Wall Street often puts the individual investor to sleep, then picks his or her pockets, say the authors of a new book.
And the blockbuster charges don’t end there.
In one controversial section, the book claims that even widely revered Fidelity Investments charges investors too much.
“Financial firms and money managers have intentionally made investing overly complicated and then convinced us that we cannot do it on our own,” says Bobby Monks, the primary author of “Uninvested: How Wall Street Hijacks Your Money & How to Fight Back.”
“They have elbowed their way into every corner of investing, cultivating a financial intermediary complex that disconnects us from our capital and charges us handsomely for it,” the author goes on to say.
Not surprisingly, a spokesman for the Investment Company Institute, the principal trade group of the mutual-fund industry, strongly denies the allegations.
“[The industry] is very competitive,” the spokesman added, “as evidenced by the significant and steady decline of fees paid by mutual fund investors over the last decade and a half, including average expenses of both actively managed and index funds, as well as funds offered within retirement plans.”
Nevertheless, the primary goal of most financial professionals is to achieve sales goals, even if it may not be in the best interests of the individual investor, the book claims.
Co-author Justin Jaffe concedes that the average investor often does best by relying on market index funds like the ones that have been made famous by Vanguard.
But he asserts that the ideal option would be for investors to buy individual stocks. They could then use their equity to “take control” of the securities industry.
Jaffe argues that this would go far to alleviate abuses like the widely publicized overpayment of chief executive officers.
Fidelity Investments and SIFMA, the security industry’s main trade association, both declined comment on the book.