To understand one way that the financial system fails the people it is meant to help, consider the story of three hypothetical sisters — triplets.

Each sister earned the same salary and saved the same amount of money for retirement over the same timeframe. But because they lived in different countries — one in the United States, one in the United Kingdom and one in the Netherlands — one of them ended up far better off financially in the end. The sister in the Netherlands accrued a nest egg 50% larger than the other two sisters.

The reason? Fewer fees going to intermediaries in asset management.

The extraction of fees — "through commissions most of you don't really know about" — can add up to an enormous amount, said Stephen Davis, during a panel discussion at the University of Delaware's John L. Weinberg Center for Corporate Governance in early November. The focus of the discussion was a new book, "What They Do With Your Money: How the Financial System Fails Us and How to Fix It," which Davis co-wrote with two others also on the panel, John Lukomnik and David Pitt-Watson. The book calls our retirement savings a virtual ATM for Wall Street, with assorted fees going to as many as 16 intermediaries.

If you pay 2% in management fees a year — even though it doesn't sound like a lot — "you would wind up with 50% less than you should have" for retirement, Davis said. At 1.5% in fees, you lose 38%.

"And part of the problem is we don't really know where all that money goes," he said. By "we," he means not just the typical 401(k) saver, but also financial professionals. He cited an example of a pension fund for U.K. railway workers that hired an outside consultant to figure out how much it was paying in fees. Turns out, it was paying about four times the amount it expected — £290 million a year versus £75 million.

According to Pitt-Watson, the overarching question that needs to be asked is: What is the point of our financial services system and how is it delivering against its goals?

Rather than adopting regulations to manage specific issues that flare up, a smarter approach would be rethinking the governance of financial institutions more holistically, he said, noting that the book offers dozens of suggestions for improvements.

Among the changes the authors see as necessary is a shift away from the focus on daily fluctuations in stock prices and toward investing for the long term. That would help reign in excessive trading and make it less likely that questionable business practices at corporations would go unchallenged.

Decades ago, individual investors owned 70% of all equity in the United States. Today, institutional investors do. Though corporate boards have become more competent and more responsive to shareholders over the past 40 years, the shareholders — now that they are largely "huge financial bureaucracies" — have been lax, Davis said.

"They have not been sufficiently looking after our interests when they take equity in public companies. And as a result we have a lot of public companies with managers that have gone awry," he said. "You only need to look at the 17 vivid minutes of Sen. Elizabeth Warren's grilling of Wells Fargo CEO John Stumpf" — who resigned over its phony-accounts scandal not long after that hearing — "to see how much this can cause damage across the country and undermine trust in our business sector."

Davis said the need to improve the governance of institutional investors is paramount. "How transparent are they? How accountable are they?" he asked. "I think what we conclude in the book is that they fall short in many ways."

In his remarks, Lukomnik cited two research papers to illustrate that point. One study found that mutual funds that manage money for a company in its 401(k) plan disproportionately do not vote as a shareholder of that company in ways that have implicit criticisms of management. The other found that mutual funds that manage money for the 401(k) plans of companies own those companies disproportionately.

"So you add those two papers together and what you're getting is disproportional ownership by the people least inclined to do anything about poor management — little bit of a problem," Lukomnik said.

The net result has been what they refer to in the book as "economic ADHD" — a system fixated on short-term goals. This kind of "short-termism" is irrational, expensive and destructive to the economy, Lukomnik said, adding that the fixes they suggest aren't meant to be anti-capitalist.

"We are doing to Wall Street what Wall Street does to every other business," he said. "They put out an analyst report and they say, 'If you did this, you can make more money.' What we're saying is, 'If you did these steps, the economy would grow faster" and the financial system would be closer to fulfilling its purpose.