"How-to" financial books continue to proliferate, flooding Barnes & Noble and other outlets -- determined to guide people on investment issues essential to their lives and prospects. There's little doubt they do play an important role in this information-hungry world as some of these well-intentioned books provide information and, more importantly, insight into issues that befuddle a big part of the non-Wall Street populace.
The ubiquitous advice books attempt to identify landmines in the many aspects of investing. But if they are worth paying attention to, they should also provide solutions or at least alternative routes to avoid the hazards the authors seek to illuminate.
So initially, the recently released book, "Pound Foolish, Exposing the Dark Side of the Personal Finance Industry," by free-lance journalist and Forbes contributor Helaine Olen focusing on an area that undoubtedly needs enlightened discussion, looked encouraging as timely reading material.
The book seeks to “expose the myths, contradictions, and outright lies it (the personal finance industry) has perpetuated,” according to the book's description of Olen’s purpose in writing "Pound Foolish." Unfortunately, however, the book neglects to propose, much less provide solutions to the very problems it highlights.
Indeed, Olen tries her best to write off the personal-finance industry as peopled with hucksters, if not outright frauds. She depicts the world of investment professionals, from the stock brokers and insurance agents to practically every men and women in the industry, as driven mainly by greed, mendacity, and the exploitation of those in the dark about money and investments.
Those who read this book possibly may never again trust anybody having to do with the investment business. That’s partly because this collection of hard-luck anecdotes about people disillusioned by their encounter and experience with the unscrupulous in financial organizations is hardly welcome news.
One interesting chapter is its re-telling of horror stories about several once-glorified investment gurus who have since been swept off the stage as a result of the colossal failure of their forecasts. Before their fall, those investment predictions created headlines that turned them into instant multi-millionaire celebrities. Among them: Howard Ruff, Robert Prechter, Peter Schiff, and Harry Dent Jr. The book also takes a swipe at current investment celebrities still holding sway, but whose tactics and antics don’t thrill the author at all, such as Suze Orman and CNBC Mad Money's Jim Cramer.
But the major thesis of the book is all about Olen's argument that the personal finance industry as a whole delivers misleading messages, if not downright false promises, that result in investors ending up holding the short stick.
She asserts that many, if not all, of the lunches, breakfasts or dinners lavished on would-be investors by financial organizations, promise unreachable financial nirvana mainly to line their pockets with unethically gained profits.
"The personal finance industrial complex continues to prosper... Everyday our e-mail boxes and Facebook and Twitter feeds overflow with come-ons, appeals, and pithy advice ranging from savings strategies to sure-thing stock tips. Books are released by the truckload purporting to share the secret of successful investing while experts prattle away everywhere, from the Today Show to CNBC. These experts paint themselves as our financial saviors, while often neglecting to mention they are making a living (and a good living!) not just from their television appearances and books, but by their agreements with everyone and everything from mutual fund companies and credit reporting agencies -- not to mention the 'host' of 'products' they try to sell us. This sets up a basic conflict. These experts need to sound authoritative to get our attention and convince us they alone have the answer. But if they actually had the answer, we would no longer need them, effectively ending their reason for business. So much of the advice we receive is suspect, but in our desperation, we take it anyway.
"I wish all we have been told about their world were true. Imagine what a wonderful world it would be if Suze Orman and the folks at CNBC really could solve all our financial problems! I simply want to help people realize that just because they're not millionaires, doesn't mean they're failures."
Unfair and untrue? That's what several investment professionals say about the book. My overall assessment is the book is an entirely negative and dour perspective, riddled with a multiple of omissions," says Nick Stuller, CEO of Advice IQ, an organization that helps investors avoid falling into the clutches of fraudsters, like the Bernie Madoffs of the investment world.
There are two million licensed financial and insurance professionals and based on the book's own numbers, notes Stuller, only 2% of advisors and agents do investment lunches or dinners to promote their services and products -- and most of them are sponsored by honest, dedicated professionals aimed at helping the less-informed about investing.
Stuller is a credible source on the subject because Advise IQ's privy to crucial information about many investment planners, advisors, and securities brokers based on its work as the only financial service and database company that performs advisory due-diligence work across all primary U.S. regulators.
The company has an online directory of financial advisors (FAs) who have been checked against the records of the Securities and Exchange Commission, Financial Industry Regulatory Authority (FINRA), as well as the investment advisor and insurance regulators in all 50 states. In other words, investors can check out any financial planner or investment pro through Advice IQ with the assurance that the advisers are in good standing and have not committed any regulatory infractions.
"Pound Foolish" pretty much rambles on and on, jumping all over the place and pointing only to the negatives and omits any balance to any of the author's assertions, says Stuller. "The book is definitely devoid of balanced research as the anecdotes in the book are nearly 100% negative, and ignores a lot of facts about the industry," argues Stuller.
As an example, it claims that countless studies have been conducted about Americans and retirement plans post 2008, and they all say the same thing:"We're petrified and getting more scared by the day." The book quotes pollster Bill McIntruff as stating that "if we find a consensus about anything in America, this is it." McIntruff's 2011 annual National Voter Survey found almost nine out of ten people worried.
That's quite a ridiculous assumption -- that nobody has been a winner in investing, says Stuller. He says the book would have had some semblance of credibility if it had presented a fair and balanced perspective. Consider: Not one successful investor was quoted in the book, laments Stuller. Instead, it brings up "a selection of misstatements and distortions," he says.
One of the book's many misstatements, says Stuller, is the book's claim that although investing is very risky, "this is not what many people (in the industry) will tell you." But that's totally wrong, counters Stuller. "Every advertisement by brokerage houses and mutual fund companies warns against the "potential risks and danger of losses, including the loss of one's principal investment," he notes.
Stuller takes particular umbrage at Olen's assertion that "there is no personal finance or investment scheme that can fully protect us from downward spirals or plain old ill luck." That statement was premised on her observation that personal finance advisors aren't able to do it all. "As an adjunct, it can make a valuable contribution, allowing us to plan, to get out of and stay out of debt, and to hopefully better our position when the time comes for retirement and other long-term goals." For that, says Olen, "we need family, friends and finally, the government, the back-step enforcer of everything, from the rule of law to insurer of last resort."
In plain fact, the industry doesn’t guarantee any such "bad luck protection," says Stuller. But there are many investments based on the advice of personal-finance pros that have succeeded, yet the book deliberately ignored such stories.
What's obviously missing from the book is how author Olen intends help solve the problems she alluded to. What solution does she propose? The book is silent on this, and proposes nothing.
After the many problems she has cited and how she minimized the work of personal-finance advisers, her proposed solution is simply: "let’s talk." The conclusion she proposed in the book:
"Let us begin a conversation about our money. From there, all things will become possible."
No wonder people like Stuller protests the book's multiple omissions. It "lacks any positive comments about advisors, nor does it present interviews with actual advisors and management officials at financial firms -- nor was there mention of any investor-success stories," says Stuller.
Bottom line: It's foolish for the book not to have taken the trouble of providing possible answers or solutions to the problems it dwelled on.
