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You’ve written a book about stewardship. Why this topic?
Well, one of the things that contributed to the financial crisis that I don’t think we fully addressed yet is the fact that the leaders of our financial institutions lost touch with their stewardship values, and we saw the consequences of that. That same failure in stewardship is playing itself out now dramatically in the sovereign debt crisis in Europe.
It sounds almost quaint.
It is quaint, but it’s a core principle. When money managers, broker dealers, investment bankers, etc., do what they’re supposed to do, they match up investors with people who need capital. So financial institutions serve—or should serve—an agent’s or intermediary’s role. What we’ve seen, though—going into the financial crisis, and we still see it today—is that financial institutions have moved away from that agent’s role to a principal role. That’s what’s gotten us in trouble.
How do we get back to being intermediaries?
It is difficult to legislate the change. You have to address it with cultural and leadership factors. Are you behaving every day in a way that is good for your clients, or are you thinking about how to make money yourself? Client service—that’s what stewardship is. I think that you need to compensate generally on the basis of how well your clients do as a result of your activities. We do some of that in the financial-services industry but not enough.