The Biggest Problem with the Personal Finance Industry is…

The Biggest Problem with the Personal Finance Industry is…

Fair warning: this is a long post…:) Last Friday, the Dow Jones Industrial Average closed above 14,000, which is where it’s been hovering the last few days. Reaching this benchmark is a pretty big deal; it’s a threshold the Dow hasn’t seen since 2007 – right before the crisis that led to the Great Recession. If you’re asking, “And what does this have to do with me?” – perfect! It’s a great lead in to the open-ended statement that serves as the title for this post: The biggest problem with the personal finance industry is… In a moment, I will share what I believe is the biggest problem with my beloved industry. (And yes, I do love my very flawed industry.) But let me first set the stage to provide context for my musings, beginning with this week’s announcement by the U.S. Justice Department. Standard & Poor’s The rating agency Standard & Poor’s is being sued by the U.S. government for its alleged role in the 2008 financial crisis. If you are so inclined you can check out the 128-page document, which details the allegations by clicking here. In short, the complaint is that S&P mislead investors by giving “stellar ratings on toxic mortgage securities” and not disclosing its conflicts of interest of getting paid by the very banks they were favorably rating. “Pound Foolish” Pound Foolish: Exposing the Dark Side of the Personal Finance Industry is a recently released book (January 2013) by Helaine Olen. And it is causing quite the stir! In her book, she questions the structure of the personal finance industry and the value of...