With all the discussion surrounding the millions and billions of dollars earned by investment firms and financial institutions, presumably on the backs of retail and institutional investors, some in the public arena have even aimed their criticisms at the money managers who steward the endowment funds of many of our colleges and universities. For me, this is evidence that so much of what people are reacting to is misplaced and misguided. This does not mean that people should not be disgusted at the losses they have incurred in their investment and retirement portfolios as a result of the financial crisis. Nor does this imply that people should not be appalled at the capacity that some financial firms and their executives have to engage in business deals and financial transactions whose only purpose is to produce the highest level of returns. The simple reality is that investors, their money managers, and bankers were all driven by greed and everyone was chasing the dollar. When the whole house of cards began to collapse, it exposed how fragile the whole stock market operation can be and how easy it is for individual firms and isolated transactions to move or make the entire market. The shock felt by so many people has led them to want to blame someone for the pain they’re experiencing, when in essence, we were all complicit in maintaining a financial system that has always been replete with unsubstantiated and very risky financial instruments. As the frenzy continues and the public insists on someone taking the blame, the investment managers who oversee postsecondary institutions’ endowments have become fair game.

Colleges and universities hire very talented investment managers and pay them top dollars to grow their financial capacity which ultimately allows them to attract the best professors, engage in groundbreaking research, and expand the physical capacity of their institutions. If the goal were not to maintain a world class academic institution that gives its students access to the best teaching and research resources, then college and university administrators would not be so willing to pay the kinds of salaries and bonuses that they do to retain some of the most successful portfolio managers in the financial industry. School endowment fund managers are providing the financial services that they were hired to do and the critics should let them do their jobs. The hypocrisy and irony is that those who are now criticizing colleges and universities for hiring the best investment managers likely rely on this same class of brokers and asset managers to manage their private investments.

Retail and institutional investors entrusted their financial consultants and stockbrokers with the authority to invest their funds in ways that would ultimately make them a good profit or somehow improve their wealth. After all, this is what finance professionals do every day of the week. Most investors could care less about how their wealth would be enhanced; all they wanted was to see the growth on the quarterly statements. If the public had been paying attention for the past 100 years, it would have known that financial institutions have made their fortunes on the backs of ordinary investors as well as the larger investors such as mutual funds and pension funds. As long as these investment managers and investment banks were able to package and sell products in ways that achieved excellent financial gains for our stock and bond holdings, then we were all fine with it, didn’t ask too many detailed questions, or simply didn’t care to understand the arcane nature of financial market dealings. We’ve all known for decades that money managers are some of the most well paid professionals in the marketplace, so we should not try to change the rules of the game, now that we’ve all suffered tremendous financial losses. Let’s just hope that we don’t make the same mistakes again and put all of our trust in a financial system that is built on manipulation and risk.