Dave Ramsey lawsuit

[PrivClientSG]

"Each of the 17 plaintiffs in the April lawsuit say they paid thousands for Timeshare Exit Team's services after listening to Ramsey's promotions. They say they were often advised to negotiate their own settlements with their timeshare companies, and usually found it impossible to contact Reed Hein.
Ramsey promoted Reed Hein between 2015 and 2021, and only ceased when the company stopped paying him, according to the suit"
....
"In the period Ramsey promoted Reed Hein, it's argued the company received $70 million in fees from customers referred to it by the radio host."
....
""Ramsey never returned any of the tens of millions of dollars Reed Hein and Happy Hour Media Group paid him from his own listeners' hard-earned money. Instead, Ramsey has chosen to profit from his listeners' money," lawyers say."

Call me crazy - I dont think this will work out so well for Dave Ramsey #DaveRamsey

There you go! If this is the case -- then he could potentially have some major problems.

 

[Tahoe Ray]

Not a complete surprise to me. On one hand, I always viewed him more of one of those "personality" types -- like Suze Orman -- rather than a practicing financial professional. Like others, there is this wide-casting, one-size-fits-all, advice for the masses, in his approach, also similar to Suze Orman. Ramsey's real business model is selling books, courses, other material, etc., first, and being a practicing financial professional second, if at all. When the former becomes your business model, you are not a practicing financial professional in my eyes.

I don't mind that the guy has a bankruptcy on his record, or that he started his "financial" career in the world of religion. At the same time there has long been complaints, controversies, etc., about COVID and his handling of the pandemic with regards to his company, workplace, employees, seminars, etc. In addition. his company's policies regarding on marriage, sex, homosexuality, LGBT, etc.

I've heard him speak and like some other "personalities" he was very quick to throw out generic numbers and claims, and what I considered to be very inflated ROR's for the "stock market," using load mutual funds. I heard him refer to 12% numerous times in several different broadcasts, seminars, etc.

While this is different -- very often where there is smoke, there is fire -- how tied together these two parties are still remains to be seen.

Agree.

At least he extols the virtue of disability insurance. Too bad he recommends only Zander which last time I checked sells everyone Assurity or Principal.

Maybe that's changed?

 

[marindependent]

Agree.

At least he extols the virtue of disability insurance. Too bad he recommends only Zander which last time I checked sells everyone Assurity or Principal.

Maybe that's changed?

I wonder if they pay him too?

 

[Tahoe Ray]

I wonder if they pay him too?

They 100% do.

 

[Newby]

They 100% do.

If this guy was paying him $450,000 a month and no one has ever heard of him, how much do you think Zander pays him monthly who he has made a very well known brand?

 

[PrivClientSG]

I don't know if Ramsey has active licenses -- but I am guessing he would have to for "giving" financial advice, and if he was receiving "commissions" resulting from the sale of disability insurance -- and a B/D; but receiving comp from this time-share operation is going to be very problematic. If he didn't disclose this, he's done. Game, set, match. Over. If he did, I wonder how a B/D could approve this as an OBA. I would think they wouldn't. This is a screaming conflict of interest. However, I have heard that some people have structured "creative" arrangements where they collect "fees" or "compensation" for various services when they don't have the appropriate licenses. I have no idea if that's the case here, but I see some red flags in the various articles.

As far as his disability recommendations, I view this as simply another opportunistic, self-serving sales arrangement. Just like Suze Orman -- who was anti-LTC insurance -- until an LTC company offered her a deal to put her name on an LTC insurance product and to joint market and distribute it with her. Then of course she was all for it! LOL How ironic it was when her own mother needed LTC, and Suze, being against it, didn't secure coverage before her mother needed it, applied when she did, and she got declined. Suze's response was that she was grateful and blessed to be able to afford to move her mother into the finest facility she could find -- and everyone else should learn from this because they couldn't afford what she could, so they should buy LTC insurance. Hypocritical, greed, opportunistic, and what else? LOL.

If you operate in the HNW marketplace, then you don't come up against the Orman, Ramsey types. Maybe Ken Fisher, but that's a whole other story, LOL. Then again, his problems only cost him about $5 billion in assets, tarnished his reputation, and showed the world a side of him the world never saw.

 

[titeye]

I've heard him speak and like some other "personalities" he was very quick to throw out generic numbers and claims, and what I considered to be very inflated ROR's for the "stock market," using load mutual funds. I heard him refer to 12% numerous times in several different broadcasts, seminars, etc.

I like your post. The truth is, 12% happens to be the maximum ROR FINRA allows to be illustrated. The problem is not that this ROR is inflated or unrealistic. The problem is, illustrations mistakenly assume the ROR shown is earned every year. Depending on the month you begin with, using an Ibbotson Chart, you can make a case for Equities outperforming any other investment in any 10 year period. Using that same Ibbotson Chart, you can make a case for Index Annuities outperforming Equities. This is why we often hear insurance agents, financial advisors, and investment advisors frequently say, "Numbers don't lie." The problem is, people lie. They are the one's who create the illustrations.

 

[PrivClientSG]

I like your post. The truth is, 12% happens to be the maximum ROR FINRA allows to be illustrated. The problem is not that this ROR is inflated or unrealistic. The problem is, illustrations mistakenly assume the ROR shown is earned every year. Depending on the month you begin with, using an Ibbotson Chart, you can make a case for Equities outperforming any other investment in any 10 year period. Using that same Ibbotson Chart, you can make a case for Index Annuities outperforming Equities. This is why we often hear insurance agents, financial advisors, and investment advisors frequently say, "Numbers don't lie." The problem is, people lie. They are the one's who create the illustrations.

Thanks. I completely agree with you. However, I personally do have a problem with 12% -- whether FINRA allows it or not. Yes, the "order" of the rates of return can bring about two different extremes, however, I don't care if he references 12% for 5 years or 12% for 20 years. It is simply far too "aggressive" and egregious -- for planning purposes or even discussion purposes. You throw around 12% as part of a discussion, and it's always one piece of a puzzle, and now the other pieces become almost contingent upon the 12%, or the other pieces seem to have more validity because of the 12%. Regardless, it has an impact on the remainder of the discussion.

Whether you are talking about individual annual ROR, average ROR, actual ROR, etc. -- it doesn't matter to me. 12% is simply a dangerous ROR to use. However, I absolutely and agree with your points. Thanks.

 

[titeye]

Thanks. I completely agree with you. However, I personally do have a problem with 12% -- whether FINRA allows it or not. Yes, the "order" of the rates of return can bring about two different extremes, however, I don't care if he 12% for 5 years or 12% for 20 years. It is simply far too "aggressive" and egregious -- for planning purposes or even discussion purposes. You throw around 12% as part of a discussion, and it's always one piece of a puzzle, and now the other pieces become almost contingent upon the 12%, or the other pieces seem to have more validity because of the 12%. Regardless, it has an impact on the remainder of the discussion.

Whether you are talking about individual annual ROR, average ROR, actual ROR, etc. -- it doesn't matter to me. 12% is simply a dangerous ROR to use. However, I absolutely and agree with your points. Thanks.

Those are great points. When I was new in the business, I used to quote 12% whenever it was required to achieve the clients goal(s). I did it because I believed the Ibbotson Charts and wanted to prove to the client the guy who could help them achieve their goals. As I matured, I realized that I was not responsible for a client not achieving their financial goals because they didn't start planning sooner.

 

[DHK]

DR is not a registered rep nor an insurance agent. He is not beholden to anyone but his sponsors. He was a Primerica rep back a few decades ago.

Because WE have licenses, WE are beholden to regulators for our actions and recommendations. We have to couch our words. He does not.