advice is because I was in Baby Step 6!.

I also called his recommended Gold Stash for Cash after his recommendation
"Take it from me, these guys are honest, fair, and will treat you with the respect you deserve. Gold Stash for Cash will help you get the cash you need to start paying off that debt."

The first red flag, was when they would not give me an estimated quote over the phone. After proding a little more they gave me an idea based on recent transactions. When I calculated the price they paid for gold based on the recent Spot Price for gold, they were only paying about 40% of the Spot Price. Exactly how that is fair, honest,and respectable, I am still trying to figure it out.

I still like his show, and agree with most people that his get out of debt message is great, but unless you are absolutely clueless about money and had no desire whatsoever to learn, I would stay away from his recommendations. I think it is shameful to use religion and his almost cult like environment to gain from you financially. You do have to admit he is a marketing genious, just think of the hundreds of thousands of church going unpaid volunteers teaching his Financial Peace University on his behalf, conviced about his "ministry".[/quote]
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Re: Dave Ramsey's ELP suggests Loaded Funds

Postby modal » Fri Feb 05, 2010 11:28 am

joeples wrote:...keep in mind one of the main weaknesses of a no load mutual fund is that you usually have the ability to make major changes (transferring funds, withdrawals, etc.) without having to talk to your financial planner first.


:lol:
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Postby freebeer » Fri Feb 05, 2010 11:32 am

Come on folks, Ramsey's in the media business... it's no different than Outside magazine's gear review articles being influenced by their advertisers, or travel writers doing puff pieces on venues that have put them up on "press trips". There may have once been more of a "Chinese Wall" between editorial and advert but that's long gone my friends.

The best manage to convey their true opinions to discerning readers/listeners in nuanced ways, which it sounds like Ramsey does. In other words, him saying he owns index funds is not hypocritical, it's a hint.
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Postby NYCPete » Fri Feb 05, 2010 11:53 am

freebeer wrote:The best manage to convey their true opinions to discerning readers/listeners in nuanced ways, which it sounds like Ramsey does. In other words, him saying he owns index funds is not hypocritical, it's a hint.


I'm sorry, but I have to disagree.

I listened to him every day for almost two years and heard him address index funds a grand total of once, when he admitted to holding an S&P 500 fund in a discussion about reducing taxes on taxable investments. What was even more sad in that particular conversation was the caller was retired and inquiring about whether municipal bonds would be a good choice. Dave proceeded to absolutely slam bonds and said he held the Vanguard S&P 500 fund, but qualified his remark by saying that index funds, while being tax efficient, are only ever going to give you average returns and that one can easily find mutual funds "that beat the pants off the S&P" by looking for "a good, growth stock mutual fund with a looong track record of at least 5-10 years etc. etc. 12% yada yada yada ELPs yada yada..." I've heard him say that crap about "good growth stock mutual funds" so many times I could almost recite it in my sleep.

No, he is not 'hinting' at anything involving index funds, and he never takes calls involving questions on them. He's not nuanced in his advice either. No one has, or ever will, describe him that way. He's very direct, which is why the other 99% of his advice involving staying out of debt and budgeting is so rock solid.

Best,
Peter
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Postby natureexplorer » Fri Feb 05, 2010 12:00 pm

Funny how people seem to have higher moral expectations of Dave Ramsey than of other investment advisors.
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Postby Chuck » Fri Feb 05, 2010 12:24 pm

natureexplorer wrote:Funny how people seem to have higher moral expectations of Dave Ramsey than of other investment advisors.

Because he influences a lot of people, mostly people who are already in debt or poor because of their bad choices.
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Postby freebeer » Fri Feb 05, 2010 12:34 pm

NYCPete wrote:
freebeer wrote:The best manage to convey their true opinions to discerning readers/listeners in nuanced ways, which it sounds like Ramsey does. In other words, him saying he owns index funds is not hypocritical, it's a hint.


I'm sorry, but I have to disagree.

I listened to him every day for almost two years and heard him address index funds a grand total of once...


OK fine, I've never listened to him and was just extrapolating from prior comments on the thread.

It would be kind of fun to hear what he had to say if a caller asked him about survivor bias and what data there was to say that a fund that had achieved strong results in the past would continue to out-perform in the future.
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Postby jmourik » Fri Feb 05, 2010 12:35 pm

natureexplorer wrote:Funny how people seem to have higher moral expectations of Dave Ramsey than of other investment advisors.

Don't know, his advice to get out of debt and all that is a very good message. If you really appreciate someone for that, it may be more difficult to see that his investment advice might not be up to par with his "get-out-of-debt" advice.

Anyway, do people like Rick Ferri and Scott Burns promote load-funds? They need to make money too, just like Dave Ramsey...
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Postby fishndoc » Fri Feb 05, 2010 12:36 pm

OK, I have to defend Dave, even though I cringe every time I hear his investment advise:

If you listen to the folks calling in to his show, you realize that poor investment decisions/returns are so far down on their list of bad financial decisions, that it s probably something most of then never get to.
Also,I doubt the ELPs ever make enough off Ramsey referred clients to recoup their advertising cash.

But when deciding whether or not to use loaded or no-loaded funds, keep in mind one of the main weaknesses of a no load mutual fund is that you usually have the ability to make major changes (transferring funds, withdrawals, etc.) without having to talk to your financial planner first. The result is that many investors jump out of good funds during bad times. This turns into buying high and selling low, a bad plan.

Now that I think about it, for Ramsey clients, this may well hold some truth.

Remember guys, people who need Dave Ramsey's advise are not Bogleheads - more like the anti-Boglehead!
Buying and holding a loaded mutual fund might be the best financial decision of their lives!
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Postby natureexplorer » Fri Feb 05, 2010 1:13 pm

jmourik wrote:
natureexplorer wrote:Funny how people seem to have higher moral expectations of Dave Ramsey than of other investment advisors.

Don't know, his advice to get out of debt and all that is a very good message. If you really appreciate someone for that, it may be more difficult to see that his investment advice might not be up to par with his "get-out-of-debt" advice.

Anyway, do people like Rick Ferri and Scott Burns promote load-funds? They need to make money too, just like Dave Ramsey...
Correct, they don't recommend load funds. Dave Ramsey exploits the trust people have in organizations associated with "the church" and people who have given good advice on one thing.
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Postby conundrum » Fri Feb 05, 2010 1:17 pm

Agree with fishndoc

He has some decent advice about getting out of debt and living below your means. This is the primary order of business for the majority of his callers. His investment advice is not great.

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Postby FordBoy33 » Fri Feb 05, 2010 1:53 pm

I've led Dave's course (FPU) at church for a few years. I've definitely seen the benefit in the lives of the families that take the class and implement it. Lives are changed, marriages are strengthened, etc.

Dave's advice is for the masses, and it works for them...much better than most of the advice they'd otherwise get from their broke friends and family or from the local bank's advisor. Simple, common-sense steps that can followed with minimal effort, yielding a reasonable level of success. Always keep that in mind. People on this forum are in the slim majority that actually pay attention to their personal finances.

I would rather see someone follow Dave's investing advice then not invest or invest solely in high cost 401k plans, CDs and cash value life insurance. Just think of all of the bad options out there, and then weigh against those an investment in a growth stock fund with a good ten year track record and a 5.75% load. Not so bad, right? As good as what most people on this forum are doing? No, but its all relative. Dave's investing advice is surely not for Bogleheads, and guess what?! He's not talking to Bogleheads!

In my capacity as a coordinator for FPU, I've met with a couple of the investing ELPs in this area. Guess what? They each had different philosophies. One was only recommending loaded funds, albeit with full disclosure of the load and and explanation of how that works, and the other recommends (for people with more to invest than $5K in a Roth and $2K in and ESA, of course!) an "assets under management" approach with a 1% annual fee. Those ELPs have to accept all comers as clients, so keep that in mind, too. They don't have a threshhold of only those with $100K to invest. So give them some credit for that when you're crushing them for using load funds.

Dave, his staff and his ELPs do a lot of good for a lot of people. If you don't like their advice, don't take it. But don't tear him/them down for trying to help and making money in the process.
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Postby HeatIndex » Fri Feb 05, 2010 2:29 pm

I am a former Dave Ramsey follower. I say former, not in a bad way. His advice about paying off your debt was and is invaluable. I remember a dear friend of mine thinking I was quite unwise for paying off my credit card debt which, relatively speaking, was huge for me. This was after her hearing a financial advisor on Oprah saying it wasn't such a good idea to take your cash to pay off all of your debt. Nothing against Oprah in regards to her good work and many good experts on her show, but in this particular case, it wasn't necessarily the best advice.

I have learned that it is o.k. to disagree even with people who have serious good influences on you. Money can cloud your judgment and influence your actions, so maybe that is the reason Dave is pushing not-so-sound investments.

I never could get with the financial "advisor" programs that he touted. I am fairly financially literate and I couldn't see how taking his classes or programs could make anyone an expert and then teach others.

HI
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Postby Mel Lindauer » Fri Feb 05, 2010 2:45 pm

joeples wrote:
Tall Grass wrote:Or get excellent free advice right here!


Amen to that... I've still got Ibonds from 2001 that Melindauer and Taylor recommended (paying wonderful returns), and I've stayed the course now for over 10 years...

Thanks Mel (if you're still here) and Taylor.


Yep, I'm still here, joeples. And, like you, I've been enjoying those great I Bond returns, too. Some were paying 8.65% when the market was tanking last year, and that definitely added ballast to my portfolio.
Best Regards - Mel | | Semper Fi
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Postby natureexplorer » Fri Feb 05, 2010 2:51 pm

When recommending load funds, Dave Ramsey does not explicitly point out that his receiving a kick-back from ELPs is in a sense a conflict of interest.
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Postby smallcapvalue » Fri Feb 05, 2010 3:18 pm

How about charging an honest hourly rate for financial planning advice rather than continually picking the pocket of the investor?[/quote]\

That is Fee Only.
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Postby metalman » Fri Feb 05, 2010 5:16 pm

The guy is a sleazy crook, conning the naive by attaching himself to churches and schools, then milking them for his products and services and sending them to "advisors" whose primary qualification is paying kickbacks to him.
Yes, he may be of some help to those who are so terminally stupid they need somebody to tell them they shouldn't spend money they don't have. His advice may also help deadbeats to avoid their responsibilities when their creditors come after them - he apparently has experience in that area.
His investment advice, however, is usually worse than worthless.
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Postby fishndoc » Fri Feb 05, 2010 5:26 pm

Lots of stones being thrown at DR here today, but I doubt there are many on this forum who have helped as many people as he (yes, I know there are a few). While he does make money for his service, so did J Bogle - it's the American way.

As far as encouraging debtors not to pay their bill, I believe if you ever listened to his show, you would find it it exactly the opposite - he often states we have a moral/ethical/legal responsibility to pay our debts. He only recommends bankruptcy if it seems to be the only option for his client.
" Successful investing involves doing just a few things right, and avoiding serious mistakes." - J. Bogle
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Postby joeples » Fri Feb 05, 2010 6:18 pm

FordBoy33 wrote:I've led Dave's course (FPU) at church for a few years. I've definitely seen the benefit in the lives of the families that take the class and implement it. Lives are changed, marriages are strengthened, etc.


I took Dave's FPU course after being a Boglehead for over 10 years. My purpose of the original post wasn't to bash Dave or his program. I would kindly suggest that Dave reconsider his investment advice. If he were to recommend Target Retirement Funds from Vanguard it would be a much more honest perspective for uneducated investors. Encourage them to invest and "stay the course".

That being said I still love Dave's FPU course. For the average American it teaches simple ways to stay out of debt and live within our means, kinda like Grandma used to (as Dave would say).

I have found Dave's advice on life insurance excellent. He recommends low cost term insurance. His advice on other insurances are also excellent and I learned a great amount from his FPU insurance lesson.

I hope someday Dave will see this post, and as a good Christian man he will realize that if his goal is "education" as he claims thru his ELPs he might want to revamp the program.
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Postby KyleAAA » Fri Feb 05, 2010 6:25 pm

joeples wrote:
smallcapvalue wrote:.... How else does the advisor make money unless they are fee only? .....


How about charging an honest hourly rate for financial planning advice rather than continually picking the pocket of the investor?


a.) Because a lot of investors are better off with a load and b.) it's difficult to feed a family that way. Do you want advice for a commission or no advice at all?
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Postby Chuck » Fri Feb 05, 2010 6:32 pm

KyleAAA wrote:Because a lot of investors are better off with a load

Ouch. I was going to say something, but now I decided not to. Other than that. Of course.
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Postby Fbone » Fri Feb 05, 2010 7:24 pm

smallcapvalue wrote:How about charging an honest hourly rate for financial planning advice rather than continually picking the pocket of the investor?
That is Fee Only.


What is considered "an honest hourly rate?"
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Re: Changing Dave Ramsey

Postby realitytruthprozac » Fri Feb 05, 2010 9:38 pm

Taylor Larimore wrote:It is virtually impossible to convince someone of doing things differently if their income depends on the status quo.



It is difficult to get a man to understand something
when his salary depends upon his not understanding it.
-- Upton Sinclair
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