Money Managers Make Big Fees and Close Eyes

John Bogle, founder of Vanguard, is one of the few smart people in the investment world. He always tells it like it is, even when he strikes close to home. In an interview recently, Bogle pointed his finger at mutual fund managers, retirement account managers, pension managers, money market managers, institutional money managers and the like -- people who charge or make large fees for their work and who together control some 70% of the shares of large public companies today.

John Bogle, founder of Vanguard, is one of the few smart people in the investment world.  He always tells it like it is, even when he strikes close to home.  In an interview recently, Bogle pointed his finger at mutual fund managers, retirement account managers, pension managers, money market managers, institutional money managers and the like  -- people who charge or make large fees for their work and who together control some 70% of the shares of large public companies today.  

 

These money managers, Bogle said, were every bit a culpable as the borrowers, lenders, scrutinizers, regulators, and traders.  The only difference, until he spoke up, was that they had gotten off free of attention and criticism.  It is, in fact, quite amazing that the very people we trusted to care for our monies and to represent our interest were too busy making money from fees for themselves to care much about the very people they were supposed to serve.  They were exactly like (in fact they are the same as) the feeder funds that plowed billions of other people’s money into Madoff’s schemes. 

 

That they have avoided public scrutiny for so long is what is so stunning.  They are still out there hawking their wares, trying to convince us all that their funds or services are to be trusted.  The whole system is broken, and until there is both change and accountability one must be on guard in ways never before thought necessary.  Bogle thinks these managers need to relearn what it means to be a fiduciary – to act for the sole benefit and interest of another.  Until they do, we as investors would do as well or a lot better managing our own money.  We are not being served by money managers today, and it is going to be some time before I trust the stuff coming out of their mouths.  We all need to listen with more skepticism and to demand far more from these crooks.

Ari Socolow
Ari Socolow: Ari Socolow is the Chief Economist and Editor-in-Chief at BestCashCow. He is particularly interested in issues relating to financial literacy and bank transparency. Since co-founding this website in 2005, Ari has been frequently cited in the media as an expert on local and national savings accounts, CD products, mortgage and loan products and credit card rewards products.

Your code to embed this article on your website* :

*You are allowed to change only styles on the code of this iframe.

Comments

  • Arnold

    April 13, 2009

    It's not just the mutual fund mangers. What about the board of directors at companies that approved outlandish compensation for executive management? The list goes on and on. The reality is that shareholders have been sitting at the bottom of a river that is sucked dry long before its waters reached them. If you invest in public markets, you are really trusting your money to others and as has been shown, this trust is very often misplaced.

  • Jeff

    April 14, 2009

    All these folks do is offer you diversification so that they match whatever they are targetting (the entire market or some other index). They charge you a fortune for this. If the market crashes or you don't get the desired results, they shrug their shoulders and say: "You invested in this fund because you wanted us to match the performance of this, that and the other. You didn't invest in it because you wanted to be in cash."

  • «
  • Page 1 of 1
  • »
Add your Comment