{"id":181812,"date":"2016-03-10T19:47:00","date_gmt":"2016-03-11T00:47:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2016\/03\/10\/didnt-expect-this-to-appear-in-fortune-magazine\/"},"modified":"2016-03-10T19:47:00","modified_gmt":"2016-03-11T00:47:00","slug":"didnt-expect-this-to-appear-in-fortune-magazine","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2016\/03\/10\/didnt-expect-this-to-appear-in-fortune-magazine\/","title":{"rendered":"Didn’t Expect This to Appear in Fortune Magazine"},"content":{"rendered":"

This essay eviscerates the claims by the finance industry that it needs to cheat its customers to function<\/a>:<\/p>\n

There\u2019s a horrendous lie being told by the brokerage industry and its army of lobbying groups. It goes something like this:<\/span><\/p>\n

\u201cMiddle-class Americans are not worth serving if we can\u2019t charge them egregious fees and sell them products that they do not need.\u201d<\/span><\/p><\/blockquote>\n

They\u2019re not using that exact language, but this is precisely what they\u2019re saying. This message disgusts me personally and I\u2019m in a unique position to comment on it professionally. As I documented in my book Backstage Wall Street, the business model of selling investment products to investors is hopelessly rife with conflicts.<\/p>\n

\u2026\u2026\u2026<\/p>\n

In other industries, higher-priced products are typically superior in both quality and efficacy\u2014think luxury watches and cars, or the difference between a roadside motel and the Ritz-Carlton. With financial services products, however, it works in exactly the opposite way. Virtually every single piece of academic research ever produced on the topic says that the less you pay for an investment product, and the simpler it is, the better off you\u2019ll be over the long-term. <\/span>

<\/span>Wall Street knows this for a fact. It\u2019s undeniable that high fees and excessive trading costs damage the long-term potential of a retirement account and work against investors. Unfortunately, the brokerage business is predicated on selling the higher cost solutions because that\u2019s where the profit margins are. The incentives paid by fund companies to brokerage firm sales forces across the country are a cancer that must be rooted out. This built-in conflict between advisor and client is partially responsible for the nation\u2019s looming retirement crisis. It also plays a role in the finance industry\u2019s almost universally negative perception among Americans.<\/p>\n

\u2026\u2026\u2026<\/span>

<\/span>The logic here is astounding. The argument is literally that some people need to be taken advantage of in order for them to be worthwhile clients. I believe Ryan is on the wrong side of this issue and on the wrong side of history. But more than that, his argument\u2014that somehow conflicted advice is better than none at all\u2014is wrong for at least two reasons.<\/span><\/p><\/blockquote>\n

It’s a righteous rant.  I suggest that you read the rest.<\/p>\n","protected":false},"excerpt":{"rendered":"

This essay eviscerates the claims by the finance industry that it needs to cheat its customers to function: There\u2019s a horrendous lie being told by the brokerage industry and its army of lobbying groups. It goes something like this: \u201cMiddle-class Americans are not worth serving if we can\u2019t charge them egregious fees and sell them …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1005,970,1004,1002],"tags":[],"class_list":["post-181812","post","type-post","status-publish","format-standard","hentry","category-business","category-corruption","category-finance","category-good-writing"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/181812"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=181812"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/181812\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=181812"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=181812"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=181812"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}