Wall Street Potholes

Chapter 9Putting Investors First

The Future of Finance

Putting Investors First. That was the motivation behind the work that went into this book. The 2008 financial crisis did nothing to improve the already poor reputation of the financial services industry, even though the popular narrative of gambling bankers needing a government bailout is a gross distortion of the causes. While there were certainly bad actors and subsequent penalties that by 2013 had already exceeded $100 billion (Campbell, 2013), the everyday self-seeking advice that is provided to so many individual investors is what really caught our attention. This was happening before the crisis and continued afterward. It's why financial services companies and banks consistently receive low ratings on trust in surveys of public opinion (Harper, 2013).

My own epiphany around this issue occurred during the summer of 2013. After 23 years at JPMorgan spent dealing with institutional clients who generally have the resources to sort good advice from bad, I had set up my own investment firm and began managing money for wealthy individuals as well as institutions. As I reviewed the non-traded REIT investment held by Penelope (described in Chapter 1), growing incredulity came over me as the prospectus revealed just how abusive the product was. I imagined the guilty laughter of the brokers selling such products after each successful sale drew in another unsuspecting client with little understanding of just how badly their trust ...