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." 

New LEGO Set Features Stay-At-Home Dad And Working Mom

An exciting new offering from LEGO marks a step toward inclusivity for different kinds of families. 

According to Fortune, the toy company recently unveiled a stay-at-home dad minifigure as part of a much-celebrated new set that also includes a young man in a wheelchair.

Daniel Karmann/Getty Images

New LEGO minifigures, including a stay-at-home dad, working mom, baby in a stroller and young man in a wheelchair.

The the stay-at-home dad is part of the Lego City line, along with his baby in a stroller and working mom wife ("depicted in a work outfit," according to Fortune). The brand told the magazine that the minifigures "mirror the world we live in today."

For some, this welcome addition has been a long time coming. In March 2015, Elissa Strauss wrote an op-ed for The Week titled, "Boys need a stay-at-home dad LEGO figurine."

"By playing with these LEGO sets, boys would not only get used to seeing men playing a larger role in domestic life, but come to think of it as fun too," Strauss wrote. 

With Pew reports indicating significant growth in the number of men who identify as stay-at-home dads, it's clear the need/urge for this inclusion will only grow.

"We need to stay in tune with the world around us," President of LEGO Systems Soren Torp Laursen told Fortune. "We aren’t responding to demand from anyone. We are trying to portray the world around us and listen to our consumer base."

While the brand has faced criticism in the past for promoting harmful gender stereotypes, LEGO has made strides in recent years with inclusive additions like female scientist minifigures.

Here's hoping this stay-at-home dad development is an indication of greater representation of diverse families to come.