Wealthy Barber is back in business

More than 22 years after finding bestselling success with The Wealthy Barber, financial guru David Chilton is back with a non-fiction follow-up. The Wealthy Barber Returns is arguably the best financial planning book since, well, since The Wealthy Barber.

The lifelong Kitchener, Ont., resident has departed from the fictional setting of the original, maintaining what he terms his “stage voice” — a folksy, witty tone honed over countless speeches. So readers expecting the return of the fictional Sarnia barber, Roy, may be disappointed that character is not the wealthy barber who is returning.

“I quote him [Roy] a few times,” Chilton says in an interview, “His advice was smarter: he ended up right.”

Given that so many others (including me) have imitated Chilton’s fictional format, it seems strange he has switched gears, but his timing has always been impeccable. The fact is the phenomenal success of the first book (more than two million copies have been sold) means Chilton himself has become the wealthy barber, supplanting his fictional creation. As with the original, the cover sports a full-length photo of Chilton and the red-white-and-blue barber pole that’s part of his powerful image.

Chilton acknowledges that he has “become the barber. One guy introduced me as the only author who became his character. No one calls Herman Melville Moby Dick.”

Even though it’s self-published, Chilton’s clout and genius for marketing have assured him widespread bookstore distribution. It’s in stores now, from Chapters to a spot I can confirm personally, a small independent bookstore in Bayfield, Ont.

Judging by initial testimonials, he’s hit another grand-slam home run. Luckily for us other authors, this is only the second time he’s stepped up to the plate.

As explained in the introduction, he was long reluctant to follow up the original because it was “the only good idea” he had, one he’s been “milking” for the better part of two decades (typical of the charming self-deprecating wit he maintains throughout).

But after a detour into co-publishing cookbooks, he decided North Americans are still nowhere close to absorbing the central message that they’re not saving enough. Except for a fortunate minority in employer-provided defined-benefit pensions, or the even rarer few who marry rich or win lotteries, most of us will have to save significant chunks of our income to achieve financial independence at a decent age.

The long-awaited sequel makes it clear there’s no magic bullet that can substitute for consistently saving for retirement, year in and year out. Most need to save till it hurts. Recognizing that most people find it near-impossible to save, Chilton tries to shift their focus to spending less, which amounts to the same thing. In clear and witty prose, he makes a compelling case for lifelong frugality or what I call guerrilla frugality. Forget the fancy stuff: If you can’t save by consistently spending less than you earn, retirement is just a pipe dream.

I’ll spoil one chapter, titled Four Liberating Words, by revealing they are “I can’t afford it.” I’m not a big fan of tattoos, but in the case of some acquaintances I know, I’d consider tattooing that phrase on their foreheads.

Chilton goes out of his way to avoid repeating key concepts from his earlier book, although the pay-yourself-first message of the orignal pervades the sequel in concept if not the actual phrase. I didn’t notice a repeat of the succinct Be an Owner, Not a Loaner — his original stance on emphasizing stock ownership rather than bonds — but he continues to see the value of a diversified portfolio of quality dividend-paying stocks.

However, the mutual fund industry and other proponents of “active” security selection will not be happy the new book joins the growing ranks of passive “indexers,” whether through index mutual funds or exchange-traded funds (ETFs). Nor will the insurance industry be ecstatic that Chilton has not recanted his previous stance in favour of low-cost term insurance rather than costlier whole-life or permanent insurance.

The book is divided into two sections, the first devoted mostly to the need to save more. The second half is a potpourri of short unconnected chapters on various aspects of investing, covering everything from pensions to tax-free savings accounts to wills and estate planning.

Chilton devoted the better part of the past year to the book, bouncing it off multiple experts (notably Mercer’s Malcolm Hamilton) and media pundits. The result is a book parents and teachers should provide to students late in high school or as they enter the work force.

As I note in a back-cover blurb, it’s the kind of book the federal Task Force on Financial Literacy should be distributing — except for the troubling fact its chairs are from the life insurance industry and actively managed investment firms.

Ironically, the first chapter of the original was titled The Financial Illiterate. Too many North Americans are still financially clueless and as Senator Pamela Wallin notes on the front cover of the sequel, Chilton has returned “just in time.”

Just not Roy the barber.

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