Wow... exactly the "cynical" conclusion I reached, but now I don't consider it cynical at all. I think it's accurate. Of course it's why Dave perpetuates the 12% idea -- it's for the same reason that people will ALWAYS buy the "7-minute Abs!" over a "8-minute Abs!" workout routine. Uninformed people ask around, find out which guy is promising the best stuff (for who can beat 12%?!) and they'll go with that guy.Wade Pfau, in [url=http://wpfau.blogspot.com/2013/06/dave-ramseys-8-withdrawal-rate.html]his blog[/url] wrote:I was recently talking to someone about getting started in investing, explaining the benefits of a low-cost index fund approach. The conversation was going fine, and then he asked me what return he should expect from such a portfolio. The question caught me off guard, because once you have a sound strategy you need to be ready to receive whatever the market provides, but then I started getting into some of the issues from the myth of 8% return column. If I had been a financial planner seeking clients, I can see that this is where I would've likely lost this lead. He could have then said, well thank you Mr. Pfau for your time, but I've been listening to Dave Ramsey and he knows how to pick mutual funds that offer a 12% return. I think I will take my business to one of his affiliated advisers so that I can get access to those high earning funds.
This is the fundamental trouble facing honest people trying to make a living in the financial services industry. There is always going to be someone willing to suggest that higher returns are possible. Consumers will naturally gravitate toward whoever is offering them the best story about how they can achieve riches. With his 12% returns, Dave Ramsey sits at the top of the financial services heap. And as his business model of using affiliated advisers who pay him a fee and sell you commissioned high-load mutual funds depends on maintaining the fiction of 12% returns, there is no way he can step down when challenged about this issue. So he sidesteps the issue and makes personal attacks instead.
It's getting to the point now where I'm almost embarrassed I ever defended Dave Ramsey.