Empire of the Fund: The Way We Save Now
William A. Birdthistle
Abstract
Empire of the Fund is an examination of the way we save now. With the rise of the 401(k) and demise of the pension, the United States has embarked upon the richest and riskiest experiment in our financial history. Over the next twenty years, 80 million baby boomers will retire at a pace of ten thousand per day. The hypothesis of our experiment is that millions of busy and untrained citizens can successfully manage their savings in a system dominated by skilled and powerful financial institutions, many of which have a record of treating individuals shabbily. The key tools for saving now are mut ... More
Empire of the Fund is an examination of the way we save now. With the rise of the 401(k) and demise of the pension, the United States has embarked upon the richest and riskiest experiment in our financial history. Over the next twenty years, 80 million baby boomers will retire at a pace of ten thousand per day. The hypothesis of our experiment is that millions of busy and untrained citizens can successfully manage their savings in a system dominated by skilled and powerful financial institutions, many of which have a record of treating individuals shabbily. The key tools for saving now are mutual funds, which hold more than $16 trillion. But funds pose three dangers: structural vulnerabilities that give managers the incentive to privilege marketing over investing; human challenges of husbanding our savings decades into the future; and the bad behavior of financiers. Few Americans are aware of the astonishing ways that some financial advisers have illegally diverted money out of mutual funds: from abetting hedge funds to trade after the legal deadline, to inflating the assets on which they are paid a percentage, to paying kickbacks for brokers to sell their funds. This book illustrates the structural flaws, perverse incentives, and litany of scandals that have bedeviled mutual funds. And by setting forth policy solutions to improve Americans’ financial literacy and bargaining power, it also attempts to safeguard our individual financial destinies and our nation’s fiscal strength.
Keywords:
mutual fund,
401(k),
investing,
retirement,
savings,
pension,
finance,
Individual Retirement Account,
financial literacy
Bibliographic Information
Print publication date: 2016 |
Print ISBN-13: 9780199398560 |
Published to Oxford Scholarship Online: August 2016 |
DOI:10.1093/acprof:oso/9780199398560.001.0001 |
Authors
Affiliations are at time of print publication.
William A. Birdthistle, author
Associate Professor of Law and Freehling Scholar, Chicago-Kent College of Law, Illinois
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