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Empire of the Fund: The Way We Save Now

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Description

Empire of the Fund is an exposé and examination of the way we save now. With the upward thrust of the 401(k) and demise of the pension, america has embarked upon the richest and riskiest experiment in our financial history. Over the next twenty years, nearly eighty million baby boomers will retire at a pace of ten thousand per day. The hypothesis of our experiment is that millions of peculiar, untrained, busy citizens can successfully manage trillions of dollars in a financial system dominated by wealthy, skilled, and powerful financial institutions, many of which have a record of treating individual investors shabbily.

The key tools in our 401(k) plans and individual retirement accounts are mutual funds, which have ballooned to hold more than $16 trillion. But these funds pose dangers to our savings in three ways: through structural vulnerabilities that give money managers the incentive to concentrate on marketing over making an investment; through the very human challenges of managing our savings decades into the future; and through the peril of financial professionals behaving badly, to our economic harm.

Though Americans continuously hear of the importance of low fees in fund making an investment, few are conscious about the astonishing panoply of 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’re paid a percentage, to paying kickbacks for brokers to sell their funds. This book will forewarn and forearm Americans by illustrating the structural flaws, perverse incentives, and litany of scandals that have bedeviled mutual funds.

And by setting forth a pair of policy solutions to toughen Americans’ financial literacy and bargaining power, it is going to also attempt to safeguard our individual financial destinies and our nation’s fiscal strength.

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