Wall Street Potholes

Preface

Financiers were never especially well liked prior to the financial crisis of 2008. The bank bailouts compounded a general belief that bankers always make money regardless of the outcomes for their clients. This popular view had never sat easily with me as one who had made his career first in London and then on Wall Street. Although there were inevitably bad actors, I clung to the idea that part of the reputational challenge was the result of poor understanding by the general public.

Then I met Penelope, as described in Chapter 1, and was prompted to learn about non-traded REITs (real estate investment trusts), a murky corner of the securities markets that can only damage the reputation of anybody involved in the sale of these instruments to the general public. The fees, conflicts of interest, disingenuous marketing, and more fees were breathtaking. That it was all legal, because of its disclosure via a thick, densely written prospectus, was astonishing.

Discussions with industry colleagues found like-minded practitioners with their own examples of shoddy, self-interested advice provided to trusting clients. It soon became clear that a collection of advice from people on the inside would fill a needed gap in the education available to people simply trying to save for retirement.

The CFA Institute's efforts to shape the “Future of Finance,” and especially the Putting Investors First initiative, provided further impetus to promote better outcomes by warning against the wrong ...