Average investors need a voice

By: GEORGE CHAMBERLIN - For the North County Times | Saturday, November 26, 2005 9:53 PM PST ∞

A couple of years ago, John Bogle suggested the formation of something called the Federation of Long-Term Investors. The idea was based on the changing Wall Street landscape that is more oriented toward speculation rather than investing.

Of course, that's the kind of logic you would expect from the father of index investing. Bogle has always espoused the power of investing in quality stocks and owning them for the long run.

At the same time, Bogle was addressing the fact that average Joe and Jane investors don't really have representation on legislative and tax measures that impact the return on their investments. And ---- since more than 50 percent of all U.S. households now own investments in stocks ---- that could represent a rather powerful voting bloc.

The financial services industry has plenty of representation on Capitol Hill.

The Securities Industry Association is the lead lobbying organization for Wall Street firms. And, the Investment Company Institute is a powerful political force for the mutual fund industry.

Even the industry's most powerful regulatory body ---- the National Association of Securities Dealers ---- is financed by the very people it is assigned to regulate.

You have to admire the power. The National Association of Variable Annuities ---- which lobbies for insurance companies ---- carries enough clout that they annually get a handful of legislators to introduce legislation promoting VAs under the guise of retirement planning. It is too bad they don't lobby for more laws that penalize people who sell these unsuitable products to elderly and unsuspecting investors.

Sure, these groups make an effort to present themselves as advocates for small investors, but their actions speak much louder than their words. They all offer decent educational materials and resources. However, they have been successful blocking efforts to require better reporting of mutual fund portfolio activities. The groups say that too much information would only confuse simple-minded investors.

So, bottom line, individual investors are just that. They fight the lonely battle for fair tax representation by writing letters and calling their legislators.

There are several groups that do offer a community for investors. While they don't serve in any lobbying capacity, they do provide a chance for individuals to share information and knowledge.

The American Association of Individual Investors (www.aaii.com) is a nonprofit organization that provides education and tools needed to build wealth. The group has more than 150,000 members. There is an annual fee of $29 and that includes a subscription to the association's magazine. You also get complete access to the Web site that is loaded with information.

The National Association of Investors Corp. has recently changed its name to Better Investing (www.betterinvesting.org). Started by in 1951, the group promotes investing literacy by helping groups form investment clubs. Today, more than 198,000 belong to the group and there are nearly 18,000 investment clubs.

Membership costs $50 a year and that includes a monthly subscription to Better Investing magazine.

As wonderful as these groups may be, they still lack any political punch. While they make take an editorial position from time to time on certain issues, they have little if any sway in the halls of Congress.

The idea of a Federation of Long-Term Investors sure sounds appealing and it definitely is an idea whose time has come. But, I'm afraid that won't happen any time soon.

George Chamberlin is a regular contributor to the North County Times and also is a TV and radio commentator. Contact him at geoc1045@adelphia.net.