The Financial Planning Community Wants a Real Conversation with Dave Ramsey

Recently, the financial planning community got into a Twitter back-and-forth with Dave Ramsey. Dave, who likely has helped more people with their finances than any other person, tweets this:

The financial planning community responded with several articles, forum discussions, and blog posts, like this one from friend Jason Hull of Hull Financial Planning. Jason, admittedly a huge Dave Ramsey fan, says this in his post:

“…I have serious and deep concerns about the investment and retirement asset management advice that he gives to his listeners.”

I spoke with Jason about the issue and asked him what happens next. Jason believes Dave should debate a professional financial planner regarding his brand of investment advice.

Jason expressed disappointment in the debate Dave chose to have earlier this week with Brian Stoffel of the Motley Fool, who wrote a piece calling Dave’s advice “Dangerous”.

Earlier this week, Dave invited Brian onto his show to have a debate about the content of the article. Dave’s 12% return promise was heavily discussed.

During the interview Dave surprisingly threatens the writer, saying “you keep on with this, you and me are going to have a problem”, and calling him “son” several times. Listen to the interview.

Dave posted the interview on Facebook. Sarah Jane, one of Dave’s Facebook fans said this about the interview:

“That was not a debate. That was Dave inviting Brian onto his show to belittle and patronize him in a very rude and un-Christian manner. I hated listening to that..”

The majority of the other 181 responses from Facebook were similar. However, many did come to the defense of Dave.

Will Dave have a real debate with a fee-only financial planner about the investing arm of his advice?

It seems the community, many of whom are strong Dave Ramsey supporters, are ready for a real conversation with Dave:

Hopefully this conversation will continue and not end similar to the 2011 dustup over 12% returns.

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Philip Taylor, aka “PT”, is a CPA, financial writer, podcaster, FinCon Founder, husband, and father of three. He created PT Money back in 2007 to share his thoughts on money and to meet others passionate about managing their finances. All the content on this blog is original, and created or edited by PT. Read more about Philip Taylor, and be sure to connect with him on Twitter, Facebook, or Google+. Listen to the new podcast, Masters of Money!


  1. i didn’t find anything offensive or inappropriate.  Sure, i wouldn’t have used the word “son” but that is pretty common lingo in the South.  And i do agree that Dave’s general framework is appropriate for most people.  His illustrations may not be perfect but are good indications for most people because they don’t know any better.

    • @Will I’m from Louisiana. I know a derogatory “son” when I hear one. I’m surprised you didn’t find the interview condescending and arrogant.

  2. caseynlewis says:

    I can’t disagree with the passion D.R. possesses and I think he has every right to defend himself in an unprovoked attack on his character.  That being said, a debate with the guy is probably going to be a little difficult.  He has 20+ years of experience, 5 million daily listeners, 1 million + people through FPU and countless others at his seminars over the years.  Do we really think a discussion with him would change his mind about something he has clearly researched and frankly has more money than probably anyone else commenting?  
    At the end of the day, Dave has never said you can or will get 12% in returns.  He just bases all of his math and calculations on getting a 12% average return, which he can substantiate.  No this isn’t the CAGR and he never claims for it to be.  
    The bigger part of this is that according to USA today, 70% of American households are living paycheck to paycheck.  14% of retirees this year have a negative net worth and 54% of retirees will have less than $25,000 in the bank.  This argument of investing for the future is for the small 30% who actually have some available cash to invest.  Using 12% as an example to motivate someone to get out of debt fast and start investing is far more powerful than using 6% or 8% which I find is what most professionals are recommending.  
    If he can motivate someone to get out of debt and invest 15% of their income towards retirement and they do that from age 30-age 65 with a rate of return at 8% do we really think they’ll not have enough money in retirement or be upset that they didn’t hit this magic 12% number?  Of course not.  
    This guy who wrote the Fool article didn’t do his research on D.R. before writing the article and made some bad assumptions and then got torn apart in front of 5 million radio listeners.

  3. Thanks for the plug–that ‘2011 dustup’ from NY Times Bucks Blog writer Ann Carrns highlighted my 17-page report on the soundness of Ramsey’s financial advice (google ‘dave ramsey blue paper’ or go here: And yes, I wish that Ramsey would debate someone from the financial planning community…someone like Jason Hull, Carolyn McClanahan, Michael Kitces, Carl Richards, Wade Pfau, Rick Kahler, etc. Carl Richards from The Behavior Gap was invited at one point, but they gave him a very narrow time frame to come on the show, and he’s out of the country. Apparently they are not interested in making it work when he gets back to the US. And the comment above is correct: Dave has taken down almost all negative comments on his FB page from fans who were disappointed in the way that Dave handled himself in the ‘interview’ with the writer from the Motley Fool. Squashing dissent and condescending rhetoric don’t make for a very open, honest exchange of ideas and promotion of truth.

  4. Jake @ Common Cents Wealth says:

    I’m a big Dave Ramsey fan and listened to this whole ordeal go downt this week. That being said, he did go a bit overboard and his 12% rule seems to be a bit on the risky side. Could he have handled it better? Yes, but he wanted to stick up for himself and there isn’t anything wrong with that. I think the entire thing has been blown out of proportion and that everyone just needs to calm down and come to their own conclusions on what’s best for them.

  5. Every critic in the financial business soft pitches every 12% critique of DR by mentioning how many people he “helped.” I have to disagree EVEN WITH THAT. He branded “saving more than you make” and sells it back to people in books and seminars which have “helped” make him a squillionaire. His branded advice is about as insightful as look both ways before you cross the street or brush your teeth. There is nothing new. 
    Maybe that’s some definition of “helping” but I would argue that people that have gotten out of debt helped themselves and, by the way, read a book or two on the journey. They did because they were scared shitless. Maybe the book helped, maybe not. The fact that they will so willingly give the credit to a failed real estate salesman turned writer/TV host (a uniquely american phenomenon no longer limited to Tony Robbins or Jimmy Swaggart), is pretty odd but a whole other semester of psych 101. I’m sort of fine with that I guess part of his success. That’s just age old PT Barnum stuff — and there there IS one born every minute. 
    Add a little scripture in the mix and you are (wait for it) beyond reproach
    But the “save your money” pitch sets up the counterpunch … and it a knockout and Ramsey’s real genius: selling mutual funds and insurance. Dave Ramsey is a stock broker without a license, ingeniously avoiding that title and pesky regulations by using the gears of PR and marketing to steer readers, listeners and viewers to his ELPs and charging them for the privilege. I think that used to be called a kickback. 
    He is a simply sales guy who pushes overpriced, loaded mutual funds and insurance using his books and radio show and wraps it up by rolling his sales push into the “baby steps” of “save your money”, keeping it all tightly intertwined so it’s becomes more difficult to discern sound (and obvious) advice from the opportunistic sale.
    It’s an ingenious scam and NOBODY mentions it. It’s also a conflict of interest and patently dishonest. I’m shocked nobody has come after him for it.
    So of course He has a vested interest in selling 12 percent, as it statistically pushes more unsophisticated people into buying mutual funds with completely unrealistic expectations — his confused customers. They are dazed and exhausted from “beans and rice” and being “gazelle intense” and just need Dave to tell them what to do. 
    Step right this way, folks. Welcome to my ELP tent! 12%! 12%!
    He was threatened by the Fool headline because a) it is true and b) could threaten his sales business if it catches fire, which I hope it will. The 12% dream is the backbone of phase two of his entire scheme. Take credit for people getting of debt, then guide them smoothly into mutual funds with patently false numbers for the second payoff (the book and seminar being the first). 
    He has to defend it, even if he knows its a lie. He’s in too deep. It’s in the book! 
    Yes, I’m a nut. Fire away.

    • Candygirl7 says:

      No, you’re not a nut—you are a very perceptive person and you hit the nail on the head re: Dave’s scam. I used to listen to this man but stopped many months ago. The 12% sounded too good to me.

  6. Wow, hadn’t heard about all this hub bub. As I was mowing the grass, I was thinking about his investment advice and how I’ve strayed from it…oh and I’ve taught FPU 5x and been trained as one of his financial coaches. 12% is a bit much, I’d prefer 8% as a guide and I’ve come to be a more of an index fund kind of guy too, instead of his A share mutual funds that he suggests or at least his ELP’s do.

    • ontargetcoach Exactly! It would seem Dave hasn’t evolved with the times like most in-tune financial writers and professionals. I do like his 15% rule though, and I agree that if you do that you’re all good. But with expensive funds and a lack of diversity you give up too much.

  7. those negative posts on his page were ALL pulled.

  8. I don’t know if I would call his advice dangerous, but just miscalculated.  He has helped out many millions of people that really needed it.  His math is basic and flat out incorrect, but it is what it is.  I don’t think anyone has a chance to debate him properly because that interview with Brian was no debate.

    • DebtRoundUp Yeah, miscalculated, or un-evolved. 20 years ago his investing advice was pretty mainstream. He’s just not kept up with the times. We’ve made a ton of advancement in knowledge when it comes to long-term investing. He’s just stuck in 1995. I hope he at least is open to a conversation with someone. Agree, that interview was a bully session.

  9. Dave is an entertainer, not a financial planner. He’s grown accustomed to being the loudest mouth in the room and he doesn’t have the capacity for an honest debate based on facts and data.

  10. ayoungpro says:

    Dave is being a little petulant with responses to these people, but why do they need to hate on what Dave is doing? Dave offers his opinion, the same as other people offer theirs. If someone doesn’t like his advice, they shouldn’t utilize it. The same can be said for any financial adviser. I am disappointed in Dave’s apparent lack of a desire to engage in real debate though.

    • ayoungpro It’s probably a mix of reasons. Some may be jealous or have some weird axe to grind. Dave is a Christian and in your face about it. There are haters for sure. Some may be pulling for Dave (like me) but want the best for him and his audience. I for one would love to talk about Dave more but he makes it difficult with his stance on expensive mutual funds and his over-agressive legal team’s use of cease and desist orders.

    • @ayoungpro – I don’t think I’d characterize what I wrote as “hating” on Dave Ramsey. If I need to go hate on someone, I can well up and do that just fine. However, in this case, the issue is that people get anchored to the 12% number. Yes, he says it’s “educational,” but in doing so, he’s created an expectation, realistic or not, that people are going to get 12% every single year. It leads to the expectation that they can withdraw 8% per year in retirement, an expectation which Wade Pfau, Bill Bengen, and others have disproven time and time again. Furthermore, I, as a financial planner, have to deal with people who need to be unhinged from this 12% expectation and brought back into a set of realistic expectations.

      Think of it this way. If provided with two scenarios, which would you think the average person would choose?

      a) Save 15%, because, no matter what the market does, you’re likely going to be in good shape when you retire. Live on 85% (or less) of what you bring home.
      b) Expect 12%. Plan as if you’ll get an average (not CAGR, mind you) return of 12% every year. Save enough such that, if you get 12% every year, you’ll have enough when you retire.

      Both sets of advice are on Ramsey’s website. Yes, he pushes 15%. But, if you’re having a tough time dialing back your lifestyle to get to the 15%, don’t you think it’d be tempting to listen to that little voice in the back of your head that says “hey, Boss…Ramsey also says we can get a 12% average return every year…we don’t *really* need to save up 15%, do we?!?” So, you’ll roll out the rationalizations for saving less and set yourself up for real failure.

      It’s why I tell prospective clients who are at a negative net worth position to go to the library, check out The Total Money Makeover, live by it until they get to net worth of $0, and then come back so that we can have a discussion about why my approach differs from his. I imagine any planner who is a *fiduciary* would have a somewhat similar approach, since setting a client up to expect 12% (and selling him a 5.9% front loaded mutual fund) is not in the client’s best interest.

      I’m not a Ramsey hater. I am someone who has serious issues with his advice between the time you get to net worth of zero (alternatively, no debt) and baby step 7(.5), give like no other.

  11. I can say that Carolyn McClanahan is a true financial planning superstar.  Not only is she a CFP but she is also an MD and wonderful speaker.  That said at least on this 12% issue I think Dave Ramsey is full of a certain type of lunch meat.  He’s out selling books or whatever, colleagues like Carolyn are in the trenches helping clients amass and preserve wealth.

  12. PT, maybe the best we can hope for is that no more financial gurus refer to personal-finance bloggers as “idiots”…

  13. joetaxpayer says:

    It’s disappointing when anyone in the limelight would treat another the way Dave has. Especially when he professes to be a religious man. 
    The amazing thing to me is that when most of us are presented with new information, we change our conclusion. Dave has his opinions but professes every one of them as granite-solid facts. “There is no responsible use of credit cards.” Really? A high earner should walk around with $5000 in cash every month? How about “Credit is too tempting for most folks, 90% of people would be better off without cards”? Nope, too wishy-washy for Dave. His his way or the highway. 
    The market has in fact averaged 12% in the timeframe Dave cited. But average annual returns are not compound growth rates, which in that 12% period were actually 10%. Any long period will result in a CAGR about 2% lower than the average. As you know, you can’t spend average. It’s CAGR that counts. Not my opinion, this is fact. I know the difference. 
    You know how many people’s finances I’ve messed up by telling them to count on a 12% return? Zero. hat’s the number that matters to me.