Consider a hypothetical popular financial adviser with $30 million in investable assets. Her (or his) primary clients may average $500,000 of liquid reserves ready to be directed in any manner as instructed. The typical advice these clients may receive likely involve investing mostly in equities through stock index funds. They have low expenses and are poised to provide decent returns with average risk. This advice may include special consideration of asset allocation, with a slide towards lower risk once in retirement to help provide more reliable income while maintaining capital.

This is sensible advice for the average client, though a financial adviser has the responsibility to tailor his advice to the client’s unique situation.

Let’s take a look inside the portfolio of a $30 million adviser. In fact, it just so happens we have some details on one particular famous financial adviser with television and radio shows, books, and a strong brand image, so let’s use her portfolio as reported in 2007.

Suze Orman has a liquid net worth of $25 million, which doesn’t include her $7 million in real estate. Only $1 million, or 4% of her liquid net worth, is in equities. Suze, whose advice is over-simplified and dumbed down to be understood by the most idiotic of callers and is usually accompanied by “motivational” words of empowerment bordering on mean, doesn’t follow her own advice. Far from it. As of 2007, Suze invests almost exclusively in municipal bonds, favoring “safe,” lower returns over the risk of the stock market. Out of her entire portfolio, Suze invests only what she can afford to lose in equities.

Does her asset allocation and refusal to follow her own rules mean she is a bad financial adviser? While there may be several reasons to seek personal advice elsewhere, her own portfolio isn’t one of these reasons. Her advice is not directed at people with $25 million to invest. While some of the general tenets of her advice, like pay off debt, spend less than you earn except in some circumstances, and avoid costly commissions, hold true universally, some of the specifics like asset allocation are directed toward a certain type of client.

Suze’s personal choice makes some sense. With $25 million, you can afford quite a bit of flexibility. With $24 million in bonds, you may be generating a yearly income of $720,000. (Add to that seminars, royalties, appearance fees, and endorsements, and you’re doing pretty well.) One might levy criticism that she is not securing the future for her heirs, but I’m not convinced of that argument. Personally, I have no idea if Suze has any heirs or future plans, but I would think that she would want to do something with her accumulation when she dies, either provide for a family or provide for a foundation. And I would also think that she wants to build as much as possible to do the most she can to help whatever cause she chooses. So in that sense, she may not be doing all she can to allow her funds to grow.

But her current wealth puts her in a position where she can still reach her goals, and give herself a better chance of doing so by backing off and choosing less risky investments for a major part of her portfolio. You and I, her average clients, can’t afford to forgo the potential for higher returns and must therefore take on higher risk.

The first fallacy is the idea that one piece of financial advice fits all people all the time. The other fallacy is that one cannot give advice without following that same advice. A stunt man can advise an actor not to jump out of a moving car. A parent can advise a child not to handle knives. A police officer can advise a civilian to put down the gun. Suze—or any other financial adviser—can advise her average clients with not much investable assets to invest as much as possible in equities for the greatest return, regardless of her own portfolio.

But when Suze yells at callers, placates the lowest common denominator, or is otherwise condescending, I change the channel. I tend to think her recommended allocation for the average caller is a little on the safe side. However, she’s free to do whatever she likes with her money, and it doesn’t affect the quality of her advice.

Information on Suze’s portfolio from Outing Sue Orman’s Investments, Chuck Jaffe, MarketWatch, March 8, 2007.

Yahoo Finance is featuring an exclusive excerpt of Suze Orman’s latest book, Women & Money: Owning the Power to Control Your Destiny. If the book follows the standard formula, this excerpt is from the introduction and outlines the 8 qualities of a wealthy woman on which the rest of the book will expound. Here are the 8 qualities.

Qualities 1 and 2: Harmony and Balance. “Harmony is an agreement in feeling, approach, and sympathy… Balance is a state of emotional and rational stability in which you are calm and able to make sound decisions and judgments.”

Quality 3: Courage. “Courage is the ability to face danger, difficulty, uncertainty, or pain without being overcome by fear or being deflected from a chosen course of action.”

Quality 4: Generosity. “Generosity is when you give the right thing to the right person at the right time—and it benefits both of you.”

Quality 5: Happiness. “Happiness is a state of well-being and contentment.”

Quality 6: Wisdom. “Wisdom is the knowledge and experience needed to make sensible decisions and judgments, or the good sense shown by the decisions and judgments made from an accumulated knowledge of life that has been gained through experience.”

Quality 7: Cleanliness. “Cleanliness is a state of purity, clarity, and precision.”

Quality 8: Beauty. “Beauty is the quality or aggregate of qualities in a person that gives pleasure to the senses or pleasurably exalts the mind or spirit.”

Since the excerpt was posted on February 12, the excerpt has garnered 1,960 ratings, averaging 2.5 stars out of 5. That’s not exactly a shining endorsement.

I’ve found that Suze offers decent tips for the general public, but based on her attitude on her show on CNBC, I wouldn’t choose her to be my financial advisor. To be more specific, I find that she needlessly berates the callers. Additionally, her explicit endorsement of unwise financing for GM’s vehicles left me with a sour taste, as I’ve mentioned before.

Vince from Investorial and GuruWatch is skeptical of Suze Orman’s new relationship with TD Ameritrade. Here are the details of what she is promoting.

You can receive a $100 bonus by opening up an account with TD Ameritrade in March and by following the “Save Yourself Plan,” which involves automatic monthly investments of at least $50 for at least a year. If you watch out for fees, it’s not a bad deal (but not spectacular by any means).

The new relationship is timed to coincide with Suze’s new book, Women & Money: Owning the Power to Control Your Destiny. I don’t like Suze’s abrasive style on her call-in show, and I’m not a fan of her sponsorship of programs that conflict with her message, but I usually agree with her financial advice.

We’re rolling into the new year, a perfect time for gurus to repeat their favorite nuggets of advice. Suze Orman, who writes a column for Yahoo Finance, has published the five best financial moves for 2007. Here are her tips, which don’t have much relationship to 2007 specifically, but are good ideas in general.

1. Lose Your Balance. Pay your credit cards off every month to avoid interest fees and late fees. I’ve been writing about credit cards lately, and I identified two types of credit card users. Type A users pay fees and do not pay down their balance while Type B users have mastered their credit cards by beating them at their own game. Suze says Type As should become Type Bs.

2. Make sure you rate high. ING Direct is falling out of favor, even with the major voices now. Suze says get your cash in HSBC Direct or Emigrant Direct where as of now it can earn more than 5% APY.

3. Win the match game. Invest enough in your company’s 401(k) to be eligible for the full company match. This is recycled from last year’s list.

4. Face your mortality. Suze suggests a term life insurance policy for protecting those who rely on you. This is not part of my 2007 plan, and won’t be until I’m no longer a single guy whose only dependent uses a litter box.

5. Stop kidding around. Here’s something I don’t hear often in the mainstream press. Suze says parents have a responsibility to teach their young children about personal finance and the value of living within one’s means.

I’m not Suze Orman’s biggest fan. I’ve seen her call-in television show and she can be nasty to the callers. I would assume the callers are familiar with the show and know what they’re getting into when they dial, but sometimes they seem to be taken by surprise. I was also not impressed when she started appearing in GM commercials touting the value of buying or leasing cars. This seemed to go against the values she reflected on her shows. For most people, living within their means would mean not buying or leasing a new car.

Nevertheless, when I can’t detect her attitude in her writing, I don’t mind her advice. It’s solid, but not particularly special.

I’m not exactly a Suze Orman fan. I find her unnecessarily rude to callers on her television show, and I don’t always agree with her advice. However, she has something worth mentioning every so often. For example, last year, I live-blogged her Young, Fabulous, and Broke special on PBS.

On Yahoo Finance, Suze has created a financial education quiz for graduates about to enter the “real world” (or for anyone who needs to maintain their independent finances).

The answers to her questions are not obvious. In fact, most people who have participated in the quiz so far have answered incorrectly on a number of the items.

Here’s an example:

Which of the following will hurt your FICO credit score?

• Paying just the minimum due on your credit-card bill.


• Unpaid parking tickets.


• Opening three credit cards at the same time.

The correct answer scored a distant second in terms of percentage of individuals answering the question. One of the incorrect answers accounted for 68% of the responses by the time I looked at the results.