Three hundred and fifty billion dollars -- and probably quite a few cents. That's the size of the paycheck American investors paid to the nation's financial-services industry in 2004. Paid unwittingly. Paid involuntarily. Paid unnecessarily.

It's a number that has bothered us here at The Motley Fool for some time, and it should bother you, too. Here's how the $350 billion breaks down, in round figures:

Financial advisor fees

$5 billion

Annuity commissions

$15 billion

Pension management fees

$15 billion

Hedge fund fees

$25 billion

Direct mutual fund costs

$70 billion

Investment bankers' and brokers' fees

$220 billion

Grand total

$350 billion

That's a pretty big number
Indeed it is. But big numbers are just little numbers with lots of zeros tacked on until you put them into context. Just for fun, I drew up a shopping list of what we, as investors, could have purchased with that $350 billion -- had we managed to hold on to it.

If we wanted to splurge and spend the whole $350 billion in one shot, we could have bought ourselves General Electric in its entirety. In 2004 alone. And we could have done it again in 2005. And again in 2006.

Or, were we to split the bankroll up, here's what we could have gotten for our money:



XM Satellite Radio (NASDAQ:XMSR)

$5 billion

Sun Microsystems (NASDAQ:SUNW)

$15 billion

Ford (NYSE:F)

$15 billion


$25 billion


$70 billion

Coca-Cola &
PepsiCo (NYSE:PEP)

$220 billion

Grand total:

$350 billion

It Bogles the mind
The amount of money involved here simply boggles the mind. Or Bogles the mind, to give credit to the man who pointed out the problem. But let's bring this down to a personal level: $350 billion amounts to $1,182 for every man, woman, and child in America. Or $3,318 per household.

If not for the ongoing exaction of these intermediary fees from the fund managers, bankers, and assorted other moneymen up on Wall Street, the average American family would have an extra $3,300 and change at the end of every year. That's enough money to save Mom from sweating over a hot microwave oven every day of the week and order pizza every few days. It's enough to buy Junior a halfway-decent used car to take with him to college. Enough to pay the family's entire auto-insurance bill and make a good-sized dent in the health insurance bill, to boot.

Or, as we like to think we'd do here at The Motley Fool, let's say that instead of handing over your $3,318 to the financial-services industry, you were allowed to keep and invest it in the basket of stocks above. Thanks to Ford's recent troubles, this random selection of stocks wouldn't have beaten the market, but it still would have made you nearly $3,500 richer than if you'd handed everything over to the bankers.

Amount invested
on Jan. 3, 2005*

Value Today



























*Assumes a $5 commission.

Over the longer term, if invested in your basic S&P index fund at its historical annual appreciation rate of 10.5%, $3,318 could become more than $66,000 in 30 years (before taxes). Even better, if you invest $3,318 not just once, but again every year over the course of the 30, the pot grows to more than $666,000. Combined with Social Security benefits, that's probably enough of a nest egg to retire on -- and you could create it just by refusing to hand your money over to Wall Street.

Waiter? Reality check, please.
Of course, it's not really possible for you -- or any investor -- to hold on to the entire $3,318, to say "good riddance" to the financial establishment. The system is rigged to see that at least some cash gets skimmed off the top. But you can still minimize the damage by turning off the cash spigots that you do control.

How? For one thing, by dropping your actively managed mutual funds, which underperform the S&P 75% of the time in any case. If Americans took control of their own investing, this could save $70 billion right away -- enough to buy ourselves an Amazon and an eBay a year. Just saying "thanks, but no thanks" to the annuities-hawkers could buy us a Ford (the company, not just the car).

Where to start
At The Motley Fool, we understand that taking control of your finances is a big step. We work every day to demystify the world of investing, explaining business news and providing investing views free of charge to our readers on For many new investors, that's all they need to take control of their finances -- a little explaining here, a little guidance there, and they're set.

But are tutors available?
Sure thing. For those who need a little extra help, we offer Motley Fool Stock Advisor -- our flagship newsletter for the ordinary investor. Every month, we give you our top two investment ideas -- but the service doesn't stop there. We recommend, we explain our recommendations, and we provide updates on our companies' progress. As if that weren't enough, we maintain dedicated discussion boards where Stock Advisor subscribers can ask questions of our analysts.

With customer service that can't be beat, and recommendations that are beating the S&P -- 60% to 21% -- we're convinced that Stock Advisor will help you get Wall Street's hand off your wallet. Try it for free, and we think you'll agree.

Oh -- and did I mention that the new issue of Stock Advisor comes out at noon tomorrow? It does. Join now, and be one of the first to see our April picks.

Coca-Cola is a Motley Fool Inside Value recommendation. XM is a Motley Fool Rule Breakers pick. Amazon and eBay are Motley Fool Stock Advisor selections.

Fool contributor Rich Smith does not own any of the companies named above. The Motley Fool has a disclosure policy that would make Wall Street blush.