Here's a fairly dramatic encounter from this afternoon's Suze Orman Show. "Mike" works as a credit manager selling consolidation loans for a "major banking institution." A 22-year-old MBA, Mike calls people with substantial credit card debt (owed both to his own employer and to other lenders), and tries to get them to move their unsecured debt into car or home loans with lower interest rates. Mike had written into the show because he had ethical qualms about selling people potentially disadvantageous products.
Suze conducted her interview with Mike's silhouette in order to "protect his job." She made two cases against this type of loan consolidation: a) a car or home, unlike unsecured debt, can be seized by the bank; b) the maturity terms of mortgage and auto debt mean the person will likely end up spending more. Here's a portion of their exchange:
Suze: I would feel far more comfortable with somebody who has credit card debt that is high going to somebody like a [Consumer Credit Counseling Service], consolidating that debt, getting them to reduce their interest rate, pay CCCS so that in five years you're through with this debt, and keep all my secured assets exactly that, secured, so no matter what happens I know that I in fact can keep my car and keep my home and that's what I want to do. Whenever you give people an option to pay less, they will take that option. That's how we got into trouble to begin with.
But you know, Mike, as you said, I think you knew all of this; that's why you wrote in to the Suze Orman Show. But now that you've heard if trom me what do you think you are going to do in regards to your job?
Mike: Well, uh, first thank goodness I have a job. But I'll definitely have to go back and think things over. Because, I don't know if I put that in my email, but that's one thing I always wanted to be was a financial advisor. You are somebody I look up to as an established financial advisor. But it's definitely something I'll have to go back and think about.
Suze: Mike, here's what I learned after all the years, and it's been thirty years now really that I've been doing this, is this: that it's better to do what's right than to do what's easy. And I understand that you need a paycheck. I understand that in this economy what are you gonna do? But if you make money off of telling people to do something that in the long run hurts them, that will only come back to bite you in ways that are far beyond what money can buy and what money can do for you. That's why I have never in my career made a move with somebody else's money that was good for me before it was good for them. Thanks, Mike, so I did just want to protect you, but honest to God, it makes no sense.
Mike: Right, when I took the job it was a little bit like, what is it? And like I said I wanted to be a financial advisor, so of course I analyzed it a little more than my fellow employees did, and I was like: I would never do this, why are they doing it?
Suze: Bingo, Mike! Bingo, and listen, you have to understand there's a big difference between a financial advisor and a financial salesperson. Don't you feel like a salesperson?
Mike: That's all I am right now.
Suze: Under the guise of being a so-called financial advisor or representative of this major bank. Again, when are the banks going to get it, that they have got to put people's interest at heart before they put their own bottom line at heart? And until they do that, this economy will never ever turn around. Good for you, boyfriend.
Mike: You're exactly right.
[Italics, and transcription, mine] I don't feel one way or another about personal finance celebrity Suze Orman, and I only learned today, while watching her show for the first time, that her first name is pronounced "Siouxsie" and not "Siouxs." Her advice seems sound enough, and she appears willing to strike a balance between respecting her callers' desire to buy stuff and advising them whether they can afford it. (For example, she "approved" one guy to buy a 1970 VW Beetle for $5,500 even while advising him that he was massively overpaying for the vehicle, on the logic that given his personal balance sheet he could afford the $5,500.)
But I'm gonna have to go ahead and … disagree with Suze on this job advice. Mike is right: He's just a salesman right now. His job is to sell debt consolidation. To say he has an ethical obligation to stop selling the bank's products is like saying a lawyer should only become a prosecutor or an actor should only play good guys. Mike may have ethical concerns about his job, but they are no different than the concerns of a salesman who decides he can't sell porn or booze or cigarettes: They exist solely within the confines of Mike's own head.
In fact, when he makes "a move with somebody else's money" it's the bank's money, not the borrower's. So he does have an ethical obligation: to his employer. And because Suze is informally giving Mike advice, I'd say she served him poorly by implying that he needs to stop doing what he's doing. Not just because it means he loses his paycheck but because a 22-year-old MBA should be doing anything he can to learn about finance, particularly if he eventually wants to become a personal financial advisor. (And if he does, he should steer his clients away from this type of loan consolidation, for exactly the reasons Orman says.)