Walt Bettinger, Schwab’s CEO, laments how the current system is rigged against individuals buying stocks, setting out four reasons why the number of investors owning stocks or mutual funds, or investing in a self-directed 401(k) or IRA, has dropped from 67% in 2002 to 52% in 2013. Bettinger lays out the reasons for consumer withdrawal from the market, along with some potential solutions:
• High frequency traders are gaming the system – last September the SEC fined the NYSE $5 million for releasing quotes and other data early.
• Glitches and errors in the system erode investor confidence – e.g., 2010 flash crash, Facebook IPO, Hurricane Sandy, Twitter hoaxes.
• Tax policies discourage investors through increased taxes on investments here and abroad.
• The retirement savings system is under attack, with some calling for reduced contributions and others calling for the government to take over.
By the way, Bettinger is one of the heads of a U.S. major financial service firm who started his career in the DC market. Can you name the other three and where they started, along with Bettinger’s roots? We’ll provide the answers tomorrow in the comment section of this post — maybe there are more than we think.
