John Kay’s latest book, Other People’s Money. The Real Business of Finance, is a tutorial on finance, a reminder of fiduciary responsibility, and a caution—at times, a scalding caution—about what happens when knowledge and responsibility are overwhelmed by self interest.

Financial advisors can gain wisdom and validation from Kay’s book, but Kay says that because personalized, individually-tailored financial advice is growing scarce, computerization is filling the gap.

“The computer has two potential advantages over the financial advisor: the computer is as honest as its programmer, and the processes and conclusions of the computer can be monitored and reviewed.’’

If Kay sounds cynical about the character of some who handle other people’s money, he argues forcefully that the financial sector deserves chastising, and he urges reform of its basic structure.

He is a professor of economics at the London School of Economics, a columnist for the Financial Times and a director of several publicly held companies.

The primary culprit in the troubling way finance works today is “financialization,’’ Kay writes. He credits Gerald A. Epstein, a professor of economics, and sociology professor Greta R. Krippner, with defining the term. In Epstein’s 2005 book, Financialization and the World Economy, Epstein writes, financialization can mean “the ascendancy of ‘shareholder value’ as a mode of corporate governance; the growing dominance of capital market financial systems over bank-based financial systems; the increasing political and economic power of a particular class grouping; the explosion of financial trading with a myriad of new financial instruments; a ‘pattern of accumulation in which profit making occurs increasingly through financial channels rather than through trade and commodity production’; and the increasing role of financial motives, financial markets, financial actors and financial institutions in the operation of the domestic and international economies.’’

With financialization, the size of the financial sector as a percentage of the gross domestic product has grown from 2.8 percent in 1950 to 7.9 percent in 2012. Incomes in the financial sector have increased more than in other sectors of the economy—a 70 percent increase in income relative to other workers since 1980, according to Investopedia.com.

“But the true value of the finance sector to the community is the value of the services it provides, not the returns recouped by those who work in it. These returns have recently seemed very large. Why is the industry so profitable? Or perhaps why does it appear so profitable?’’ Kay asks.

Kay says growth in the finance sector has not been in the creation of new wealth but in the appropriation of wealth from other parts of the economy, for some of those who work in the financial sector.

“Too much of a good thing’’ and “egregious excess,’’ unchecked by regulation or regulatory agencies, can implode as it did with the global financial crisis of 2008. Kay writes that some of the players in that collapse, such as Bernard Madoff, were imprisoned, but others survived with immense personal wealth.

In lively, often witty chapters describing how we arrived at financialization, including on the functions of finance and the role of regulation and economic policy, Kay does not mince words: he warns that in the United States and Great Britain, we are in danger of approaching oligarchy.

Further, Kay says, leaders such as Margaret Thatcher and Ronald Reagan, whose policies helped usher in financialization, would be chagrined by the replacement of their ethos of hard work, self reliance and compassion with “the greedy individualism and sense of personal entitlement characteristic of much of the finance sector today.’’ The circle of influence of the finance sector includes policymakers, academics and journalists, Kay says.

What is the answer to this massively thorny problem? Kay spends nearly 50 pages on the issue, in “Reform’’ and “The Future of Finance.’’ His forecast is gloomy, but he says the damage is not irreversible. More laws and regulation are not the answer; restructuring the industry so that the culture of self-interest is checked is essential.

Kay says his six proposals for reform, all of which call for streamlining, shortening and eliminating in the era of “too much of a good thing,’’ will “reduce the amount of capital available to support trading activities and eliminate cross-subsidy to these activities,’’ and, “reducing trading volume to modest levels, which will curb financial instability and lessen the costs of financial intermediation.’’ He acknowledges high-frequency traders and the unscrupulous will balk at these proposals.

Kay argues that the legal/regulatory framework already in place should impose and enforce “obligations of loyalty and prudence, personal and institutional, that go with the management of other people’s money.

If there is no restructuring of financialization, “there will be another major financial crisis,’’ Kay says.

Other People’s Money. The Real Business of Finance, by John Kay. PublicAffairs. $27.99.

Eleanor O’Sullivan is an award-winning freelance journalist who writes for Financial Advisor magazine.