Why Does Dave Ramsey Want To Stop You From Saving Money?

If the most popular personal finance personality in the United States had a chance to save Americans billions of dollars a year, would he? Apparently not.

On Monday, Dave Ramsey came out against a rule being reviewed by the Obama administration that would require financial advisors to act in the best interest of their clients who are saving for retirement. The fiduciary rule, as it is known, was proposed last year and would apply to 401(K)s and Individual Retirement Accounts (IRAs). 

Ramsey -- a personal finance guru who has written six New York Times bestsellers and has a talk-radio show that draws over 8 million listeners, behind only Rush Limbaugh and Sean Hannity -- said in a tweet that the rule would keep a wide swath of the population from getting personal investing advice. 

This Obama rule will kill the Middle Class and below ability to access personal advice. https://t.co/Eym2Jq5CUP

— Dave Ramsey (@DaveRamsey) February 22, 2016

Current law allows financial advisors to work on commission when they advise savers about retirement accounts. Advisors are also allowed to earn money from mutual fund companies for steering clients to specific funds, even if those funds are not in the client’s best interest.

Such conflicted advice costs retirement savers $17 billion a year in poor investment performance and unnecessary fees, according to a White House estimate. Financial research firm Morningstar puts the cost to retirement savers slightly higher, at $19 billion.

The finance industry has continually argued that the fiduciary rule would restrict access to information from advisors and raise costs for customers. But it's important to remember that the only advice the rule would restrict is potentially conflicted advice. In addition, the advisor of a commission account has an incentive to push the client to buy and sell often, which often drives up the cost for the saver -- the fiduciary rule would restrict advisors from telling clients to buy just to generate commissions.

So why is Dave Ramsey, who preaches a financial code based on cost-cutting and ethical behavior, standing up for a business model that costs Americans billions of dollars a year? 

It might be because he makes money steering his listeners and readers to a network of financial advisors, called endorsed local providers, who can work on commission, said Helaine Olen, a personal finance author who writes an advice column for Slate.

“Ramsey’s entire business model is that he claims you can get 12 percent returns in the market, and he has a network of endorsed local providers who pay him for referrals,” Olen told The Huffington Post. 

Since Ramsey doesn’t disclose his company’s financial details, it’s hard to know exactly how much money is at stake for him, but Olen thinks the fiduciary rule might take a toll on Ramsey's referral business, and it certainly will not be good for endorsed providers who work on commission. 

Ramsey's office did not respond to requests for comment.

While Olen notes that “not everyone who works on commission is doing something with bad intent,” the current system has created a "standard where everybody is on their own and people have to figure out if they are getting advice that is in their best interest. And that’s sort of absurd, right?”

In the past, Ramsey has used his syndicated advice column to tell followers to quit jobs that require them to sell financial products they don’t believe in. A reader once asked if she should keep a part-time job that required her to push credit cards on customers. (Ramsey abhors debt and the questioner shared that view.) 

Ramsey’s advice: Quit, “for the sake of your own integrity.”

CORRECTION: An earlier version of this story incorrectly said Ramsey's radio show airs weekly. It airs five days a week.

What Bill Gates Got Wrong About Green Energy

Bill Gates on Tuesday called for "new inventions" in energy storage to make generating power from solar and wind more economical.

In a blog post accompanying his annual letter, the Microsoft founder said storing energy in lithium-ion batteries for use when the sun has set or the air is still costs triple the average kilowatt-hour of electricity in the United States.

"This is why we need new inventions that improve our ability to store energy cheaply and efficiently," Gates wrote. "Getting them will make it even easier for solar and wind to be a big part of our zero-carbon future." 

He explained:

This figure is based on the capital cost of a lithium-ion battery amortized over the useful life of the battery. For example, a battery that costs $150 per kilowatt-hour of capacity with a life cycle of 500 charges would, over its lifetime, cost $150 / 500, or $0.30 per kilowatt-hour.

So if a consumer tried to store enough electricity in this lithium-ion battery to run her house, she would be paying at least $0.30 per kilowatt-hour for the battery.

According to the EIA, the average price of electricity for consumers in the United States is around $0.10 per kilowatt-hour. The European Union, where prices average 20 cents per kilowatt-hour, and India, where they range from 2 to 15 cents, would see similarly dramatic increases.

The problem is twofold. The way electricity is priced in the United States provides poor incentives for storing excess solar and wind energy, and batteries are expensive. 

Electricity is more expensive during the day, when solar panels generate energy, and cheaper at night. Utility companies will buy consumers' excess solar generated during peak hours and recirculate it into the power grid, then sell it back at a cheaper night rate, when solar panels aren’t producing energy.

Therefore, there's little incentive for people to use solar-storage batteries that hang onto energy during the day if they could be selling it at peak prices to the utility companies and buying it back later on the cheap.

That remains a problem in most states.

But Gates is wrong to harp on the high costs of energy storage technology, according to Matt Roberts, executive director of the trade group Energy Storage Association.

"There's sort of this perception that costs need to come down for something to happen," Roberts told The Huffington Post by phone on Tuesday. "This cost focus is a bit of a red herring. What we need to see out there is more value focus."

For businesses, the long-term benefits are clear. The historic climate accord reached in Paris last year provides a framework for building a low-carbon economy, and it signals to companies that renewable energy will be a smart investment right now, even if the tangible benefits won't show for another few years. 

The costs of storing energy are likely to decrease by 50 percent in the next five years, according to Roberts. That makes sense. Electric automaker Tesla, which released two storage batteries last year, is building a $5 billion manufacturing plant in Nevada called the Gigafactory, which at its peak is projected to produce more lithium-ion batteries in a day than were produced in the entire world in 2013. 

Roberts said Gates would better serve the renewable energy movement by highlighting the positive outlook for energy storage instead of noting obstacles that are already in decline. 

"Those costs are still coming down," he said. "But the big thing that unlocks this is value." 

Here's A Devious Way To Get Workers To Exercise

Corporate wellness programs seem like a no-brainer in theory. In order to get employees to exercise more, companies can just pay them to reach a certain number of steps walked or calories burned. Right?

Not quite, suggests a new study by researchers at the University of Pennsylvania. Rather than rewarding employees with cash or perks for achieving a fitness goal, employers might consider first giving out money and then gradually taking it away from those who fail to reach their goals. 

The idea of losing money for not exercising may help motivate workers, according to the study, published earlier this week in the Annals of Internal Medicine.

“We know that people are irrational, and that they respond more to loss than gains,” Mitesh Patel, one of the researchers, told HuffPost. “People want to avoid the feeling of losing something they feel they already have. That can be very motivating."                                                              

The researchers enlisted a group of 281 slightly overweight adults and instructed them to walk 7,000 steps a day. One group of participants was paid $1.40 each day they hit the goal; another was entered into a lottery to win $5 or $50 if they completed the 7,000 steps; a third group received $42 at the beginning of the month, with $1.40 deducted each day the goal was not achieved. A control group received only feedback on their exercise and no money.

The monetary incentives were offered for 13 weeks. During that time, the group whose money could be taken away actually performed better than the others -- which surprised the researchers. They also didn't expect to see such similar results between the people who got paid to exercise and the ones who didn't get paid at all. 

Participants in the penalization group hit the 7,000 steps on 45 percent of the days. Those who had the possibility of a reward achieved it just 35 percent of the time, and those in the lottery group did so 36 percent of the time. The people who only got feedback hit the goal on 30 percent of the days.

As an interesting note, the participants in the loss incentive group never actually earned the $42 upfront. The researchers paid everyone with a check at the end of the month. The money used during the study was all deducted from an imaginary account, proving that just the psychological fear of losing money is pretty strong. 

The researchers hope that the data will help companies develop more effective ways of getting their employees to exercise. Standard wellness programs usually take the reward approach, like offering to supplement gym memberships or giving prizes for reaching weight or blood pressure goals. But if penalizing employees makes them a little more eager to work out, why not try that?

“If we’re going to use incentives, we should think about how it’s designed and incorporate behavioral economics,” Patel said.

Nearly half of U.S. companies have adopted wellness programs, many of which hinge on outcome-based goals like losing weight or decreasing cholesterol levels. Their actual effectiveness is contested: Some studies argue that they don’t significantly improve health.

Not to mention, when employers start emphasizing the need for workers to take better care of themselves, some worry that the burden of the health care costs get shifted onto those who are less healthy and that the programs will violate employee privacy. In 2014, CVS was sued by one of its employees for allegedly making her disclose her weight and sexual activity under a health screening program or pay $600 a year if she declined.

And while incentivizing workers to get healthy has good intentions, the fundamental message that a company conveys should be that it’s encouraging a culture of healthy behavior. No one wants to be overworked, stressed and, on top of all that, penalized for not having taken enough steps in one day. That’s pretty discouraging -- and won’t solve problems either.

Your Fears About The Coming Robot Revolution Might Be Overblown

CAMBRIDGE, Mass. -- The robots are coming! The robots are coming! But maybe that's OK.

Rob High, IBM's chief technology officer for Watson, on Saturday urged an audience of industry elites, academics and press to consider how artificial intelligence technology should improve -- rather than replace -- the human experience.

AI can help people became more efficient, creative and informed, High suggested during a keynote speech at the MIT Tech Conference.

"It's not about answering the question, it's about helping you come up with the questions you're not thinking to ask," High said.

Take Watson, for example. It's a technology platform geared toward using a vast amount of data to produce intelligent responses to some of the biggest human problems, like cancer treatment.

No one human could possibly read every medical journal out there, but Watson is being trained to ingest that information and produce smart solutions based on specific data -- a patient's background and symptoms, for example.

That's a true partnership between humans and AI. Watson takes information that people produce, considers a variety of factors and provides knowledge that is then used to help a human doctor do their job better. But Watson is not a replacement for an actual doctor.

There are concerns that robots are coming for our jobs, though. Meet Pepper, a Japanese robot that's able to function as an intelligent sales representative.

In a video High included in his presentation, Pepper interacts with a man who wants to buy a cheap television. She up-sells him and suggests a cutting edge 4K TV instead. (Yes, this is real life.)

The man asks the robot if channels are even broadcasting in 4K yet. The robot considers the question and responds with several stations that, indeed, broadcast in 4K.

That's cool, but there's an obvious dark side. A store like Best Buy could theoretically populate its TV section with a couple of Peppers someday, rather than pay a regular wage to human employees.

We as a society have a role and responsibility for deciding how we want [artificial intelligence] to affect us.Rob High, CTO of IBM Watson

The Huffington Post asked High about concerns that a robot like AI could steal human jobs. He said, of course, that he doesn't have the answer. But he said it's absolutely a question society will have to grapple with in the near future. 

"We, not just as a set of engineers a set of scientists building these things," High said. "We as a society have a role and responsibility for deciding how we want these things to affect us in the world."

He compared AI to a hammer. There's a social contract that you use a hammer to build stuff, not to bludgeon people to death. Sweet, robotic Pepper isn't a murder machine, but the same principle applies.

"We have created conditions and regulatory requirements and social conditions that place expectations on how people use these things," High said.

And anyway, he added, so many of these jobs have already disappeared. Hotel concierge desks are so often understaffed, he offered. Supermarkets and pharmacies have already embraced self-service checkout machines.

In High's vision, an intelligent robot who fills an already empty slot makes life better for current employees and customers.

"Having a robot, in this case augmenting the staff, benefits the people who are there so that it helps them serve their customers better," he said.

So, sleep tight: Maybe there's nothing to fear about the robot revolution after all.

Artificial Intelligence Might Just Disrupt Know-It-All White Men

CAMBRIDGE, Mass. -- White male executives, long accustomed to their opinions becoming policy, may have the most to fear from artificial intelligence. 

Seas of data analyzed by swift cognitive computing could make the  gut instincts of the executives who dominate business obsolete, according to the lone woman on a five-person panel at the MIT Technology Conference at the Massachusetts Institute of Technology on Saturday.

“A lot of business is run by, no offense, smart white men,” said Amanda Kahlow, chief executive of the AI-driven marketing firm 6sense, as she turned to the four white men serving on the panel. “AI is going to take the ego out of the equation.”

Male privilege ripples through the tech industry. Less than 6 percent of venture capitalists -- who provide startups with the financial lifeblood they need to get off the ground -- are women. When you consider those on the receiving end of venture capital, the ratio is even worse. Less than 3 percent of the 6,793 companies that venture funds backedfrom 2011 to 2013 were headed by a woman, according to a 2014 study from Babson College.

Alexander C. Kaufman / The Huffington Post

Amanda Kahlow was one of just three women who spoke at on panels at the 2016 MIT Technology Conference. 

“I look at them as gods,” Kahlow said. “They get to decide. Thousands of companies come in, and they get to decide. It’s all subjective.”

“You like to say you’re data driven,” she added, before being interrupted with a quick denial from her co-panelist, venture capitalist John Frankel. “But you’re not data driven.”

Indeed, data shows that women-led businesses may be better bets. A Fortune magazine analysis showed that Fortune 1000 companies with female chief executives delivered better stock market returns than those with male CEOs. Yet only 51 of Fortune 1000 companies are run by women.

“Businesses today are run by subjectivity, they’re run by the person in the room who has the highest title and the loudest voice,” Kahlow told The Huffington Post in an interview after the panel. “Sadly, those don’t always correlate with having the best opinion or the right approach.”

Still, Kahlow said she has adjusted to operating in a man’s world -- so she may need data to check her subjectivity as much as any man. Over the years, she steeled herself against the self doubt that can plague women working in male-dominated industries, Kahlow said.

“Because, as a woman, I’m told what to do all the time, it might be harder for me to take that data in,” she said. “In the past, I thought ‘they know better than me, I should really think about this.’ Now, I can be less likely to listen sometimes.”

Parental Leave Revolution Moves From Tech To Banking

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As tech companies like Facebook, Netflix and Spotify up the ante on parental leave benefits, they're putting pressure on the staid world of banking to do the same.

Credit Suisse announced Monday that it would begin offering all of its U.S. employees 20 weeks of paid maternity leave. Previously, the Zurich-based bank had offered 12 weeks paid plus eight weeks unpaid leave to its 8,300 U.S. employees.

The company also announced it would pay for new parents to bring a nanny with them if they had to travel for business in the first 12 months of their child's life.

Competition from increasingly enlightened tech firms drove the change, said Elizabeth Donnelly, Credit Suisse's head of benefits for the Americas. "We're no longer just competing with other financial services firms," she told The Huffington Post.

You hear tech companies talk a lot about game-changing disruption. There are endless examples: Uber "disrupted" the taxi industry, Seamless made calling for pizza obsolete, Netflix changed the way we watch television. Less discussed is the way tech is starting to change and improve how new parents get treated at work -- at least at certain high-end employers.

Giving employees at well-paid, white-collar jobs more maternity and paternity leave is the new hotness of 2015.

The same day Credit Suisse announced it would beef up leave, Facebook said it would offer four months' paternity leave to all dads worldwide -- previously, just male employees in the U.S. had the benefit.

Also this year, Netflix gave 12 months parental leave to employees that work in its streaming business. Spotify gave six months of leave to its U.S. employees. Amazon, Microsoft and Adobe also increased their leave allowances this year. 

In banking, Goldman Sachs increased paid maternity leave to 16 weeks, Donnelly pointed out. Most of Credit Suisse's competitors offer about 12 weeks. "We didn't necessarily want to mimic other banks," she said.

As for the "gilded" nanny perk, elite private equity firm KKR announced a similar benefit in August, as part of an effort to attract more women to the old-line firm. Only 13 percent of KKR's employees are women.

Women in finance face many of the same issues as women in tech -- feeling like you've just walked in on a boys' party, etc. -- especially at the elite investing and private equity firms.  While there's parity in the lower ranks in the finance industry, as you move up women start to disappear, according to data from the nonprofit women's advocacy group Catalyst. 

There's only one woman, out of 13 of people, heading up one Credit Suisse's regional offices in the U.S. 

Credit Suisse's new policy is also distinctive because it gives employees a year to take time off. All primary caregivers, including same-sex and adoptive parents, are eligible for the leave and can take it within the first year of a child's arrival. That means a man working at Credit Suisse can take 20 weeks off, after his employed spouse takes her maternity leave from her job. That's a huge win for a dual-income family -- essentially doubling the amount of time a baby gets to bond with her parents at home.

These People Got Way Too Aggressive On Black Friday

If it's worth waking up for at 3 a.m., it's apparently also worth waking up for at 3 a.m. and then punching someone in the face. 

Welcome to Black Friday, the annual tradition where bargain-crazed shoppers gather at big box stores and reenact scenes from Lord of the Flies.

At a Walmart in El Paso, Texas, bystander Adolfo E. Arzaga captured a chaotic scene as a scrum of shoppers scuffled over discounted flat-screen TVs:

In Springfield, Virginia, a college student waiting in line at a Best Buy told Fox 5 that he was attacked by a woman who tried to save a spot at the front of the line by leaving a chair there, then returning hours later.

“She was angry, and I was telling her, ‘No, you’re not getting in the front of the line. I’ve been here since 12 [p.m.],'” the student, Ahmad Shukrey told the outlet. “And she proceeds to attack me with the chair, pushing into my friend, knocking me over and twisting my ankle.”'

Steven Boone, another man in line, told the station the woman "refused to calm down" and ended up getting arrested.

Lady cut Blk Fri line @BestBuy, assaults cust & police, gets arrested. Officer very professional. @fairfaxpolice pic.twitter.com/fag1pcPTU2

— Al Luna (@AlLunajr) November 26, 2015

Not to be outdone, shoppers at the Alexandria Mall in Alexandria, Louisiana, were treated to the sound of gunfire Thursday night after a fight in the mall parking lot escalated, reports the Town Talk. One person was injured.

Police said afterward that the "dispute [appeared] unrelated to shopping or mall operations."

Real estate search site Estately crunched the numbers last week and came up with the top 10 states most likely to see fights over Black Friday deals. Be careful out there, discount shoppers.

Map of which states are most likely to have #BlackFriday sale fights https://t.co/OmY6z9Z1Zu pic.twitter.com/YaQRk0SGrx

— Estately (@estately) November 23, 2015

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