I think I first heard about Helaine Olen and her book, Pound Foolish: Exposing the Dark Side of the Personal Finance Industry, from Marketplace (or maybe Marketplace Money). I’m always listening to those shows, either on the radio or through their podcasts. I also caught her interview (pt 1, 2, and 3) on The Daily Show, where she went into quite a bit of detail about the topics in her book.
The idea of taking on the personal finance industry and exposing the not-so-pretty realities definitely appealed to me. I get sick of all the sneaky fees and “sponsored” financial products. So I was interested to hear what she had to say about the personal finance movement.
The author takes on quite a few topics, from personal finance “personalities” to the “flip this house” mentality. A common theme throughout the book is that the industry is just that, an industry, and so the focus of many advisers, authors, and companies is, in reality, to make money for themselves. While they may also be helping us save money, they’re not ready to do it for free, out of the kindness of their hearts.
The start of the book reviews the beginning of the personal finance movement. Olen talks about the sometimes wrong/changing talking points that come from personalities like Suze Orman and David Bach. She also emphasizes the point that all the frugality in the world can’t make up for stagnating wages and increasing medical costs and housing prices.
She goes into great detail about how screwy the whole retirement plan is now with 401(k)s, 403(b)s, etc. A move from pensions to individual retirement accounts mostly means a much more uncertain future. So much money can end up going to fees for managed funds and portfolios. Fees cut into EVERYTHING. Individual investors are left to fend for themselves, and they end up falling for expensive funds or buying investment products they don’t need. Yes, sometimes we can find no load, low fee funds for our retirement accounts. But it’s not always the case. This chapter led me to want to learn more about Teresa Ghilarducci, one of the main opponents to the current 401k system. She believes that leaving all the retirement planning to the individual was flawed and leaves most people woefully unprepared for retirement. (see one of her recent articles). I also learned about a Brightscope, a website that helps you see how your employer’s retirement plan stacks up.
Olen discusses many more topics in her book, including the focus on stock picking (and CNBC stock market obsession, Jim Cramer, etc.). She also talks about the recent push to specifically help women control their finances, noting that while there are plenty of women who are lost when it comes to managing their money, there are just as many men in the same boat. But that women are at a disadvantage mainly because “[w]omen have less money than men for most of their lives for a basic reason: they earn less and live longer.” There are other reasons, of course, and Olen goes into much more detail on the many misconceptions about Women and Money. And while she is fine with young people learning the basics of personal finance, she is not so comfortable with the way that kids learn about it: through branded experiences and sponsored programs by the big banks, all trying to get in on their lives early.
There’s plenty more to read, and Olen has pages upon pages of references and notes to back up her information.
Reading this book was a bit depressing, because it reminded me of quite a few of the harsh realities of personal finance. She doesn’t quite present any “answers” to all these problems, though she does list a few suggestions on her website as to what should be done.
I did still enjoy reading her book, since I did find myself agreeing with most of her points. It’s a lot easier to read a book that you agree with! It’s a serious read, but got me thinking a bit more about what I’m doing with my money and to be a little more skeptical of all the big money personalities and financial companies. And to watch out for fees!
Have you read Pound Foolish? What did you think of it? Did you agree or disagree with certain points? And aren’t you glad that I give away my advice completely for free?