“Financial institutions and policymakers in the United States and United Kingdom have engineered a system that has transformed worker savings into a virtual ATM for the financial industry”.
Financial services are failing us and the planet. Yet the financial system is essential to our economy and our personal lives. Without it, we can’t solve any of the world’s great problems: poverty, sustainability, development. We wouldn’t have pensions, mortgages or savings accounts.
Each year we pay billions in fees to those who run our financial system. The money comes from our bank accounts, our pensions, our borrowing, and often we aren’t told that the money has been taken. These billions may be justified if the finance industry does a good job, but as this book shows, it too often fails us.
Financial institutions regularly place their business interests first, charging for advice that does nothing to improve performance, employing short-term buying strategies that are corrosive to building long-term value, and sometimes even concealing both their practices and their investment strategies from investors.
The authors of a new book What They Do With Your Money: How the Financial System Fails Us, and How to Fix It (published June 7), explain how a tyranny of errant expertise, naive regulation and a misreading of economics combine to impose a huge stealth tax on our savings and our economies. They also lay out an agenda for correcting the loopholes that allow the financial industry to profit at our expense.
The book addresses two simple questions: How could we have made such a bad job of such an important industry? And how can we find a new path that allows the finance industry to help serve us?
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To celebrate the publication of What They Do With Your Money, Good With Money readers can purchase the book direct from Yale University Press London at the special offer price of £16 (RRP £20) with free p&p. Place your order online at Yale Books, using promo code Y1630 at the checkout stage of your order. Offer available to UK customers only and ends 31 August 16.
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It shows how a simpler but more rational system of regulation would better protect our interests, allowing only those who offer good service to prosper, and that with such an approach we could increase the value of our pensions by 50%, as well as creating more jobs, more economic activity and more wealth.
Read it if you want to put the world to rights.
What they say
“Uncompromising in its critique and optimistic in its vision, What They Do With Your Money not only addresses the problems in the finance industry, it offers practical solutions that can change the world for the better.” —Gordon Brown, former Prime Minister of the United Kingdom
“Davis, Lukomnik and Pitt‑Watson paint a bleak picture of an out‑of‑control financial system that fails to serve the aspirations of ordinary individuals. Not content simply to identify the problem, the authors propose creative (principles‑based) solutions. If you care about the role of finance in today’s economy, read this provocative, compelling book.” —David Swensen, Chief Investment Officer, Yale University
“This is a clear and persuasive analysis of what is wrong with the financial system. The good news is that much of it is fixable and this excellent book gives a compelling account of how.”—David Walker, Chairman of Winton Capital, former Chairman of Barclays
“This excellent and well written book exposes the multiple leakages to various agents operating between savers and pensioners and the companies they are invested in as well as the problems of collective industry failure. It does not just make clear the problems and the often perverse incentives in the current system, but with clear ‘takeaways’ after each chapter, the authors propose practical solutions from greater transparency to systemic regulation, with an outline of what a ‘People’s Pension Plan’ and a ‘Common‑Sense Bank’ would look like. The book has insights for the individual investor as well as those in the industry interested in making the investment process fairer and more responsible.” — Sir Mark Moody‑Stuart, former chairman of Royal Dutch Shell
“For those wishing to know what’s right with our financial system and how it can go wrong—or what’s wrong with it and how it can be set right, this is the book for you. Its return to common sense and the basics of finance is refreshing in a world too often characterized by obfuscation and complexity. Clear, concise, sensible and incontrovertible.” —Steve Lydenberg, Founder and CEO of The Investment Integration Project
“This book brilliantly describes what finance is for and shows how we, the people, who are the ultimate owners, can influence the system to meet our long term needs.” —Dame Barbara Stocking, President, Murray Edwards College, Cambridge; former head of Oxfam GB
“This fine book provides remarkable insights into what has gone wrong in our financial institutions and markets. In its call for action by us ‑ we investors who collectively own corporate America ‑ the authors offer clear and actionable steps that we can take to build a corporate world that serves our own interests, not Wall Street’s.” —John C. Bogle, founder and former chief, The Vanguard Group
“As only insiders can, Davis, Lukomnik and Pitt‑Watson shine a spotlight on hidden cracks in the system that can still put hard‑earned savings at risk. This is a vital book for anyone concerned about how to make the finance industry generate wealth for all of us.”—Former U.S. Senator Christopher Dodd
About the authors
Stephen Davis is senior fellow at Harvard Law School’s program on corporate governance. Winner of the 2011 ICGN Award for Excellence in Corporate Governance, Davis has testified at US congressional hearings, been a columnist for the Financial Times and Compliance Week, and is a frequent media commentator on corporate governance. He has been named by Directorship as among the 100 most influential figures in corporate governance and by Trust Across America as among the Top 100 Thought Leaders in Trustworthy Business Behavior. He lives near New Haven, CT.
Jon Lukomnik is a pioneer of modern corporate governance. He has run a top ten pension fund (New York City), been managing director of a top ten hedge fund (CDC), and helped rehabilitate one of the largest frauds and bankruptcies in the world (Worldcom). Winner of the 2013 ICGN Award for Excellence in Corporate Governance, he has also been honored by the NACD, Ethisphere and Global Proxy Watch. A frequent media source, he serves as Executive Director of the IRRC Institute and Managing Partner of Sinclair Capital. He lives in New York City.
David Pitt‑Watson is recognised as one of the leading thinkers and practitioners in Europe, in the field of corporate governance and responsible investment. He is Chair of Hermes Focus Funds, and a former board member of Hermes Fund Managers. As co‑founder, and former CEO of the Focus Funds and Equity Ownership Service, he built and led the largest responsible investment group of any institutional fund manager in the world. He lives in London, England.
