CHAPTER 15

Integrity, or the Lack of It

Understanding the mechanics and strategies of investing is only part of what it takes to make a good investor. Knowing who to work with is vital.

Unfortunately, there are people who go into the investment business for the same reason that Willie Sutton is said to have robbed banks. That's where the money is. (Actually, this famous quote came from a reporter who put it in Sutton's mouth.)

The amount of money that can be made by financial executives is phenomenal. According to John Bogle, stock brokers, fund executives, money managers, hedge fund proprietors, plus their lawyers, accountants, marketers, and advertisers are collectively paid about $530 billion a year for moving capital around. If you are lucky enough to work for one of the most lucrative firms, you can do very well as an average employee. Goldman Sachs, at the top of the list, has 36,000 employees. Their average total compensation in 2010 was $232,000. With this kind of remuneration, there should be no excuse whatsoever for investment professionals putting their own profit motives ahead of their customers' interests.