I don't watch television very often on the basis that it usually either shocks or depresses me. Last night I watched BBC2's Money. It was no exception. The programme followed the fortunes of a few of the thousands of people who regularly buy the books and attend the seminars of the world's wealth creation coaches.
They pay thousands and thousands of pounds to buy products from and listen to highly skilled presenters explaining to them how they can make themselves "financially free". The answer? It usually involves some very odd exercises (standing in front of a mirror repeating core phrases such as "I am a good money manager" over and over again for example) in a process called wealth conditioning and then using the "skills" learnt from the conditioning to create "multiple streams of income".
What kind of streams? Mostly the answers as far as I can figure come down to buy-to-let property. "Wealth creation" is simply the US name for borrowing a whole pile of money and using it to buy houses you can let out to other people. And wealth creation seminars are buy-to-let seminars, just with a bit more glitz and finesse than you used to get from the scamsters the UK was plagued with during the property bubble.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The problems with all this are obvious. Most people never go into buy-to-let. They just go to a lot of seminars and end up deeply in debt (as was the case with most of the participants in the programme). And of course, most wealth coaches don't make their money from property themselves. No. Their own multiple streams of income come from seminars, DVDs, books and for those just starting out in the confidence business, one-to-one coaching sessions.
But there is one more problem. In times of recession, the vulnerable are even more open to this kind of thing than usual. Add that to the cult-like atmosphere of the events and wealth creation is on the way to creating a new world of misery. The BBC programme followed one woman who had spent £50,000 on seminars and so on. Has it made her rich? It has not.
Instead it has taken her to the verge of bankruptcy. The same goes for Janice Geddes, one of the sweetest women I have ever seen on TV. She has spent all she has and owes £4000 on her credit card. Indeed, so infatuated is she with the wealth management gurus that at one point, we even saw her volunteering to work free at one of Robert Kiyosaki's seminars (Kiyosaki is the author of the Rich Dad Poor Dad series). Her money is gone but she is so drawn in that she's now willing to hand over her time as well. So much for her millions.
We saw Kiyosaki speaking towards the end of the programme. He told his audience that he knew this crisis was coming but that it made no difference to him he could make money on the way up and money on the way down. I very much doubt the first bit. I interviewed him in the spring of 2007 and I don't remember him mentioning either his forecast of a crisis or even his recognition that one was kicking off. I asked him if he really thought that people buying a whole load of property right then could really get rich. "Absolutely," he said. I can't imagine that worked out too well.
However I am certain he is right on the second bit. Why? In the good times people think they can make it on their own. In the bad they'll throw all they have at buying hope. That's why Kiyosaki is having a great crisis and why UK-based wealth creation coaches are now popping up all over the place. It isn't a good thing. At all. I have never quite understood why most forms of financial advice are somehow regulated while property advice of this kind is not. I still don't.
If you want to talk about this or anything else with me, why don't we do it over lunch? Bid here
-
Christmas at Chatsworth: review of The Cavendish Hotel at BaslowMoneyWeek Travel Matthew Partridge gets into the festive spirit at The Cavendish Hotel at Baslow and the Christmas market at Chatsworth
-
Tycoon Truong My Lan on death row over world’s biggest bank fraudProperty tycoon Truong My Lan has been found guilty of a corruption scandal that dwarfs Malaysia’s 1MDB fraud and Sam Bankman-Fried’s crypto scam
-
House prices to crash? Your house may still be making you money, but not for much longerOpinion If you’re relying on your property to fund your pension, you may have to think again. But, says Merryn Somerset Webb, if house prices start to fall there may be a silver lining.
-
Prepare your portfolio for recessionOpinion A recession is looking increasingly likely. Add in a bear market and soaring inflation, and things are going to get very complicated for investors, says Merryn Somerset Webb.
-
Investing for income? Here are six investment trusts to buy nowOpinion For many savers and investors, income is getting hard to find. But it's not impossible to find, says Merryn Somerset Webb. Here, she picks six investment trusts that are currently yielding more than 4%.
-
Stories are great – but investors should stick to realityOpinion Everybody loves a story – and investors are no exception. But it’s easy to get carried away, says Merryn Somerset Webb, and forget the underlying truth of the market.
-
Everything is collapsing at once – here’s what to do about itOpinion Equity and bond markets are crashing, while inflation destroys the value of cash. Merryn Somerset Webb looks at where investors can turn to protect their wealth.
-
Value is starting to emerge in the marketsOpinion If you are looking for long-term value in the markets, some is beginning to emerge, says Merryn Somerset Webb. Indeed, you may soon be able to buy traditionally expensive growth stocks on the cheap, too.
-
ESG investing could end up being a classic mistakeOpinion ESG investing has been embraced with enormous speed and zeal. But think long and hard before buying in, says Merryn Somerset Webb.
-
UK house prices will fall – but not for a few yearsOpinion UK house prices look out of reach for many. But the truth is that British property is surprisingly affordable, says Merryn Somerset Webb. Prices will fall at some point – but not yet.
