This is for others wondering about Rich Dad/Poor Dad or for those who have been through it. This is my perspective and I am no investor guru(and apparently the author of the book isn't either) but I am a business owner with a degree in computer science business concentration and most importantly I have a bag full of common sense.
So this weekend I went to a Rich Dad Poor 3 day seminar and by the end I realized it was nothing more than a long sales pitch. Basically what they do is this:
The Sales Process
1) Lure you in with the prospect of being financially free and living your dreams, something everyone wants. They get you pumped to be rich. -Emotional
2) Give vague examples, and sometimes erroneous examples of how you can make money. Shows few examples of possibly past successs. This is the way to your dream.- Pathfinder
3) Begin to throw in fear tatics to scare you and without their help, you will not succeed.-Fear + Control
4) Denouce the people who do not take part of their program as being scared, losers, missing and trying to hold you back. Makes it harder to reason with those who fall into this belief.- Seperation + More Control
5) Make a sales(minium sales is $5000 and some cost $60,000) to a person who has been given a vague way of reaching their dreams and has been driven to fear others and only trust Rich Dad/Poor Dad. - The Catch
Follow: Dream+ Path +Fear +Seperation/Cult +Control=Sale
That is just the overview of the process. Now I'm going to get down into in depth examples of how they make the sale.
Fear/Scare Tactics
"When advertisers use fear tactics, they attempt to sell their product by playing on our fears. The reasoning is that if consumers buy the product the fear is abolished." Some of the examples they used are:
1) Wealth is the leaving the US and soon we will all be broke unless you invest
2) There is only two classes, the rich and the poor and if your not rich you will only get poorer.
3)There will be anarchy in the US. The 2nd highest selling product in Walmart is an AK 47(yes they actually said this).
4)The banks control your life and you will never be rich and pay off your mortgage or have enough money to retire You risk working for the rest of your life and dying ppor.
5) Jobs are rapidly disappearing and soon you will be unemployed and in trouble.
Build a Cult/Group Mentality
People always feel more powerful when they are in a group. The saying goes "Never Underestimate the Power of Stupid People in Large Groups" . Now I am not calling anyone of those people stupid but it is easier to get a movement going with a group, individuals have better defenses. With this group, the make you feel special and effectively block outside influences because you have the group and they are right. They told us:
1) You need us to help you reach your dreams.
2)There slogan: If not real estate then what (alludes that real estate is the only way to get rich)
3)Those who do not agree with are holding you back from your dreams. They are scared to take the right steps but you are not. They will remain ignorant and poor while you will not. If you are married/couple you need to take charge and do this for the both of you.
4) Being Self Employed or Employed is wrong because you will always be poor. Come with us to get rich.
5) Do not let any comments on the internet sway you. Most people only when to the $500 session dollar have negative reviews while those who paid the $30,000 are happy. This is the ultimate defense by calling out their weakness before hand in hopes that you will ignore others people's comments.
6) Give very basic knowledge and state of mind you can be in. Then ask you to recite that stuff later and then say you have learned something. Learning their Phrase "Time Is Freedom" is not learning how to invest.
7) We do this because we want to see everyone succeed and we want you to help other people too.
Bad Information/Misrepresented Information
Throughout the series they give little bits and pieces of information that sound good. It sounds good because it leaves around VERY important facts.
What They Said
Buying a short-sell will only be about 15-20 hours of work.
What They Left You
It takes a lot of paperwork and about 3 months in order to complete a short sale.
What They Said
You can easily raise your credit score. Simply take 3 no interest baring credit cards, and put a balance on one and a balance an another. Write yourself a credit card check, cash it in your bank and then write a check from your bank to the credit card with a balance to raise your credit score. Keep repeating and the higher your credit score the higher your credit limit.They used big numbers such as $10,000.
What They Left Out
There a lot of small fees for those transactions. And they never said how to pay off the money on the card completely, because one card will always have an increasing balance. VERY DANGEROUS. What they are actually doing here is giving you a way to pay for their class!!!
What They Said
Banks are in control of the economoy and they are sucking the life out this economy and putting it in foreign investments. Banks control everything and do as they please. Banks are the enemy, use hard lenders.
What They Left Out
Ok first of all, this is erroneous to a huge extent. "Banks are sucking the life out of this econmoy"? Banks are the bank back bone of this economy. Without banks, economics/economy would not exist. Banks are regulated by the government and have to adhere to standards set forth, such as interest or debt:asset ratio.
What They Said
Buying a house is easy with none of your own money. Use money from hard investors, high interest rates such s 18% are not important.
What they Left Out(The big one)
They gave us this and a few ways of buying a house but never a way of actually selling it once we bought it, and that is huge risk because if you are going to make a profit, you have to be able to sell the house. In fact, I asked the instructor during a break session "What is the average amount of time it takes to buy a house" and "What is the ratio of houses being bought and sold". He never answered me but said we would discuss in the presentation. He gets to the software part and shows us the real estate foreclosures and the amount of opportunity in the area. What I noticed is that there were maybe 10-15 houses being foreclosed a month but only 1 or 2 being bought. That means you would buy a foreclosed home that you could not sell and your stuck with a high interest rate of 18%!!! Not to mention all the money made during these kinds of deal are at a higher tax rate it is capital gain!!!
What They Said
Showed some success stories.
What they Left Out(Another big one)
Each success story has a title under it something like "Individual Case". Alsot never showed anyone past the year mark. Were those testiminiols true? Not a clue but the writing may be on the wall.
What They Said
Your house and car is a liability but if you own an apartment that you rent its an asset.
What they Left Out
A house gains equity and you can sell it, asset. A car declines in value but you can sell it, asset. An apartment that you collect rent from is an asset that has a cashflow. Know the difference, these are not liabilites.
The Kicker
This is the part that really got me. I decided to research Robert Kiwaski himself. As it turns out, there is no evidence of him having a successful track record. There are claims(not sure who makes it) but there is no concrete record. You can track Donald Trump, Warren Buffet, can you track Robert Kiwaski, no!!!!!!!!!
Conclusions
I think it is fair to say, this program is a well organized sales pitch with well trained sales men. What you can get from this article is how they make their sale. They build your dreams and get you ready to make it happen and then introduce vague ways of doing it without an exit strategy or giving you all the risk. It really bothers me how they down play risk, INVESTMENTS ARE RISK. They take their time in assimiliating you into a group setting up their beliefs while making fearful and distrusting of the outside. What this really is is pyschological conditioning after which they try and make an absurd sale.
One thing they always do is give a 'today' price and 'later' price. They want you to buy it as soon as possible before their mental conditioning comes off or you reach and find out the real results. I think they always offer the initial $900 class but if you buy it today then is only $495. I have yet to come across anyone who paid the $900. Hmmmmm. And then they ask you to come up with $30,000 in less than a day for a discount, hmmmmm
There are many of other sources for cheaper and some free that will teach you the full story. In conclusion, the book is good read for motivation if you need, but not for solid advice and anything after is a poor placement of your money as it can be better spent.
