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Kiyosaki Mania

So when Robert Kiyosaki's fans heard he'd be speaking at New York City's Madison Square Garden last week, they came by the thousands. For three hours, Kiyosaki - author of the bestselling "Rich Dad, Poor Dad" books - charmed and motivated. He cajoled them to network with each other. He flouted the conventional financial institutions they'd lost faith in and preached his familiar message of self-help and financial independence.

They ate it up.

"I never saw such mass appeal," marveled Brenda Welch of Queens, who came for ideas she could use to make her wedding planning business more profitable. "He speaks to the everyday person."

It's easy to understand the draw. Forget traditional messages about, oh, sticking to a good job, diversifying assets, investing for the long haul and plowing hard-earned savings into 401(k) plans. Kiyosaki has little time for them. After all, he reminds the audience, haven't millions of retirees, good people who worked for companies like Enron, put their faith in traditional lessons only to get nailed?

"The 401(k) is the riskiest of all investments," Kiyosaki tells his audience. "They tell you to diversify. I call it de-worse-ify.

Instead, the road to riches is found by going it alone, he insists - which is exactly what he did with his 1994 book "Rich Dad, Poor Dad." In it, he espoused the teachings of his "rich dad" – a friend's father who became Kiyosaki's mentor and whose Socratic-like questions taught him about wealth. (His own father was the superintendent of Hawaii's schools, but he wasn't financially successful, says Kiyosaki who ultimately decided to reject the teachings of his "poor dad" and embrace the lessons of his rich mentor.) It was an unusual book - and publishing houses refused to touch it.

So Kiyosaki published it himself, selling the first copies in a friend's gas station. Witin two years it made its way onto the "New York Times" bestseller list, where it remains today.

Since then Kiyosaki has written 11 other books, which are now published by Warner Books, a division of AOL Time Warner, which owns CNN/Money.com. He's created three "Cashflow" board games for adults and kids and has a series of "Rich Dad" audio cassettes. He also publishes a monthly newsletter and gives motivational talks around the world. And through it all, Kiyosaki's message of self-reliance remains the same.

Kiyosaki's "Cashflow" board game

"Rich Dad's Prophecy" - his most recent book - predicts that the market will crash around 2016 when the oldest Baby Boomers start cashing out their 401(k) plans. Individuals whose savings are locked into 401(k) plans will suffer because these retirement plans, aren't flexible and don't do well in a bear market.

It's a warning that resonates loudly with fans like Danny Millan. The 27-year-old Brooklyn man makes good money managing a well-known Manhattan gentleman's club. But he's hasn't always done well financially. Like many other investors, he got burned in the recent market downturn when he put his money in tech and pharmaceutical stocks.

"I learned my lesson," says Millan who lost $12,000 and says he invested in stocks he heard about on the news. "Kiyosaki pointed out that when there's a boom it's because of amateurs getting in the market. That's exactly what I was doing."

In fact, if a friend hadn't given Millan a copy of Kiyosaki's book, "Cashflow Quadrant," Millan might be on a very different path. Growing up, Millan's mother exhorted him to find a good, stable job -- just as Kiyosaki's "poor" dad had done. But after reading "Cashflow", Millan took Kiyosaki's advice and decided to become his own boss. Specifically, he's start buying investment real estate (one of Kiyosaki's favorites). In fact, Millan just closed on his first rental condo in Brooklyn and hopes that he can buy a new investment property every year.

"Ultimately, I want to have my own business," he says. "That's what [Kiyosaki's] rich dad did. He built businesses and bought real estate."

Is it that easy? Although Kiyosaki freely admits that his first two businesses went bankrupt, one of which was a company that made velcro wallets, he doesn't dwell on pitfalls.

"Getting rich is about fun," he writes. "It's a game and you have to treat it that way."

But his lack of specificity can leave readers wanting more.

Jennifer Ng of Manhattan read a few of Kiyosaki's books, but came to the Garden " to get more information" about ideas he talks about in print.

Specifically, asks Ng who'd like to start a computer consulting firm one day: "What's the process of becoming a business owner?"

Kiyosaki's breezy, avuncular tone may be misleading. In "Rich Dad," for example, he notes that the rich often use their own businesses to protect their wealth from Uncle Sam since "the income-tax rate of the corporation is less than the individual income-tax rates."

"By owning your own corporation – vacations are board meetings in Hawaii," he continues. "Health club membership is a company expense."

But tax professionals say it's not that easy. That's because corporate money used for personal purposes - like a vacation - must be treated like a dividend, meaning it ultimately will be taxed at the corporate and individual tax rates.

"It's double taxed," says Evan Snapper, senior manager personal financial consulting at Ernst & Young.

Still, fans seem to trust Kiyosaki's level-headed advice. And they'll travel far to get it. Chris Brown, who owns a softdrink distribution company in Michigan, made sure he got to the Garden last week so he could find out more about stock options. (Kiyosaki did tell the audience that to make money in bear markets they'd need to learn more about puts, calls and options, but did not elaborate much more.)

"Don't get me wrong. The guy was entertaining. He was hysterical," said Brown. "But when I left I thought, 'Boy that's the longest commercial I've ever heard.' A lot of it was selling his books. ... I heard someone ask him at the reception 'what about college plans for my kid?' and he sort of blew them off like, 'Go make a million and don't worry about it' kind of thing. But I think that's what keeps people up at night. They want to know how they can provide for their kids."

So, is Brown shelving "Rich Dad's" lessons?

Not at all, he says. But he's not ready to abandon traditional moves, either.

"It's good to have a Plan B," he notes.  

By money.cnn.com