The Stewardship of Wealth: Successful Private Wealth Management for Investors and Their Advisors, + Website

Conclusion: Fixing the Industry

Alas, in the four years since the crisis came under control in the United States (it's still raging in Europe), little has changed. In early 2012, a Goldman Sachs vice president, Greg Smith, resigned publicly by publishing his letter of resignation in the New York Times. Smith said in his letter that “the environment [at Goldman Sachs] now is as toxic and destructive as I have ever seen it … I truly believe that this decline in the firm's moral fiber represents the single most serious threat to its long-run survival.”¹¹ Goldman may be the worst offender, but the other large banks aren't far behind.

At great expense to the taxpaying public, the banks have been yanked out of their own cesspools. But however urgent it may have been to preserve the financial system, the cost has been staggering, in both dollars and in ethical terms. It is patently clear that one doesn't convert rogue companies into model corporate citizens by merging them into each other or by converting them into bank holding companies.

Instead, I modestly propose the following three reforms:

1. The financial industry needs to adopt a laserlike focus on its customers and their welfare, in any event placing client interests far above the compensation interests of its executives.

2. The industry needs to eliminate its infamous conflicts of interest, and to avoid even the appearance of conflicts.

3. Finally, the industry needs to demand ethical behavior across the board from its executives ...