A great article telling the story of indexing

Here's a long but highly interesting article from the San Francisco magazine saying pay attention to the fees in your investments.

I like the premise of the article that rich fees create incentives placing the advisor in conflict with the client. Believe it - some products are preferred to others solely because they generate commission - the salesman's gotta make a living. I firmly believe different products would be sold if nothing but the commissions were different.

Some quotes from the story:

"Turns out that I ... was paying annual fees, commissions, and transaction costs well in excess of 2 percent a year on most of my mutual funds"

"Then he did something I doubt any other financial manager would have done. He fired himself."

"We work in the most overcompensated industry in the country”

“My job was to compile all the academic research on mutual funds, and that’s when it really became clear that active management doesn’t add any value”

"So why is indexing catching on so slowly? A big reason ... is that putting investors into index funds is simply not in the interest of the industry that sells securities. 'They just won’t accept indexing’s minuscule fees.'"

“Eighty percent of active managers underperform the market."