Robert Kiyosaki, controversial bestselling author of “Rich Dad Poor Dad,” has an urgent message for employees: Wall Street is gambling with your pensions. They’re rife with risky, secretive investments and scandalously high fees, and they dispense deceptive performance results. Because of this pension crisis, the next market crash will wipe you out.
In an interview with ThinkAdvisor, Kiyosaki discusses his new book, “Who Stole My Pension?: How to Stop the Looting” (Plata Publishing, Jan. 14, 2020), written with Edward Siedle, a former Securities and Exchange Commission attorney.
In the interview, Kiyosaki, 73, as outspoken and blunt in conversation as in writing, calls Wall Street “corrupt,” the Federal Reserve “a criminal organization” and many financial planners “incompetent.”
Pensions “lie” about their returns; for example, pensions for teachers, firefighters and police officers, who are oblivious to the speculative investments and fleecing Kiyosaki perceives.
He himself proudly steers clear of the stock market, investing instead in the shadow banking system because, he says, “that’s where the money is.” The entrepreneur owns rental properties in the U.S. Southwest and Far West, as well as hotels, golf courses and oil wells, among other businesses.
He got rich chiefly by licensing his “Rich Dad Poor Dad” brand to franchisees and investing in real estate. He has authored 28 personal finance books, and he wrote two others with his friend President Donald Trump.
In “Who Stole My Pension?” Kiyosaki and Siedle, who has forensically investigated more than $1 trillion in retirement plans, urge pension participants to create “a global network” to “improve pension investment practices.”
The way Kiyosaki tells it, he was mentored — starting at age 9 — by his best friend’s self-made affluent-but-uneducated “rich dad” on how to make money, while his biological “poor dad,” with a Ph.D., opted for financial security via a government job. He later lost his pension and was left without financial resources.
Some reports state that Kiyosaki’s “rich dad” — who built wealth in the construction business, Kiyosaki says in the interview — was fictional.
The author, who grew up in Hawaii, founded the Rich Dad Co., based in Scottsdale, Arizona, in 1996. He reportedly filed for corporate bankruptcy in 2012 because of a multimillion-dollar lawsuit brought by The Learning Annex against another of his companies, Rich Global. Further, some of his seminar franchisees have been charged with perpetrating investment scams.
ThinkAdvisor recently interviewed Kiyosaki, speaking by phone from his home office in Phoenix. He contends that pensions are invested in “financial weapons of mass destruction,” like those “that brought down the market in 2008 … Nothing has changed.”
Here are excerpts from our interview:
THINKADVISOR: Why did you write a book about what you see as a pension crisis?
ROBERT KIYOSAKI: To give people a chance to take action and prepare before the house of cards comes down again. I’m afraid that the crash that’s coming will make 2008 look like nothing. Student loan debt is now bigger than the subprime market debt, which brought down the market in 2008.
“Pensions are lying about their investment performance, and you should be suspicious about the results they tell you,” you and your co-writer Edward Siedle say. Please explain.
Pensions have been stolen by the same people that brought you the subprime real estate crash.
“Firms, in recent years, have devised the most secretive investments in history – schemes designed to conceal outrageous fees, risks, unethical and even illegal practices to thwart pension transparency,” Siedle writes. Please elaborate.
Wall Street takes teacher and firefighter union members to Vegas or Hawaii, and they party on. They get them drunk and tell them about derivative-type investments [like the ones] that brought down the market in 2008. “Financial weapons of mass destruction” is what Warren Buffett called them. He should know because his company, Moody’s, insured those derivatives. So Buffett’s hands aren’t clean, either. But he knows what he’s talking about.
[Buffett's Berkshire Hathaway is the largest shareholder of Moody's Corp., with a 13% stake.]
Back to investment info given to union members: What’s their response?
They have no idea what [the firms] are talking about. So they’re put into extremely risky, exotic things with high fees, the same things the subprime guys were doing 2005-2007.
So you’re saying that this isn’t a new scenario?
Nothing has really changed. The Federal Reserve Bank is a criminal organization that bailed out the banks — the guys who rip us off. The Fed lowered the interest rate to almost zero so that the pension plans can’t get any returns. If you’re expecting a 7% return, the best you can get is 2%. The pensions are going broke. In Paris and Chile, people are rioting, and it’s all about pensions. But Americans don’t talk about [a U.S. pension crisis].
You worked with your friend Donald Trump for eight years co-writing two books. Is he aware of the pension crisis that you warn about?
He knows it’s coming.
But it’s doubtful that he’s doing anything about it. Why is that?
Because Grunch — Gross Universal Cash Heist [from Buckminster Fuller’s book, “Grunch of Giants”] — controls everything: the people at the Federal Reserve Bank, like Goldman Sachs and Wells Fargo.
You say you forecasted the crash of Lehman Bros. six months before the start of the Great Recession of 2008. What led you to that call?
In Hawaii, where I grew up, there were always earthquakes before a [volcano] eruption. The shaking would increase as it got closer and closer. So there were always warnings. The same with Lehman Bros.
Did you go public with your prediction?
Yes. [At the beginning of] 2008, I went on CNN and warned that the crash was coming. Wolf Blitzer said, “Are you saying that Lehman Bros. is closing down?” I said, “Yes.” I was never invited back because they don’t want people scaring the public. They have to protect the banks and financial planners.
You write that financial planners aren’t bringing up the pension crisis with clients. Why is that, do you think?
It’s up to the individual planner. I don’t use financial planners because most of them are incompetent. They’re salespeople, not rich people. Warren Buffett said that Wall Street is the only place that people drive to in a Rolls-Royce to take advice from advisors who ride the subway.
But what can FAs do about the pension crisis as you see it?
It depends on the advisor. Today, everybody can buy a silver coin for about 20 bucks. With all the pressure from the green movement, they’re going to demand that more people should use silver for batteries and electric vehicles. Silver is at an all-time high today. But it should be at about 50 bucks. At 20, it’s the cheapest [good] investment on the market.
I assume you own silver.
I started a silver mine. I’m an entrepreneur.
America is in a depression, you argue. At this very moment?
Yep. Everybody is happy because the stock market is at an all-time high, but they’re not watching the repo market [repurchase agreement loans] or the [chiefly unregulated] shadow banking system. The corporate credit debt market is where the problem lies.
The stock market is high because corporations like GE, Ford, General Motors, AT&T and Dell are borrowing trillions of dollars and buying back their stock. Those companies’ bonds have been downgraded from AAA to BBB, one level above junk. If we raise interest rates 2%, the whole economy will collapse because we can’t pay for the debt. That’s why they keep lowering interest rates.
What’s your forecast for the stock market, then?
It’s going to stay up till Trump gets reelected — if he gets reelected. But if it crashes, then Bernie [Sanders] wins.
How do you invest in the market?
I don’t invest in the stock market. There are a million doors to heaven but a billion doors to financial hell. I don’t have a 401(k), an IRA or stocks. I have lots of real estate: 7,000 rental units. So every month 7,000 people send me a check.
You invest in the shadow banking system even though, you write, “it was the shadow banking system, not subprime real mortgages, that nearly collapsed the world economy.” Why do you invest there?
That’s where the money is. I don’t trust Wall Street and the stock market. It’s 100% manipulated by Grunch. It’s corrupt, just like the Federal Reserve. They bailed out Wall Street with taxpayer money. Now the shadow banking system has started to wobble, and the Fed is bailing it out with the repo market.
Why do you take issue with the widespread advice: “Invest for the long term for a well-diversified portfolio of stocks, bonds, mutual funds and ETFs”?
It puts people in a hypnotic trance. You think: ‘I’ll do that, and I’ll be safe.” It gives them a false sense of security, while the bankers, the Fed and the Treasury are ripping off everyone. The Fed causes crises. They bailed out guys like Goldman Sachs who profited from the [2008-2009] financial crisis. Meanwhile, mom and pop got wiped out.
So you think investing for the long term is bad advice?
When I was a kid, long-term investing worked. But today, with high-frequency trading, you trade against a computer, which can do, like, a million trades in a second — whereas, you might do one trade in a day. The professionals get out of the market before mom and pop even know what happened. Investing in the stock market for the long term works when the market is going up. But I’m afraid we’re at the top right now.
Do you have a pension?
No. I didn’t need a pension because I had a financial education from my rich dad. Our whole family [biological dad’s family] were schoolteachers in Japan. What they valued most was their pensions. I had relatives who had as many as three pensions. My poor dad wanted me to follow in his footsteps and become a schoolteacher.
How did you react to that idea?
I had been a Marine pilot in Vietnam. When I came back, my father said: “You’re unemployed. Get your Master’s and Ph.D. and go to work for the government.” I said, “Hell no!”
My poor dad had a Ph.D.; but when he lost his pension, he was a poor man. He didn’t know what to do.
Why did he lose his pension?
He resigned from the governor’s office and ran for lieutenant governor of the state of Hawaii as a Republican, and he lost his paycheck and his pension. His boss, who he ran against, was a Democrat and the chief of police. The head of the crime syndicate was also a police officer. My father was lucky they didn’t kill him.
What did he say about your book, “Rich Dad Poor Dad”?
I had to wait till after he died to write it. My family went nuts. They’re Japanese: “You disrespected the father!”
You say your rich dad showed you how to build wealth — and that’s what you’ve done. Do you live lavishly?
I have more money than I’ll ever use. I didn’t follow the mantra: Go to school, work hard, make money, get out of debt and invest in the stock market. I just play real-life “Monopoly”!
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