Where Are The Customers’ Yachts?

An out-of-town visitor was being shown the wonders of the New York financial district. When the party arrived at the Battery, one of the guides indicated some handsome ships riding at anchor. He said, “Look, those are the bankers’ and brokers’ yachts.” The naive customer asked: “Where are the customers’ yachts?”

__Fred Schwed. Jr., Where Are the Customers’ Yachts? (1940)

There is nothing like the power of the good anecdote to focus the mind. Sometimes the anecdote is so striking that it comes to be a root metaphor, shorthand for some basic insight or understanding. The Customers’ Yachts story is just such anecdote. We laugh at the (supposedly) innocent question, “Where are the customers’ yachts?” because we know that the bankers and the brokers are supposed to be serving the needs of their customers and yet, surprise, the ones providing the service seem to get more out of the relationship than the served.

The Customers’ Yacht story nicely encapsulates the whole issue of “perceived” versus “realized” value in professional relationships and, of course, particularly in regards to our “money” experts.

Let’s face it. We are a bit bedazzled by the big financial institutions. Those buildings. Those slick ads on TV (particularly those televised golf tournaments). The prospectuses! The nice suits and Rolex watches. We want to believe that their “success” will facilitate our success.

But will it? Are our major financial institutions acting in the best interest of their customers? A small, but quickly growing, group of investment-savvy individuals and firms (known collectively as the index fund investing movement) are answering this question with a resounding “NO”.

The Index Fund Educator is part of this index fund investing movement. Composed of academics, trustees, pension fund managers, investment advisors, enlightened mutual fund companies, and savvy individual investors, the members of this index fund investing movement have examined the performance of our big investment institutions and found them wanting. Part of the great consumer advocate movement, this index fund investing movement takes on the “powers that be” in the world of personal investing and strives to aid investors to get a “better deal”. This index fund investing movement finds a home in the great muckraking traditions of Upton Sinclair (battling the meatpacking plants) or Ralph Nader (battling the automobile industry).

But the Index Fund Educator (and the index fund investing movement itself) is not just a muckraker movement railing against the evil powers that be. Its most important mission is to help investors to enhance their investment prospects. The Index Fund Educator doesn’t just tell you what to avoid and why. It tells you what to seek as well. It presents the Evidence of the superiority of index fund investment. As you navigate through the pages of this web site, we will introduce you to the world of index fund investing and the benefits thereof. We’ll demonstrate how the conversion to index funds to meet investment needs can substantially enhance the prospects of increasing your wealth. We’ll discuss the exquisite utility of index funds in the formulation of a proper asset allocation plan.

To come full circle, are we saying that the use of index funds will mean you, as the investing customer, will get your Yacht in the harbor? Well, let’s not push the metaphor too far. Index fund investing may not get you a Yacht, but it could make it more likely that you will be able to pay for your child’s education or afford a decent retirement.