A story came across the news this weekend about Robert Kiyosaki, the author of Rich Dad, Poor Dad, and how his company went bankrupt last month. Basically, the company didn’t pay the proper royalties on its seminars, and when they lost in court, they didn’t have enough money to pay at all. It wasn’t a personal bankruptcy, rather, a corporate bankruptcy. However, a corporation with money should be able to pay up for a minor royalty dispute (only $23 million compared to $400+ million in revenues). And when you’re name is attached to a company, and your business is built around creating wealth, the word bankruptcy associated with it usually isn’t a good thing.
However minor you may consider it, I find it appalling as a personal finance writer. This guy made a living on selling “his story” and encouraging others to fork out tons of money to hear it. In the end, the story crumbles, and it just makes him a hypocrite.
Practice What You Preach
What upsets me the most is that Kiyosaki is portrayed by many as a financial guru. His Rich Dad, Poor Dad book made him famous because of the practical advice that he pretended to gain throughout his life. He talks about life lessons learned, and how that allowed him to do great things in real estate and other ventures.
The problem?
- Prior to his 1997 publication of Rich Dad, Poor Dad, Robert Kiyosaki never had any documentation of the wealth he supposedly amassed (Forbes)
- There really wasn’t a rich dad, even though his book specifically claims there was one (Smart Money Magazine, February 2003)
In the end, this “non-fiction” story is just fiction, and so it calls into doubt the advice he gives to readers and followers.
Even though his advice may sound good: be an owner, invest in cash flow investments, etc – the fact that he (or his business) didn’t maintain solid financial health is sad.
Don’t Prey on Your Followers
Another big red flag for me is preying on your followers. This is hypocrisy at its worst. If you’re selling yourself as a model for something (values, wealth creation, business, or even how you coach your kid’s soccer team), don’t use your followers and believers – empower them.
Robert Kiyosaki wrote and sold his book, which I consider to be honorable. He then tacked on a class, which was free, which is also honorable. But then he started preying on his followers -
- Class #1 – Free Advice
- Class #2 – Paid Advice, $495 (However, very little education and more marketing for class #3)
- Class #3 – Paid Advice $45,000 (Yes…that’s not a typo)
If you’re a financial planner, I think it is fair to charge for advice. However, it is important to be reasonable for your services. If you’re trying to help someone get rich, and provide value, $495 could be reasonable. But how could $45,000 be reasonable for any personal finance class? Furthermore, would you ever pay that given the credibility issues raised by the teacher?
Kiyosaki Isn’t The Only One
The sad fact is that Robert Kiyosaki isn’t the only one. There are hundreds of financial hypocrites out there. There are even more people out there that have hypocritical moments (I’m sure I have as well).
Just think:
- Suze Orman launching a prepaid credit card
- Donald Trump’s company declaring bankruptcy 4 times
- Ray Lucia, author of Buckets of Money, charged by SEC as misleading
It just really offends me when I see people almost victimized trying to get rich. I’m a firm believer that anyone can make $1,000,000 or more. Heck, read my article and it’s actually pretty easy.
Kiyosaki was just one, but there are hundreds, if not more, people doing the same exact thing!
It doesn’t take shelling out thousands of dollars for courses from potentially hypocritical speakers. Just earn, save, get out of debt, and invest. Done.
What do you think of this latest act of financial hypocrisy? Can you think of other financial pundit hypocrites?
About Robert
Wow, I’m really surprised his company declared bankruptcy!
He’s probably still a multi-multi-millionaire though.
His story is what America is all about. Anybody can pitch anything and make money. Just imagine if you really had substance + marketing!
He is rich for sure – in the bankruptcy documents it was stated “Mr. Kiyosaki will not use any of his personal capital to cover the debts incurred”. Sad that you pitch your stuff under a shell company, don’t pay your fair share, and then stick the other party with the bill. Reminds me about your tweet the other night about splitting the tip!
Wow, I didn’t know that he wasn’t as “wealthy” as he made himself out to be when his first book was published. Shady much?
He did what was financially right for his business but it isn’t helping his brand. People who sell the dream know that the people buying it aren’t always going to achieve it. They must be willing to accept that and the criticisms that come with it.
I don’t think any business owner would disagree that it was right for the business at the moment, but how did it become right to not follow through on business agreements, and then not pay up because you don’t have the money (even though your business is teaching others how to make money).
I agree that it is incredibly hypocritical to be a “financial guru” but behave in such a way. Sounds more like snake oil to me.
His work was always more salesmanship than substance. Lots of people need inspiration in regular doses.
I’ll have to check into this bankruptcy – hadn’t heard of it.
Selling inspiration is one thing, but selling “making money in real estate” is another.
His pitch for real estate was the worst! “Buy Real Estate as an Investment, anyone who invests in stocks is a sucker.”
Time usually will always reveal the liars out there. It is amazing that he got away with it this long.
Somehow, it hurts to know the reason behind Kiboyashi’s bankruptcy as it may also affect us PF bloggers. Some people may have clouds of doubt in their minds how truthful the personal experiences we share and how credible we can be. “Practice what you preach.” I hope this will serve a lesson to many, whether PF blogger or not.
Man…. and I’ve read like 4 of his books! darn! that’s crazy!
I always had some reservations about Robert Kiyosaki. I was invited to one of is seminars then pitched the 2nd class for an absorbent amount which I found absurd. I still believe that his book Rich Dad Poor Dad no matter how true is a great read for the novice seeking financial freedom. It doesn’t surprise me that he declared bankruptcy but what was surprising is he would let such a thing happen. I would imagine that his “brand” is crushed now. Thank you for this update, I actually had no idea.
I would think his brand is crushed, but it would really be interesting to see in a few years if people still remember this. I think too many people have a short term memory, and he will be back pitching his seminars again in another year.
It’s a like TV program in Mexico called “La Historia detrás del Mito de Robert Kiyosaki” (The story behind the myth of Kiyosaki” Anyway, I like his books and they have taught me many things… And for a lot of marketers here in Latin America his books are a must. Maybe it’s a strategy to teach something new.
I am one of those marketers who find financial freedom thanks to Mr. kiyosaki advice, so who cares about a financial setback like this, he is my hero and his financial advice is solid.
Man, people just don´t get the importance of being protected, Rich people apply these strategies all the time, for protection, when you buy assets and have money the wise thing that you could is protect yourself, this advise is provide by Robert from the beginning, so for me is not something weird, actually show me how smart Robert is.
I couldn´t have expressed it better!
He is so shady. I know someone who actually interviewed him for a magazine in Mexico. When this person started questioning his “training business” he got really upset. Later he had to apologize because he realized they has recorded the inverview.
I really do not like him, he seems to talk about the easy thing to get easy money .
Despite how shady or how much of a hypocrite Kiyosaki might be, he did have some good principals. Regardless if he went bankrupt, it is always a good idea to get a static cash flow that exceeds your active cash flow. If I did learn anything from him it was that saving doesn’t make you rich, cash flow does. Still, it is disappointing when you realize that you were being lead by the black sheep of the herd.
The bankruptcy was news to me. But, I always had a feeling that something just wasn’t right with his approach. I enjoyed the first book, but then the more I read about him and his writings, the more questions it raised.
Regarding the $45,000 for advice, holy cow! If I’m paying someone $45,000 for advice (I doubt I ever would) there had better be some sort of guaranteed return I earn. Otherwise, I would want my money back.
My husband and I had been greatly influenced by reading the Rich Dad books. Although they weren’t well written, they did contain a lot of practical and useful info. It’s too bad he has turned out to be different from who he claimed to be.
No surprise that his business filed for bankruptcy but his personal assets were protected. The whole theme of his first few books was to take risks in real estate and other investments, but incorporate so you can protect your personal assets in case your risks don’t turn out. If I remember correctly, it’s not the first time he was involved in a bankruptcy. The lessons he learned the first time around were to shoot for the moon, knowing bk is always an option as long as you’re protected on the personal side.
So in a way he actually is practicing what he preaches. I don’t necessarily agree with it but he’s following his own advice.
It’s pretty obvious that he declared bankruptcy as a financial move, not out of necessity. How much of the corporation’s money goes to him is up to him–he basically just shifted money around so he could get out of paying a debt. That doesn’t mean he’s out of money. It just makes him a scumball to cheat his creditors.
What you might not realize is that he IS practicing what he preaches. He tells you to start companies to not only make money but also to protect yourself. How many of us know what really happened in the dispute? Maybe he was right, maybe he wasn’t. But the bottom line is that the issue in that business couldn’t spill over into his personal wealth and other businesses. If he did businesss in his own name and they sued him, he could lose everything. Because he did it in a business, he can only lose what is in that particular business. Yes, it’s not pretty or good for his name, but it’s just business. To get rich, you do need to think differently. I would recommend you consider the other side of the story.
You’re completely right in some regards – you create a business to protect your personal assets. However, how you conduct your business is still a reflection of you. You shouldn’t create a business and be unethical just because you have a veil around your assets. You should still act responsibly and pay your vendors and work towards making a profit, not just siphoning it all out and leaving your vendors high and dry.
Kiyosaki’s own company may not be a model business enterprise, but I don’t think it greatly diminishes the overall message of Rich Dad Poor Dad. The books does a great job indoctrinating its readers to the millionaire mindset and the financial habits one needs to become wealthy. Kiyosaki is definitely not the most ethical businessman, but a testament that the principles in his book can in fact make you rich.