Jon S. Fossel, a former state assemblyman who has considered running for governor of New York, has said he wanted his tombstone to read: "Here lies a person who made New York a better place."
Now, it appears Mr. Fossel has a better shot at having his epitaph say, "Here lies someone who helped the mutual fund industry."
That's because, instead of entering the home stretch of a political campaign, Mr. Fossel last week became chairman of the Investment Company Institute, a Washington-based trade group for mutual fund companies.
Not that Mr. Fossel, who is 52 and an avid scuba diver and backpacker, needs to worry about such inscriptions.
But he certainly stands to leave behind a substantial legacy as chairman of the institute, which wields great influence over mutual fund policy in Washington. He takes over the group at a critical time, when mutual funds are suffering from lagging returns and bad publicity over problem derivative investments.
As institute chairman, Mr. Fossel arguably holds more sway over the industry than he has as chief executive of Oppenheimer Management Corp., an investment firm.
Mr. Fossel said that among his top priorities at the institute will be helping the mutual fund industry deal with turbulent markets. One issue confronting the industry is how to handle investor complaints if markets perform even worse than they have this year.
Investor education is the key to surviving such a scenario, he said. On that front, it seems there are substantial problems.
"We found in a recent survey that 47% of the people [questioned] believed that, if they invested in stocks, they would lose 100% of their money sometime in their life," he said, citing this as just one of many common misconceptions.
The industry's other major challenge is ensuring that the Securities and Exchange Commission has sufficient resources to police and inspect companies that manage and market mutual funds, he said.
"We are probably the only industry in the history of time that cries out for more regulators," Mr. Fossel said.
As to banks' abilities in the market, Mr. Fossel said he doesn't share the concerns of some that banks are doing a poor job of selling and managing mutual funds. More than a decade of experience has made banks capable players, he said.
As a veteran banker, Mr. Fossel has a good background to make such a judgment. He was with Citicorp for five years in the mid-1970s, and he led the banking company's first, albeit unsuccessful, foray into mutual funds.
Citibank's Chancellor Fund failed to attract enough investors and was shut down by the bank and its partner in the venture.
In the mid-1980s, Mr. Fossel tried his hand at launching another mutual fund family as chairman of the distribution unit of Alliance Capital Management Corp., New York.
The company's Decision Funds, which were designed for banks to sell, also failed to attract enough investors to be viable.
"So, I'm 0 for 2," Mr. Fossel said, flashing the kind of smile designed to exude confidence and win votes.
He predicted that other mutual funds won't be able to attract enough assets to survive. This, in turn, would lead to a consolidation that would sweep up some bank fund managers.
Mr. Fossel also has strong opinions about mutual fund sales loads. For example, Class C shares -- which charge level sales loads -- have not attracted the assets expected, Mr. Fossel said.
Class B shares, which levy an early-withdrawal charge if an investor cashes out before a deadline, "aren't only a dumb idea, they are a ripoff," he said. Investors get a better bargain by paying sales fees up-from.
But his days of voicing his opinions on such subjects may be over, at least for the year he heads the institute.
"I was taken out behind the shed. by some ICI members," he said, "and told that I need to be more circumspect about my comments."
Mr. Fossel is no stranger to the give-and-take of politics. Starting in 1977, he served two terms in the New York State Assembly before making an unsuccessful run for the U.S. House of Representatives in 1982.
He claims he had enough political support and money to make a serious bid this year for the Republican nomination for governor of New York. He even said he would have been in a position to oust Governor Mario Cuomo.
But when it came down to giving up his private life for the governor's mansion, Mr. Fossel said, he "wasn't willing to pay the price."
