At least the title is accurate.
Helaine Olen's recently published book, Pound Foolish: Exposing the Dark Side of the Personal Finance Industry is precisely that: one pound of foolishness. The hardcover book weighs in at exactly 1.1 pounds of foolishness. And the (weightless) eBook version is infinitely foolish. Either version is pure foolishness.
This is a journey through the personal finance equivalent of Hades where the author, like the narrator of Dante's Inferno, sees the words "abandon hope, all ye who enter here" over the entrance to the world of wealth management she has covered for many years.
After decades of reporting on the topic of personal finance, Olen tells us she has discovered "one universal truth: When it comes to money, the vast majority of us are nuts. Bonkers. [...] Crazy." No one offering to help "crazy" individual investors manage their financial lives escapes her condemnation -- except one lonely advocate of a mandatory universal savings scheme which would require everyone to invest 5 percent of their pre-tax earnings in inflation-protected U.S. Treasury bonds.
Here is a sampling of the "I am a victim" fare Olen offers up, in increasing order of hopelessness:
- "We've been sold a dream of savings and investing that had no basis in history or reality."
- "We do not live in an economic environment that will permit... personal financial progress."
- "The depressing truth is that financial literacy is impossible."
- "Financial literacy is a doomed crusade."
- "Sigmund Freud equated money with shit. Literally."
The financial media, particularly CNBC's Squawk Box and Jim Cramer's Mad Money, and self-promoting direct-to-investor personal finance gurus like Suze Orman, inhabit the first circle of hell in Olen's Hades. The next several circles are reserved for manufacturers and distributors of variable annuities, real estate syndicators and practitioners of "financial therapy."
Their crime: "Most financial advice published and dished out by the truckload is useless."
But the lowest circles of hell are reserved for (who else) "brokers" who charge commissions for the products and services they provide. In this section of the book, Olen's errors and omissions are so extensive as to make it hard to know where to begin setting the record straight.
Let's start here: "Brokers oppose having the fiduciary standard as it is currently written apply to them because it would significantly cut into their ability to sell products based on the most attractive commission," Olen writes.
As a brokerage industry executive who has strongly supported a new uniform fiduciary standard of care, I can tell you that Olen's analysis is "nuts," bonkers," "crazy"... and incorrect.
Most of the major wealth management firms already operate under a fiduciary standard, and have for years. (A fiduciary is required to put their clients' interest before their own, to disclose any conflicts of interest, and to get client approval before engaging in conflicted behavior.) In fact, most major wealth management firms derive the majority of their revenues from acting as fiduciaries.
The issue is that the fiduciary standard and the rules and case law that have grown up around it applies to only one type of personal finance activity -- managing clients' money as investment advisers, usually with discretion, usually for a fee based on assets under management. Most major wealth management firms do many other things for their clients. For those activities, clients don't always want to pay an annual fee. Paying a fee is not always the most cost effective way to pay for portfolio management.
Industry leaders support extending the protection of a fiduciary standard to those "other things" as long as it is done right. Which means preserving investors' access to the products and services they have today, and protecting their ability to choose who they work with and how they pay for wealth management services.
But these complexities and nuances are lost on an author who describes the book Personal Finance for Dummies as "one of the most informative, basic, and unintimidating books... I've ever read."
I'm not the only one who was underwhelmed. Author Roger Lowenstein writes in Bloomberg Businessweek that "her prose shows signs of laziness" and "she lacks a core principle." Lowenstein concludes that Olen "criticizes virtually every aspect of finance, but -- like the Occupy Wall Street movement she praises -- has no suggestion for what finance should be."
What does Olen conclude we should do? "We need to talk about our money." Not our personal financial situations, mind you, but our collective money. Whatever that means.
Please. Do what I wish I'd done. Don't buy this book. Save the $27.95 and add it to your Individual Retirement Account.
According to Olen... you're going to need it.