What Bugs You About Your Money?

01/10/2014 03:34 pm ET | Updated Mar 12, 2014

If you are one of the many millions of people who have enough wealth outside of your home to worry about how to invest it, your foremost questions are probably what you should be worrying about most and what should you do about it.

Whether you are 30 years old or 80, you should review the past half-century of investing to see what is relevant to you among the many changes that have occurred during that period.

The three most basic changes have been:

• In 1950, most investable wealth was handled by its owners. Today, almost all such wealth is handled by agents of one sort or another.
• The arrival of computers (both large and small) since 1950 has made possible almost costless trading as well as the creation of complex derivative type investments with endless permutations and combinations that befuddle most civilian investors.
• The Internet, with amazing abilities to search vast repositories of information, can put instantaneous and ubiquitous information at the fingertips of any interested person.

If one of your concerns is that you have not been able to consistently outperform the averages that relate to your goals, you are in a very large group of investors who share that same experience and disappointment. You will also be interested to know that the appreciation of the value of most publicly-owned investment management businesses has exceeded the appreciation of the assets managed by those firms.

There are several reasons why that happened:

• The agents working for you have had an edge on you (as in 'the house always wins' truth about professional gambling, horse racing etc.) and were busy making themselves rich at your expense by amassing more and more assets which benefitted them regardless of result: giant mutual funds and complexes of funds; hedge funds with 2/20 compensation schemes-which never made sense for the investors despite giving agents a giant incentive; high speed arbitrage trading; ETFs and even good old simple index funds which guarantee mediocrity with self-fulfilling, inexorable reversion to the mean, but are a reasonable option for people who fear navigating the crowded waters around Wall Street.

• A consistent misalignment of incentives, coupled with massive advertising aimed at creating broad public trust in all sorts of investing agents which at best is mostly misleading and at worst truly to be pilloried.

• Complexity and confusion also enabled expert "agents" to utilize their edge over even quite sophisticated civilian owners of wealth who struggle to make sense in today's maze of possibilities and vogues. That complexity has moved financial markets further away from telling the story of the realities in the business world to begin instead more to reflect simply a collective judgment of ricocheting interactions of random computer bets on numbers that only tangentially relate to reality.

What can you - struggling with this so called 'high-grade' problem because you are privileged to have it - do to improve your own performance? And, what can society at large do to help get a better balance in the asset allocation process called Wall Street?

You can try harder to find agents whose interests are better aligned with yours. Look for what and how they deal with their own wealth. If that resembles closely what they propose to do for you, it is a promising indicator. If they are required to share the pain of poor performance in a meaningful way, that too is a good indicator.

As far as dealing with the systemic problems that surround the whole financial system, you can root harder against the lobbying, for example which is trying to kill the Volcker Rule, and for ever greater sunlight into the misalignment between you, the owners of the wealth, and the often sanctimonious preaching by people who are seeking to "gather" your assets to do what is allegedly good for you and make themselves ever richer.

Above all, never become complacent, particularly after as good a year for wealth as 2013, and remain demanding and skeptical of all siren stories.