Cover image for Pound foolish : exposing the dark side of the personal finance industry
Title:
Pound foolish : exposing the dark side of the personal finance industry
Author:
Olen, Helaine.
Personal Author:
Publication Information:
New York : Portfolio/Penguin, [2012]

©2012
Physical Description:
x, 292 pages ; 24 cm
Summary:
Describes how a financial column assignment revealed to the author the unethical machinations of the multi-billion-dollar personal finance industry and its false promises of quick and easy wealth, explaining how everyday investors are routinely misled by self-proclaimed money experts who exploit clients to increase their own wealth.
Language:
English
Contents:
What hath Sylvia wrought? -- The Tao of Suze -- The latte is a lie -- Slip slidin' away -- The road to Pas Tina -- I've got the horse right here -- An empire of her own -- Who wants to be a real estate millionaire? -- Elmo is b(r)ought to you by the letter P -- We need to talk about our money.
ISBN:
9781591844891
Format :
Book

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Summary

Summary

If you've ever bought a personal finance book, watched a TV show about stock picking, listened to a radio show about getting out of debt, or attended a seminar to help you plan for your retirement, you've probably heard some version of these quotes:

"What's keeping you from being rich? In most cases, it is simply a lack of belief." --SUZE ORMAN, The Courage to Be Rich

"Are you latte-ing away your financial future?" --DAVID BACH, Smart Women Finish Rich

"I know you're capable of picking winning stocks and holding on to them." --JIM CRAMER, Mad Money

They're common refrains among personal finance gurus. There's just one problem: those and many simi­lar statements are false.

For the past few decades, Americans have spent billions of dollars on personal finance products. As salaries have stagnated and companies have cut back on benefits, we've taken matters into our own hands, embracing the can-do attitude that if we're smart enough, we can overcome even daunting financial obstacles. But that's not true.

In this meticulously reported and shocking book, journalist and former financial columnist Helaine Olen goes behind the curtain of the personal finance industry to expose the myths, contradictions, and outright lies it has perpetuated. She shows how an industry that started as a response to the Great Depression morphed into a behemoth that thrives by selling us products and services that offer little if any help.

Olen calls out some of the biggest names in the business, revealing how even the most respected gurus have engaged in dubious, even deceitful, prac­tices--from accepting payments from banks and corporations in exchange for promoting certain prod­ucts to blaming the victims of economic catastrophe for their own financial misfortune. Pound Foolish also disproves many myths about spending and saving, including:

Small pleasures can bankrupt you: Gurus popular­ized the idea that cutting out lattes and other small expenditures could make us millionaires. But reduc­ing our caffeine consumption will not offset our biggest expenses: housing, education, health care, and retirement. Disciplined investing will make you rich: Gurus also love to show how steady investing can turn modest savings into a huge nest egg at retirement. But these calculations assume a healthy market and a lifetime without any setbacks--two conditions that have no connection to the real world. Women need extra help managing money: Product pushers often target women, whose alleged financial ignorance supposedly leaves them especially at risk. In reality, women and men are both terrible at han­dling finances. Financial literacy classes will prevent future eco­nomic crises: Experts like to claim mandatory sessions on personal finance in school will cure many of our money ills. Not only is there little evidence this is true, the entire movement is largely funded and promoted by the financial services sector.

Weaving together original reporting, interviews with experts, and studies from disciplines ranging from behavioral economics to retirement planning, Pound Foolish is a compassionate and compelling book that will change the way we think and talk about our money.


Author Notes

HELAINE OLEN is a free­lance journalist whose work has appeared in The New York Times, The Washington Post, Slate, Salon, Forbes, Business­Week, and elsewhere. She wrote and edited the popu­lar Money Makeover series in the Los Angeles Times . She lives in New York City with her family. Follow her on Twitter at @helaineolen.


Reviews 3

Booklist Review

The personal finance and investment industry is a juggernaut, a part of both the ascendant financial services sector of our economy and the ever-booming self-help arena, states Olen, personal finance writer. Readers learn about Sylvia Porter, whom Olen describes as the mother of the personal financial industrial complex. Porter, by the 1960s, had a daily column in which she explained stocks, bonds, and budgeting to millions of Americans. From that beginning mushroomed financial therapy (psychotherapy, life coaching, and financial planning), which originated in the 1970s and caught substantial media attention after the 2008 financial debacle. Explaining the shortcomings of financial therapy, the author cites bias toward individual demons, errors in comparing financial problems of the rich to those of average and poor Americans, and a dysfunctional relationship with class, specifically the lack of class mobility in a country that prides itself on the American Dream. This thought-provoking book alerts us to important issues in today's postrecession economy and thus will enlighten many library patrons.--Whaley, Mary Copyright 2010 Booklist


Publisher's Weekly Review

The worth of the personal finance industry is inversely proportional to its ubiquity, according to Forbes.com blogger Olen in his breezy romp through recent financial history. According to Olen, given today's increasing income inequality and shaky employment prospects, a secure livelihood or retirement is a chimera. Olen's fast-paced narrative focuses on the rise of media celebrities and financial pundits who assure us: "You can do it!" What we can do is sign up for overhyped and overpriced investment seminars and services, promoted largely by the powerful motivator of fear. Such luminaries as Suze Orman, Jim Cramer, Robert Kiyosaki, and Peter Schiff may be household names, but their (often self-serving) advice did not prevent American retirement vehicles from losing $2 trillion in 2007-2008. The proposition that media icons are also self-promoters will astonish no one, and Olen's frequent iteration of this point diminishes the value of her observations. Though her intention is to provide an expose, not financial advice, her own observations are commonplace. One can enjoy her glimpses of the world of financial celebrity while remaining skeptical about the scope of her proposed remedy. Agent: Andrew Stuart, the Stuart Agency. (Jan.) (c) Copyright PWxyz, LLC. All rights reserved.


Choice Review

The evolution of retirement plans from defined benefit to defined contribution and the development of IRA, IRA rollover, 401(k), and Keogh retirement plans has placed increased responsibility on individuals to make investment decisions. An industry has grown devoted to marketing personal financial services and advice. Much of this advice comes through the media, as illustrated by individuals such as Jim Cramer, Jane Bryant Quinn, and Suze Orman. In addition, there has been significant growth in the industry for financial planning and investing for individuals. Olen, a financial journalist, argues that much of the advice and financial planning is inaccurate, contradictory, and self-serving, and primarily benefits the providers through fees and commissions. One particularly interesting chapter considers the complimentary dinner offered to woo new clients by preying on the participants' ignorance and fear. Olen extends her argument to psychotherapy and life-planning professionals and even finds a relationship between the decline of the middle class, financial stress, and eating disorders. Olen offers no substantive solutions, but her expose should warn individuals contemplating investment strategies and the use of professional help. An index plus footnotes combined with bibliography increase the usefulness of the book. Summing Up: Recommended. Public, academic, and professional library collections. H. Mayo The College of New Jersey


Table of Contents

Introductionp. 1
Chapter 1 What Hath Sylvia Wrought?p. 13
Chapter 2 The Tao of Suzep. 27
Chapter 3 The Latte is a Liep. 48
Chapter 4 Slip Slidin' Awayp. 74
Chapter 5 The Road to Pas Tinap. 102
Chapter 6 I've Got The Horse Right Herep. 127
Chapter 7 An Empire of her Ownp. 150
Chapter 8 Who Wants to be a Real Estate Millionaire?p. 172
Chapter 9 Elmo Is B(r)ought to You by the Letter Pp. 196
Conclusion: We Need to Talk About Our Moneyp. 219
Acknowledgmentsp. 237
Notesp. 241
Indexp. 285