Kiyosaki’s rich dad told him not to diversify — rather, seek out “the best” investments. The author attempts to use anecdotal evidence (“I knew a guy who… therefore everyone…”) to villify the financial planning industry.
Suddenly, people without much financial education became “professional financial advisors.” School teachers, used car salesmen, housewives, and insurance agents found new careers as financial advisors selling investments to people just like themselves… When one retired pilot was asked what he was going to do now that his pension had been cut from $11,000 a month to $2,300 a month, the 62-year-old pilot said, “I’m going to become a financial planner.”
The 62-year old pilot could have become a participant in any number of professions. I hope that when Kiyosaki is 62, he doesn’t plan on learning any new skills as it would go against his view of human cognitive ability. Moreover, the sentiment that teachers and housewives, etc. are less intelligent breeds is quite offensive. Anyone can learn to become a financial planner. Cedrtainly it takes time and effort to become moderately adept, but it’s not rocket science.
Kiyosaki’s not in the real estate investing business, he’s in the authorship and seminar business.
Regardless of his attitude, I could agree to a degree with some of his statements about diversification. Kiyosaki’s reasons for justifying diversification: First, it’s a good plan for passive investors — those who don’t want to or can’t put in the effort to researching good investments. Second, if one cannot focus on research, diversification helps manage risk.
Updated February 7, 2012 and originally published November 30, 2005. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.