Helaine Olen, Portfolio/Penguin, $27.95, 292 pages
Helaine Olen thinks Americans have lost their financial minds.
Name your idiocy and otherwise-sensible people have done it: Gorged on credit cards, jumped into "no-money down" mortgages, frittered away 401(k) plans on day trading.
An entire industry exists to stop this from happening. In 2011, there were 319,456 financial advisers working in the United States. If only this "personal finance industrial complex" was truly on the side of its clients. As Olen makes clear in "Pound Foolish," that is often not the case.
"So much of the advice we receive is suspect, but in our desperation we take it anyway," she writes, patiently skewering the industry she has been writing about for almost 20 years in the Los Angeles Times and elsewhere.
Take "The Latte Factor," the money-spinning idea of David Bach, a former senior vice president at Morgan Stanley. The theory goes that if we forgo our daily $5 trip to Starbucks and invest the money, we could end up with a stash of $2 million by the time we retire. Flat wrong, says Olen. A more likely (though still optimistic) outcome is a nest egg of around $170,000.
Olen takes us into the world of free meals offered to panicked, retirement-age Americans to pitch them "investment opportunities." She finds a plethora of fees, commissions, dizzying annuities and conflicts of interest.
The central promise of much personal financial advice is alluring. It taps into the strong American spirit of practical can-do-ism.
Its real power, however, lies in our absolute need for it. The rise of the personal finance industry has coincided with an era of stagnant salaries, withering pensions, and staggering rises in the cost of education and health care.
"We were participants in a vast experiment, a hope that personal finance and investments would do it all for us," Olen writes. With 43 percent of the population now living paycheck to paycheck, according to Olen, is it any wonder that people have ended up making poor, desperate decisions?