Business

11.10.13

Can Suze Orman Save America?

A messy brand extension nearly derailed her empire. Now, the loud and proud money guru is hitting back at her critics—and touting her victory over the ‘financial rape’ of the poor.

When it comes to people and their money, Suze Orman is never wrong.

That’s according to Suze Orman. In fact, around the set of The Suze Orman Show, her long-running CNBC series, Orman and her producers like to joke about what they call “Suze witching moments”—instances in which the host’s psychic intuition turns out to be eerily accurate.

Suze Orman
Courtesy CNBC

Before a recent taping at network headquarters in Englewood Cliffs, New Jersey, Orman warned two guests about her on-air style, which relies heavily on these witching moments. “If I go somewhere, just go with me,” she instructed Danielle and Brandon, a married couple looking for advice on how to grow their savings accounts. They were clearly nervous, and Orman’s attempts to loosen them up with questions about their sex life didn’t seem to help. “Is it still hot?” Orman, 62, teased.

Danielle had written to Orman, whose website bills her as “America’s most recognized financial expert,” to ask for help. She’s a stay-at-home mother, and Brandon works on commission, so nailing down a budget was tricky for them. The couple was chosen to fill the “one-on-one” segment, in which Orman—prepped with paperwork on every aspect of her guests’ financial lives—interrogates, cajoles, psychoanalyzes, and ultimately advises people stuck in tricky fiscal situations. “Suze smackdowns” and “financial reality slaps,” to use the parlance of the show and its devoted followers, are often doled out.

But backstage, Orman was all smiles. “It will be great in every possible way,” she assured Danielle and Brandon. “You two will feel differently about each other. Maybe you’ll go home and …”

Cameras started rolling, and Orman quickly put aside the brass tacks of savings accounts and budgets—producers often handle these finer points later. Instead, she hammered the couple with questions about how they communicate. She charged Brandon with keeping his emotions bottled up, and Danielle with failing to give him opportunities to vent. The couple, rattled, laughed anxiously, trying to steer the conversation back to dollars and cents. Then Orman took a leap: “Brandon didn’t look like that when you married him, did he, Danielle?”

After an awkward silence, Brandon admitted that, yes, he had gained some weight. It was all the evidence Orman needed. The stress of being the breadwinner was too much for Brandon, she had decided, and Danielle wasn’t sharing the emotional burden. “I just got goose bumps,” Orman declared. “When I get goose bumps, I know the truth has just been spoken.” She advised the couple to be more open and honest with each other; Brandon, newly invigorated, would find a better-paying job. Shoot for $80,000 a year, she told him.

Shell-shocked, Danielle and Brandon signed off. Let us know how things turn out, Orman said sincerely.

Even after amassing 11 years on CNBC, nine consecutive New York Times bestsellers, two Emmy awards, eight Gracie awards, two appearances on Time’s 100 Most Influential List, and an eight-digit fortune, Suze Orman’s conviction in her own opinions is truly astonishing. “I knew that Brandon had gained weight,” she says in her dressing room after the show. “I don’t question myself anymore. If I think it, I know it is true, and I don’t care what you say to me. I know my thoughts are true.”

Indeed, Orman’s supposed omniscience—combined with the oratory zeal of a Bible thumper and the manic enthusiasm of a children’s show actor—is the key driver of her success. Money and markets are intrinsically unstable topics, as the agitated anchors of every other CNBC program illustrate, but Orman’s relentless appeals to gut and intuition send a radically different message: forget about wealth and focus on security. Her advice, sugarcoated in goofy catchphrases, is delivered in the unimpeachable rhetoric of common sense. Get an eight-month emergency fund, girlfriend. Sign your will and your trust, boyfriend. How am I doing? Can I afford it? Amy Feller Gallant, the show’s executive producer, tweeted during the government shutdown that the show got mash notes from furloughed employees thanking Orman for teaching them to save for a rainy day.

“Remember,” Orman says. “My topic is personal finance. It’s not what stock should you buy, where’s the economy, it’s not a deep dive like that. There’s plenty of people that will tell you about stocks and money. Mine’s personal finance, so when it comes to that, I am not wrong, sir. Not wrong.”

But even gurus make mistakes. Last year, Orman put her famous intuition on the line in the most fraught venture of her career. Her steely self-assuredness was the same, but the stakes couldn’t have been higher: Orman was promising to change the credit structure of an entire economy, to create a “sidewalk out of poverty” for the working class—all with a prepaid debit card with her name on it. She took a drubbing, fielding accusations of self-aggrandizement from the financial press and fans alike.

Now, for the first time since that media firestorm, Orman speaks extensively about the product launch that left a blemish on her nearly infallible record—an ordeal that lumped her decisions in with the dubious business dealings of Justin Bieber and Kim Kardashian.

There will be no apologies, however. No, sir. On the business of the Approved Card From Suze Orman, Suze Orman is ready to declare victory. If she got it right—and she thinks she has—“Suze Orman has changed the game for everybody,” she says.

At the moment, you’ll have to take her word on it.

APPROVED, DENIED

It’s not like Suze Orman has never been doubted. She admits, for example, to being wrong all the time when it comes to her personal life with her partner of 12 years, Kathy Travis, a former executive at the marketing firm Ogilvy & Mather who now serves as Orman’s business manager. “Little things,” Orman says.

131108-auriemma-suze-orman-tease
Ben Rose/Getty

Closer to her professional wheelhouse, there’s the matter of the Money Navigator, a market-timing newsletter edited by investment manager Mark Grimaldi that Orman once championed (calling it “my newsletter”) and gave away for free to some 50,000 followers. Last year, amid revelations in the Wall Street Journal that Grimaldi had lied about his credentials and investing track record, Orman parted ways with both him and the newsletter. “[A]ll the ideas concepts recommendations were Marks so he should simply own it outright,” she tweeted at the time. “Just that simple.” In hindsight, however, she’s more forthright. “That was the biggest mistake I ever made,” Orman says. “I didn’t do my research on Mark. I believed him. I mean, when someone has in writing all over a website that they’re No. 1, that they’re this and they’re that …”

Even so, the Money Navigator flap was a minor blip compared to the storm Orman ignited in January 2012. That’s when, declaring a “financial revolution,” she launched the Approved Card, a prepaid debit card backed by the Bancorp Bank, the top issuer of prepaid cards in the U.S. “You can always bank on me,” Orman announced during the accompanying promotional blitz.

One of the most despised financial products out there, the prepaid debit card is mainly marketed to the poor and under-banked—people whose credit history is so bad or so incomplete that banks won’t bother dealing with them. It doesn’t come with checkbooks. You simply load it with cash and use it as a debit card. The tricky part: fees, and lots of them. With many cards, customers get hit up when they deposit cash; when they use an out-of-network ATM; when they check their balances; when they call a customer service hotline; and most painfully, when they overspend. The fees are “often hard to find and difficult to understand,” according to a recent assessment from watchdog magazine Consumer Reports, and the federal regulation structure is such that there’s very little oversight.

Sensing a business opportunity in an exploding industry—some $167 billion will be loaded onto prepaid cards by 2014, according to the Consumer Finance Protection Bureau, an increase of 42 percent from 2010—celebrities from Bieber to Russell Simmons and the Kardashians have lent their names to prepaid debit cards in recent years. To mixed success: In 2010, the Kardashians faced such an uproar from consumer advocates over the hidden fees in the card they endorsed that they were forced to pull out of the deal.

Onto this financial minefield swaggered Suze Orman, undaunted. Her card had its fees—among them, a $3 purchase fee, $3 per month for maintenance, $2 for using an out-of-network ATM, $1 for some balance inquiries, waived in some instances—but Orman said she was selling something much different. “You know, the Approved Card, on the surface, is a prepaid debit card,” she said at the time. “However, when you look underneath, it really is a movement…It has always been my mission to make sure that every single person gets honest information, they are valued, and they get their needs met. So the Approved Card is a prepaid debit card that is part of a big movement that I am calling ‘People First.’”

In her eyes, Orman wasn’t just another celebrity jumping into prepaid cards to make a quick buck, but a reformer from within—a sheep in wolf’s clothing.

By and large, the financial press didn’t buy it. “[Orman’s] move raises so many questions it is hard to even know where to start,” Ron Lieber wrote in The New York Times, referring to the blurry lines that appear when the host of a financial advice series debuts a financial product. Marketwatch.com’s Chuck Jaffe, a longtime Orman critic, named it his “Stupid Investment of the Week.” Reuters’s Felix Salmon wrote that “[Orman] is giving advice which looks very much as though it’s mainly serving Suze Orman’s interests.” Writing for CBS, financial columnist Kathy Kristof bemoaned “a load of little ‘gotcha’ fees and few unique benefits …Girlfriend, you can do better than that.” Some pointed out (unfairly, given the context), that Orman herself had dismissed prepaid debit cards in her 2005 book Young, Broke, and Fabulous: “I don’t think prepaid cards are a viable option,” Orman had written. Fox Business anchor Gerri Willis showed particular scorn, railing against the Approved Card in several segments, calling it the “cream of the crap” and a “money waster” that “makes American Express look like a not-for profit institution.”

Orman stuck to her guns. She pointed out that the fee structure was on par with some of the more well-reviewed products of the genre. She cited its large network of ATMs and daily text messages that alert customers who may be on the verge of overspending. Most of all, she touted an information-sharing deal she had struck with TransUnion, one of the three major credit reporting agencies. TransUnion would analyze usage patterns of the Approved Card’s clients (in an aggregate, anonymous way, and with the clients’ permission) to see if the data could help predict future financial behavior. If TransUnion found that to be the case, it would consider using that data to influence its credit reports—a huge shift that would give people without access to credit a path toward establishing higher scores and all the financial benefits that come with those higher scores. Thus the “sidewalk out of poverty.”

But she also lost her cool. When the website Cardhub.com ran an analysis of the Approved Card’s fees, finding 20 compared to eight and one, respectively, for the Green Dot and the American Express Prepaid Card, Orman called the writer of the article an “idiot.” When PTMoney.com’s Philip Taylor echoed many financial columnists by writing that the TransUnion agreement was “dead on arrival,” Orman called him an “idiot,” too. To Lieber, whose Times write-up was one of the fairest shakes she got, she said: “Ron Lieber, I would take a good look in the mirror because something isn’t quite right with you, sir.”

Negative headlines spun into more negative headlines. “Has Suze Orman lost her cred?” MSN wondered.

Finally, the backlash led to a rare mea culpa.

“I admit that I was wrong- I am sorry RON,” Orman tweeted at Lieber. “For anyone I called an idiot I too am sorry,” she wrote in a subsequent tweet. “I should have known better. That never should have happened so again I admit that I was wrong.”

GIRLFRIEND!

After the blast of bad press, Orman went uncharacteristically silent on the matter. She hasn’t talked about the card since. She stopped defending herself. She doesn’t advertise it anywhere, certainly not on her show. “I’m sure most people think that the card is gone,” she says with a mischievous smile.

The Suze Orman Show airs new material every week, but the taping schedule isn’t too demanding, so Orman and Travis, who goes by KT, spend much of their time relaxing in Florida or sailing their boat (christened the “Approved,” natch) around the Bahamas. They nearly retired this summer. “It was over,” Orman says. “We were gonna come back and weren’t gonna work anymore. And we were gonna announce, this is it, we’re gonna live the rest of our lives in the Bahamas.”

Suze Orman
Courtesy CNBC

Indeed, when I first reached out to Orman for an interview, using a generic public-relations address on CNBC’s website, I quickly saw a surprising name in my inbox. “What a great idea!” Travis had written in response. “Suze and I are in South Florida en route to the bahamsa [sic] for an adventure at sea. I can try and have her touch base with you today.”

Orman didn’t touch base that day. Probably, she was having too good a time. “I love my life,” she says. “I’m having more fun with KT now doing the most absurd things, whether it is trout fishing or horseback riding or paddle boarding and all this stuff that we are doing that are like, really? And everybody’s like, ‘How old are you, Suze Orman? Like, what age are you?’ And we’re going, ‘Oh, we’re about 10.’”

She is quick to point out—as she preaches to her choir every Saturday night—that having money goes a long way toward such happiness. “We don’t have to worry about anything,” she says. “We don’t have anything left to prove. I’ve garnered every award that somebody like me would garner. Obviously I’ve never won an Academy Award or a Grammy but, then, I wouldn’t. But I’ve garnered every award, every acknowledgment, whether it’s Time magazine, Forbes—all of it. More New York Times bestsellers? I’ve done it all. The only thing I haven’t done yet is a Nobel Prize. But I wouldn’t be surprised if that comes my way one day, because I am working pro bono with the Philippines, all right?”

(Orman and Travis are working with the Philippines government and BPI, its third-largest bank, to produce public-service announcements—“little TV shows,” she calls them—encouraging the nation’s working class to save more money.)

That’s likely as close to politics as Orman will ever get, despite entreaties from some of her most devoted fans, who imagine her as an Elizabeth Warren-esque icon of financial populism. Occasionally, she will make a round of media appearances—as she did during the government shutdown—handing out “financial reality slaps” to dysfunctional politicians. But she is shrewd enough to know that partisanship would only narrow her audience. Any opinion on former Harvard president Larry Summers, who, despite claims of misogyny, nearly became chairman of the Federal Reserve, determining monetary policy for the entire world? “I have no opinion on it, I don’t care,” Orman insists. And though she has advocated publicly for same-sex marriage, both on her show and elsewhere, she says she turned down a request to appear on the campaign trail this fall with Christine Quinn, who was running for a shot at being New York City’s first openly gay mayor. “I think she would have been fabulous,” Orman says of Quinn, who lost badly. “I was so rooting for her.”

It’s a shame Suze Orman won’t stump for a Senate seat, because she has a rags-to-riches tale that is a speechwriter’s dream. As the story goes—it’s practically fable in the Orman empire—Orman grew up poor on the south side of Chicago and spent much of her twenties slumming it in Berkeley, California, living with her then-girlfriend in a van she bought with a loan from her brother. Until she was 30 years old, she was waiting tables at the Buttercup Bakery, making $400 a month and dreaming of opening her own restaurant. The dream nearly came true in 1980, when a group of extraordinary regulars pooled together $50,000 and gave it to her as seed money. With no idea what she was doing (her college degree is in social work), Orman went to Merrill Lynch, signed some blank papers, and handed the sum to a broker—who squandered all of it in months on shady investment strategies.

From this debacle, a financial powerhouse was born. Not unlike Sen. Warren, who, when spurned by powerful men, turned around and went to work right alongside them, Orman marched back to Merrill Lynch (with “affirmative action in bloom,” as she puts it) and got herself a job working in the same company as the broker who scammed her. Once she learned how to do her job, she realized that the other guy had not. She sued Merrill Lynch—while working for Merrill Lynch—and won.

All along, Orman never made any pretense about her sexuality. In the HBO documentary The Out List, she recounts an incredible story of being an out woman in all-male brokerage firm in the 1980s. “I’m sitting in a sales meeting,” she says. “It’s all these male brokers and me, and the manager is up there. He says, ‘Men, I want you to listen to me. The first time you ever sell a private limited partnership, it will be better than the first time that you—-‘ I looked at him and I said, ‘Were you going to say the first that you — a woman?’ And he said, yeah. And I go, ‘I get that! I get that!’” In 2007, she told The New York Times: “I have never been with a man in my whole life. I’m still a 55-year-old virgin.”

             

Still, it’s likely not a coincidence—at the least, it’s good fortune—that Orman first found mainstream success in 1997, just when Ellen DeGeneres came out to the world on the cover of Time magazine. Orman’s first book, the blockbuster Nine Steps to Financial Freedom, was released just two weeks before that issue hit newsstands, and the year was a watershed moment in the cultural acceptance of lesbians.

But like many other gay people, Orman has experienced painful prejudice. It was her sexuality, she says, that nearly destroyed her relationship with her mother, who died last year at the age of 97. “The truth of the matter,” she says, “is she never accepted that I was gay. She loved KT dearly, but she wouldn’t tell me that she loved me. She wouldn’t go there with me. And after her death, my aunt sat me down and said, ‘Suze, I just want you to know: It wasn’t that your mother didn’t love you. She never could accept that you were gay. And she felt like it was her fault.’ How sad is that? The greatest thing that ever happened to me in my whole life—being gay, and knowing I was gay from day one—and she was sad about it, and that’s what prevented her from loving me. Amazing, huh?” (Orman’s father killed himself decades ago, before Orman achieved any fame. She calls it her biggest regret that he didn’t see her succeed.)

The story, like so much of Suze Orman’s story, answers a question while raising a contradiction. The gay pioneer scarred by her own mother’s intolerance. The savvy businesswoman hamming it up as a stark raving mad TV host. And most glaringly, the fabulously wealthy woman professing to shoulder the burdens of the poor.

She stares at me and tilts her head, conjuring the same loathsome intensity she displays on her show when a naive caller says he’s bought a variable annuity or co-signed a loan or dipped into his 401(k) to pay off credit-card debt.

“Adam, I’m a very, very wealthy woman. I will never spend the money that I have with KT. My frustration isn’t for me.”

A SUZE SMACKDOWN

The frustration, these days, all comes back to the Approved Card.

“I had no idea how threatened the banking industry and other prepaid cards would be,” Orman says of its reception. “That they would go to the extent of lying through their teeth to continue to make money off of people that don’t have money.” The other prepaid cards, she says, are preying on the poor, and her card—specifically its agreement with TransUnion, the key part of her “financial revolution”—is a brazen attack on the business model.

As Orman sees it, prepaid debit cards and credit cards are two sides of the same coin, so to speak. Everyone knows that credit card companies turn a profit by charging interest on people too strapped to pay their balances in full; interest adds up, late fees add up, the principal rises, and so forth. Once you’ve run up enough debt to get yourself in real trouble, your FICO score—the most widely used formulation of a person’s financial health—sinks, and everything costs a little bit more: higher insurance premiums, bigger interest rates on loans.

That’s good news for the fat cats, Orman says. “Nobody wants anybody out of poverty. Banks make more money when you are poor.”

But there comes a point when your credit can get so bad that the banks won’t go near you anymore. That’s what happened a few years ago, in the credit freeze following the 2008 recession, when millions of people found themselves in dire financial straits and “kicked out of the system,” in Orman’s words. “You cannot get a checking account at a bank, credit unions won’t deal with you, credit cards won’t deal with you… These people had no alternative but to turn to prepaid cards. And if you look at the majority of the prepaid cards out there, many of them at the time were $30 to $50 a month in fees that these people were paying to use their own money. I was beside myself.”

In a sense, these people weren’t so much kicked out of the system as shifted into another one—with all the familiar tricks, traps, and hidden fees. With her card, Orman sees herself as a secret agent in the war on the poor, infiltrating enemy territory to blow it up from within. It’s like working for Merrill Lynch while suing Merrill Lynch all over again.

“If I could have given it to them for free, I would have,” Orman says. “But I can’t carry all the people that need these cards. So it costs $3 a month, because I’m the one who pays for the 24/7 customer service. I’m the one who pays every time they use it with an Allpoint [ATM]. I’m the one who pays for all of it out of that $3. And I put $2 million of my own money in it. We didn’t take partners. I didn’t take venture capital. Because they would have wanted to make money on these people.” (According to the Approved Card’s website, customers are allotted one live agent customer service call per month; subsequent calls cost $2 each.)

Orman and her business team wouldn’t release figures about the card’s membership numbers, but anecdotal evidence suggests that the fees were a turnoff for many customers. “You got ate up with fees,” says one former card user, Tom Carpenter from Kansas City, Missouri. “I just stopped using it.” Jacqueline Stellar from Fairfax, Virginia, expressed the same sentiment. “You can’t transfer money for free anymore,” she said. “I’m not going to pay someone to move my money around. I can do that on my own.”

"The only thing I haven’t done yet is a Nobel Prize. But I wouldn’t be surprised if that comes my way."

Others disagree. Tinamarie Wachter, from Long Island, says the card is well worth the monthly fees. “I’ve never had a card like it, and I love it,” Wachter says. “Whatever amount I put on my card, I just leave $5 on there for the monthly fee.” Indeed, she appears to be just the person Orman was aiming at with her card. “Listen,” Wachter says. “My husband I both went to school and had school loans—I went to business school, he went to computer school. The loans that we got, we couldn’t get any kind of credit cards. We got frozen out. We used the debit card because that was the only way we could do things.”

But the critics in the press drowned out the debate, Orman says. They wouldn’t give her a chance to defend herself. Gerri Willis wouldn’t let her on her show. (Willis, through a representative, declined to revisit the topic for this article.)

Talking about the card at length, Suze Orman has gotten a bit worked up. Anyone who has seen her on TV will immediately recognize it—she’s in “Suze smackdown” mode: head cocked, eyes squinted, blindingly white teeth bared. “This is my group,” she says. “I do a show for people who don’t have money. Name one other financial person who says anything about people who don’t have money. So I know how these people are suffering—and they’re not suffering lightly. They are suffering tremendously.”

Orman admits being personally hurt by the criticism, but she won’t back down. “We got in this to change how credit scores work and to give people a cost-effective alternative to the financial rape that many of them are experiencing.”

In fact, she can’t help but claim victory already. The card, she says, is “thriving,” and broke even for the first time this summer. “TransUnion made a deal with me,” Orman says, “so that for two years they would look at behavior on this card—in an aggregate, anonymous way—and see if it determines future behavior.”

I point out that it’s been just about two years. Any word?

“They are finding out that it does,” she says, with a smile.

A representative from TransUnion confirmed the broad outlines of its partnership with Orman, but wouldn’t corroborate her statement about the two-year timeline. Nor would the representative make any statements about what kind of conclusions, if any, TransUnion has drawn from its analysis, stating only that the process is “ongoing.” Orman declined to give any further details, as well.

Maybe she’s wrong, letting her passion get in the way of the facts. Or maybe she’s right, and a groundbreaking TransUnion deal will soon materialize. Maybe I’ve witnessed a Suze witching moment.

HOW AM I DOING?

When the revolution comes, Suze Orman will likely be plugging away on CNBC, giving the same old financial advice.

After more than a decade on the air, and despite an unfriendly time slot on Saturday nights (the staff likes to call it “date night with Suze”) The Suze Orman Show remains the highest-rated program on a network that primarily caters to the wealthy—an irony Orman relishes. It pulls in an average of 346,000 viewers per week, according to Nielsen, nearly 40 percent more than the network’s next highest-rated show. But even Orman admits that the program is “almost identical every single week.”

From the control room, where I watched her grill Danielle and Brandon, it’s clear that the host and her producers constantly wrestle with the challenge of keeping the topic fresh. The monologues that bookend each episode are almost entirely ad-libbed by Orman; twice, she scrapped her rant when it was deemed too similar to a previous one. The only other hiccup in the production process was an effort to enlarge a special harvest moon that hung in the background to complement the Halloween episode the crew was taping. (“Bigger! Bigger! It should fill the whole screen!” Feller Gallant cried before giving up and making a note to fix it in post-production.) Orman, meanwhile, was wearing a neon orange jacket and soliciting photos of viewers dressed up as her, “in their best wigs and jackets,” a nod to Kristen Wiig’s spot-on Saturday Night Live impression.

Luckily, Orman has a zealot’s knack for turning familiar material into earth-scorching diatribes, so it isn’t always obvious when she’s dressing down a caller for taking out private student loans or borrowing money from their 401(k) that she’s given the same smackdown dozens of times before. “What I’ve learned,” she says, “is that the audience is constantly rotating. Just because it feels like I’ve said it, there are millions and millions of people that have still never heard of it.”

More gratifying is that millions of people have heard of it. And, of course, an untold number are swiping her Approved Card wherever they go. “She’s a banker—but someone you trust,” says Tinamarie Watcher. “She sounds very smart when she’s talking, and she knows what’s she talking about.”

Suze tells a story.

“The other day, KT and I were in the park. Nobody knew it was us. We had just sat down. And these kids—they weren’t kids, they were in their 20s—were playing, and they were taking pictures of themselves with their phones, and all of the sudden we’re listening to them, and we hear them say, “Hey, boyfriend! Girlfriend!’ And then one of them says, ‘C’mon, approve me!’ She wanted to be approved because she had a new boyfriend. And they were playing with her, saying, ‘Oh, we won’t deny him.’ And KT looked at me and said, ‘Suze, your show, with these kids, has created its own verbiage. That is you, Suze Orman, that they’re talking about. Listen to them.’ And so in my own way, I’ve had a dramatic effect on millions and millions of people and their money.”

It won’t silence her critics, but it’s enough, she says.

“Remember,” she says. “Grace is above praise and blame. I never read the bad stuff people write, but I never read the good stuff, either. Ever. I know who I am, and I know that God looks down on me and smiles. I know that—without a shadow of a doubt.”