Chapter Four This does not mean paper assets are a bad investment. Paper assets make a few people very rich. Paper assets have also lost trillions for unsophisticated investors forced into the stock market by government laws, laws which created pension plans such as the 401(k) in America.
Fin Ed History In 1974, the U.S. government passed ERISA, the Employee Retirement Income Security Act. This act eventually became known as the 401(k) Act. In simple terms, corporations were no longer willing to pay an employee a paycheck for life. Employees were too expensive, and the United States could not compete with low-wage countries. Without any financial education, workers throughout the world were forced to become investors. When this happened, the number of financial planners exploded. It was like throwing lambs to a group of lions. Many schoolteachers, nurses, checkout clerks, and insurance salespeople changed professions and became financial planners. Again, the problem is that most financial planners get their financial education learning to sell in the S quadrant, rather than the I quadrant. To be fair, I have met a few excellent, very smart, very dedicated financial planners. The problem is that I have met only a few. Most financial planners are in the business to make money. They know how to sell their products, generally paper assets. In fact, most financial planners can only sell the products of the company they work for. Since they do not make money selling other assets, most know little about real estate, oil, taxes, debt, technical analysis, and the historical reasons why the price of gold is going up. Good financial education is essential for knowing good financial advice from bad advice. If your financial advisor lost your money, I would not blame the advisor. I would look at myself and ask whether Iâ€™m willing to reduce risk by increasing my financial education, which you are doing now. 150
by Rich Dad, Robert Kiyosaki