I attended the David Bach seminar sponsored by Scotia Bank last night. At the outset, I should point out that I am not a big fan of David Bach. I am disciplined enough to spend less than I earn and I tend to save a significant chunk of my pay check, so pop financial experts like Mr. Bach can do very little for me. That said, since so many Canadians save so little, anyone teaching people financial responsibility should be applauded.
The seminar was well-attended. I am guessing that there were about 3000 participants and hardly a seat was empty. Mr. Bach is definitely popular. He is also charming and witty and a very good speaker. The material he presented in his seminar would be familiar to those who read his books: The Automatic Millionaire and Start Late, Finish Rich. Of course, the lessons are simple and just common-sense: spend less than you earn, cut your spending (a.k.a Latte Factor), pay yourself first etc. If you already know these principles or better yet, following them already, you can safely skip these seminars and save yourself a couple of hours.
While I liked the seminar overall and would recommend it for someone who is not financially literate, I was bothered by some of Mr. Bach’s suggestions. He started off by saying that his system “doesn’t involve budgeting or discipline because it doesn’t work”. Pardon me? Most people already know the basic financial principles. It is following these lessons that is so hard because it takes discipline. And don’t even get me started on budgeting. If you don’t budget, you don’t have a plan to save and if you don’t plan, you are setting yourself up for failure.
Mr. Bach’s asset allocation advice is also a bit quixotic. He suggests that assets should be split equally between stocks, fixed income and real estate. Perhaps, it makes sense for some people, but I do hope these people are not assuming the 10% return (used throughout the seminar) in their calculations.
I totally disagreed with Mr. Bach’s suggestions that everyone should buy a home. He quoted a study that showed the homeowners have more than 30 times the net worth of renters. So, are homeowners wealthy because they own a home or do they own a home because they are wealthy? I doubt there is a causal relationship between the two. At any rate, it is a bit irresponsible to suggest that someone in a lot of credit card debt and very little in savings (Mr. Bach’s primary audience), buy a home with nothing down, mortgage themselves to the hilt, pay a premium on prevailing interest rates and pay the maximum private mortgage insurance at a time when real estate prices are expected to soften.
The financially savvy can safely skip the seminars (and the books, for that matter). Everyone else would find the seminars (and the books) educational and definitely entertaining. If they follow some of the lessons with discipline, they would also find it profitable.
