The day of reckoning has come for the financial services industry.
The industry has a lot to answer for, said John Bogle, founder of The Vanguard Group Inc. in Malvern, Pa. This industry creates products that will sell, rather than products that are good for clients to buy.
Although it is far from over, the worst financial crisis in generations is already reshaping the financial services industry.
Gone are the days of expensive, hard-to-understand products that lean heavily on stocks to fulfill a promise of fast appreciation. Gone, too, is the ability to sell almost any product on the hope that it will eventually reward investors who are patient enough to ride it out through the markets ups and downs.
There is a run for the exits on Wall Street. As the economy and the stock market struggle to get off their knees, investors are moving fast, away from stock allocations and toward vehicles that are perceived as safe like corporate bond funds, fixed annuities and certificates of deposit.
Stock mutual funds, as a percentage of U.S. mutual fund assets, dropped to 40% in March from 55% a year earlier, according to Strategic Insight Mutual Fund Research and Consulting LLC in New York. Over the same period, money market fund assets climbed to 41%, from 30%, and assets in fixed-income strategies jumped to 19%, from 15%.