You may never have heard of Jonathan Clements. He was not a fund manager or a market guru. He was a journalist who tried to understand money in a way that really felt, not intimidating.
Between 1994 and 2008, Clements prescribed more than a thousand columns for The Wall Street Journal. Later he started his own site, Humbledollar. A few days ago he died at the age of 62, after he had fought a rare form of lung cancer for almost 18 months.
Jason Zweig, his colleague and friend, wrote a memory of him. He spoke about Clements’ ‘obsession’ with index funds and his stubborn courage to call the financial sector when it misled people.
Clements was one of the first financial writers to argue for index funds. At the time, professionals spotted them as boring and mediocre. He didn’t care. He said they were the simplest way to ensure that you had not left the market badly. Millions of investors in the US eventually came to that idea.
Zweig also remembered how Clements attacked the games that played the financial sector, including reimbursements that investors slowly bleed, which were designed to confuse, and tricks such as launching dozens of funds in secret and only those who looked good. He saw through it and continued to write about it.
However, what distinguished him was that he did not stop at numbers and returned. He reminded us that money is that not The goal. It’s just a tool. In his later years he wrote more about the use of money to build a life about experiences and people, not on accumulation of things. For him, economy was freedom, because it gave you the space to give to what more mattered.
Now look at what is happening here in India. Our financial sector almost does the opposite of what Clements stood for. Instead of making life easier, it keeps launching more and more products. Whether they call it hybrids, market-bound bonds, specialized investment funds, target group funds, arbitrage-plus-this-this-this-of-dat, factor-based ETFs, multi-axet ‘solutions’, smart-alpha, smart-beta, smart-not …
… the list is endless. Each pitch is dressed as innovation. But most solves problems that were never there.
I don’t get angry often, but this really comes to me. Money is supposed to give people a little peace and some feeling of control. Instead, the way in which industry works, it grabs that peace. It buries people under jargon, small print and beautiful names. It gives you a 300 -page offer document and then puts the responsibility on you to read it carefully before investing. It feeds on fear and gives you the feeling that you are missing if you do not buy the following “promising” product. I don’t think that serves investors, but disturbing them.
A simple own power fund, an option with fixed income and normal insurance are sufficient for most of us. But the industry thrives on multiplying choice, because that’s how assets are collected. Each new fund or product adds jargon, adds costs and adds confusion. Bad for the buyer, but great for the seller!
And the irony is that even index funds, exactly the thing that is ever celebrated for their simplicity, are no longer easy. There are now dozens, following different indices, with different strategies, factors and reimbursement structures. What was meant as the clearest, cleanest product itself has changed into a menu, so that the ordinary investor leaves a second breakthrough something to choose.
The tricks that Clements warned in the US decades ago also live here. It is painful to see because it was so predictable. Left alone, the financial sector will always opt for complexity. It sells better. But it rarely serves investors like you and me. Instead of peace it creates fear.
But if I’m honest, we can’t just point fingers in the industry. As investors, we are also part of the problem. We chase what is new and want to ask higher returns without difficult questions. The industry sells complexity because we buy somewhere deep inside. Our own greed, fear and impatience make us an easy prey. And unless we accept that part of the debt, nothing will really change.
Clements would have shaken his head. We no longer need products. We need more clarity. We need the guts to keep it easy and the humility to know when there is sufficient enough. Above all, we must remember that the highest use of money is to buy our time, peace and memories with the people we love. Nothing anymore.
And that is where his lessons leave us. A way to live with money without having it rule us.
Keep it simple.
Ignore the sound.
Save more than you think you can.
Be careful for complexity, because it usually hides someone else’s profit.
And use money to make your life lighter, not heavier.
Thank you, Jonathan. Rest in peace.
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“This is a masterpiece.”
—Organ Housel, author, psychology of money
“Discover the extraordinary on the inside.”
–Manish Chokhani, director, Enam Holdings
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