The way we save now

Recently arrived in the Ratio Juris mailbag: William A. Birdthistle, Empire of the Fund: The Way We Save Now. As pensions fade into economic history, the rising empire of defined-contribution accounts has shifted the risk of inadequate retirement savings squarely onto the shoulders of individual workers. Birdthistle's new book ruefully observes: "For the most part, however, we are a nation of investing amateurs." The primary tool of 401(k) plans and IRAs — the mutual fund — has proved vulnerable to savings-eroding pitfalls. While investors struggle with financial literacy and the behavioral hurdles of saving for distant future contingencies, fund managers have far too much opportunity and incentive to stress marketing over the actual business of investing. The entire business is riddled with opportunities for financial professionals to exploit clients who are as ignorant as they are innocent.

America teeters upon a coming age of intergenerational social insecurity. Empire of the Fund lays out a thoughtful case for reform of the mutual fund industry and an infusion of financial literacy among investors. Nothing short of the financial future hangs in the balance.