INVESTools II: CEO Responds, I Offer Rebuttal

| About: TD Ameritrade (AMTD)

So the response to the Investools (SWIM) piece has met with very animated reactions on both sides, judging both by the comments and my inbox. I wanted to take the time to post Mr. Lee Barba’s response on the front page, as well as my own counter.

Mr. Barba is the CEO of SWIM, and writes the following:

We have built our business since 1983 with a focus on the individual investor and providing them the education and service they require to make better investment decisions. Over 265,000 individual investors have graduated from our Foundation and Continuing Education Workshops and Home Study programs and we have provided our proprietary education content to the leaders in media and online financial services, currently including Yahoo! Finance, BusinessWeek Online and

We recently acquired thinkorswim, the #1-rated online broker in the most recent Barron’s ranking, a #1ranking they received for the second year in a row. We have over 650 employees located in New York, Chicago, Salt Lake City and Palo Alto who are dedicated to the development of the leading financial services technology, risk analytics and online education services in the marketplace.

While we respect your right to state your opinions about the investment prospects of SWIM, we are offended by your uninformed comments about our Company and our products. We invite you to attend one of our events and use our products so that you can reach an informed conclusion regarding our commitment to provide the individual investor with the service, analytical tools and institutional-quality data and information to make better investment decisions….we look forward to seeing you in one of our classes and on the thinkorswim platform.

In response to Mr. Barba and the other posters, I counter:

Wow, some very strong comments here and on the "Avoiding the Charlatans" board.

Allow me to respond. First, note that my comments are directed to the educational products, not the integrity of the company’s management or, for that matter, the quality of the brokerage. Second, if it is true that INVESTools products are legitimately educational, then the marketing of said products absolutely must change, for your, your shareholders’ and your customers’ good.

The tactics used and (potentially misleading) statements made on that infomercial are downright ridiculous. Trying to tell consumers that riches await them without needing any money to start, without taking on substantial risks (and don’t dare tell me options trading is not risky), and without doing much more than “following the red and green arrows” sounds nothing short of a get-rich-quick scam to me.

Most commenters have noted that I am not familiar with the products, and that they are truly and legitimately educational tools. Thus, they say, I have no basis to make claims about the product or the company, and doing so is unprofessional or unfortunate.

I offer a response and a challenge:

It is true that I have not tried the products, but please tell me what I should think about the legitimacy of the product given a) how it was marketed and b) the numerous complaints from customers who remark that either:

1. The product simply doesn’t work;

2. They never recouped their initial multi-thousand dollar investment into the education, and when they asked for a refund were pushed off;

3. The product offers nothing beyond what is already available free of charge on the internet;

4. The only way for the product to work is to use it in ways that diverge from the company’s directions;

5. The company is too focused on selling the next thing rather than their students' success.

I think that the relatively low percentage of BBB claims doesn’t really say too much, for two reasons. First, many customers go a long, long time before saying something formally to the BBB and, of course, many never do so at all (they just don’t think of it or would rather not be bothered!).

And few folks who simply feel they’ve paid too much for a product will complain to the BBB. Second, there has been at least one comment by a user (on another site) who remarks that the BBB itself did not return calls or file his complaint. So not all complaints are captured by this statistic, and it may in fact dramatically understate how many people are underwhelmed by the product.

So, it seems either the product is illegitimate and/or not worth its price (that is, a ripoff), or, at the very least, it’s marketed in an extremely questionable manner, misleading consumers and making outrageous claims. So no matter how you look at it, the company is doing SOMETHING wrong, and this is simply a logical truth. Mr. Sosnoff, with all due respect, a single infomercial can say a lot about a product and a company. In fact, if I’m not mistaken, that’s what it’s intended for! No? And furthermore, if you read my opening statement and follow my blog as my readers do, you would realize that I never recommend naked short positions.

Finally, the challenge: Mr. Barba and Mr. Sosnoff, you have both invited me to try the product for myself. As you can probably guess, I will not pony up thousands for it. But I am more than willing to try out the product to judge its legitimacy if the company is so willing to get a brutally honest review from a big skeptic. If it turns out that I’m wrong, and the product does make me bundles, I’ll share with my readers the wonderful products, and rescind any negative posts about the company.

Mr. Barba and his colleagues deserve a chance to be heard in a full rebuttal. Also, please note (and this is important): the original post was in no way a comment on the integrity of the management and employees of SWIM. It is a comment on the product and the infomercial, and a “logic” argument of why products claiming Black Box type investing success as they do on the infomercial cannot sustain themselves. I am more than happy to personally test their products and offer an honest review, as you can see from my comments above…

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