26 September 2007 5 Comments Print This Post  Email This Post

Robert Kiyosaki is the author of the popular rich dad book series, the most famous of which being Rich Dad Poor Dad. He has since released a series of books in the areas of entrepreneurship, personal finance, and investing. He’s built himself a mini media empire by the name of Cashflow Technologies. However, not everyone is exactly happy for his success. If you’ve been following blogs or yahoo finance, you’ll notice that there has been an increasing backlash against Kiyosaki and his teachings. Why all the commotion? How is his advice detrimental to his readers like some popular writers claim? I believe that the intention of the material he puts out is good, however the advice may not work for most of his readers. For some, it may even be detrimental to their financial futures.

Why the Backlash?

I believe the backlash stems from the ever diminishing credibility Robert is experiencing. After extensive research, some are concluding that rich dad never existed, nor did many of the stories that Mr. Kiyosaki talks about. Some claim that he contradicts himself when he talks about “delayed gratification” then goes off and talk about Ferarri’s and Rolexes that he owns or could afford. Many question his actual net worth and whether or not he made his money in real estate rather than just selling books. I’ve also heard stories of his company’s early affiliation with Amway, which allowed him to distribute his books and thats how he was able to convince major publishers to bring him on board. Those are the tales that led people to dig further into his past and question every single word that he writes. A lot of anti-Kiyosaki readers go into his articles or books with a bad image preset in their heads, and therefore his books and articles are almost always on the wrong end of a backlash.

The Good

Starting on a positive note, I’ll talk about why I like Kiyosaki’s work. I can’t speak about the man personally as I never met the guy. However, he seems like a friendly person. On a general basis, I believe his work does benefit society as a whole. It gives hope and motivates many would-be entrepreneurs and investors. My experience with the Rich Dad books stem back to high school. I was about 16 years old when I read Rich Dad Poor Dad and I sincerely believe that the book played a part in igniting my entrepreneurial spirit. I already ran a small online business at the time, but after reading the book I had an idea of what to do with the money that I made. I developed an interest in real estate, which led me to network with the right people and become the investor that I am today. The book is partially responsible for my entrepreneurial endeavors and the positive attitude that I have today. Personally I feel that the materials do offer a great source of motivation, which is one of the reasons why I like his work.

Aside from being a source of motivation, I do like a lot of his content. Looking at finances from a big picture perspective, I do like what he says. If you want to be as rich as possible, its best to build multiple streams of passive income or investment returns based on businesses, real estate and paper assets. He explains his material in such a way that novices can understand, and because of that he was able to reach such a large audience. The Rich Dad series is definitely a good book to start at for beginners because it is filled with financial concepts as well as stories to illustrate those concepts. Personally I don’t feel that the stories do any harm, even if they are completely fictional. The bottom line is that the book does have good material and it can help those who are beginners to the financial realm.

The Bad

Because of the growing concerns over credibility, many have began to nit pick every idea that Robert puts out. Upon closer inspection, there really are areas of concern. There is a concern over his pro-business, pro-real estate mentality. Because his books are read by many beginners like I mentioned, some may take his words a bit too seriously and go start businesses or buy real estate without first learning the ropes. I can see how this can be detrimental for some. For example Mr. Kiyosaki would argue that if nine out of ten businesses fail, you should simply start ten of them. What he is saying is don’t give up. However, those who are beginners or those who do not have as much resources as Robert may take his advice and end up being bankrupt by the second or third business failure. Some blame people like Robert for today’s real estate crash because he pushes real estate investing to the masses, including those who have no business doing it.

There is also talks about Robert’s downplay on the importance of education. His poor dad was a highly educated person, but ended up poor because he didn’t learn about money. Some other bloggers and writers feel that this mentality is detrimental to society because there were some horror stories of Kiyosaki readers actually quitting school to start their own business. Eventually it failed and those people lost their life savings and their time spent on the business. I don’t have a problem with this mentally personally, but for many of his readers, perhaps staying in school would be a better option.

The Bottom Line

The bottom line in terms of his content is that he avoids the concept of risk. Robert does not seem to connect with most of his readers because he is on another level financially. Risk is not a major concern for him, so he can go out and start and fail at ten businesses and still walk away financially stable. His readers, however, don’t have that luxury. The same applies to real estate, paper assets, and education. He does not talk about risk, however I believe that is one of the reasons his company is so successful. He perpetuates hope and gives motivation. Perhaps it is a bit too “feel-good”, but no one will buy his stuff if he didn’t paint a fantastic portrait of the successful entrepreneur and investor that his readers could become.

The majority of the anti-Kiyosaki crowd don’t like the guy as a person and therefore tries their hardest to point out flaws in his work. I don’t think it fair, but then again if your famous you’re a target for such scrutiny. No one should take any book or advice word for word. Every person’s situation and background is different. His advice will work for some and not for others, along with every other book’s advice. In conclusion, I still think his work are a great source of motivation and they give a good overview of how money works. It is up to the reader to interpret and digest the material in such a way that will help their current situation.