If rate of return doesn't matter then why does he keep using outdated numbers despite the mounting evidence that it is unrealistic? To keep people entertained? That's a poor excuse. There are countless entertaining financial blogs and even shows that don't need to lie about this number to get people excited.
Furthermore, if his audience is as ignorant about investing as you suggest (a point I agree with) it's all the more reason he should stear them to cheaper, fool-proof index funds.
He's definitely one of those people that you have to discretize all of his suggestions, take the good and leave the bad.
Well if the options are:
- Cheap index funds and buy/hold by self
- Expensive index funds with advisor and buy/hold
I'd agree, but for many people, the first option can easily become "buy and hold... except when the market goes down, or I want a loan from myself, or need to withdraw money for a down payment, or I think the market is going to crash, or do other dumb stuff" and make poor choices.
Buying low-cost funds is only cost effective if you are diligent and disciplined enough to actually keep them that way. For many people, paying 1-2% to an advisor to talk them off a cliff periodically and/or encourage them to invest is a hugely beneficial overall impact on their financial lives, in spite of the cost. An advisor preventing a few dumb decisions can net people far more positive benefit than the cost incurred by their considerably higher fees.
As a point, I basically "lost" 5% on my 401k during the rollover time last month being out of the market for only 3 weeks (thanks Fidelity/Vanguard and bad timing for my new job...). How many people do you think sold their investments during that down time? Perhaps some of them are not even back now. Enough people here have anxiety about market crashes and are effectively timing the market, imagine what poor Joe or Susie who have no financial knowledge must think. Or in 2009, I am sure plenty of people sabotaged themselves by selling low and buying high considerably more than an advisor would have cost them.
Of course, bad advisors give you have the worst of both worlds. But Dave Ramsey definitely advocates buy-hold strategies and presumably to get his endorsement, the ELP crowd does too.