Frontline--The Retirement Gamble

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Re: Frontline--The Retirement Gamble

Postby texasdiver » Thu Apr 25, 2013 4:16 pm

hoppy08520 wrote:
M1garand30064 wrote:
BruceM wrote:Some industry rebuttals....

http://www.plansponsor.com/Documentary_ ... _Fees.aspx

BruceM


That's a very weak rebuttal IMO. They dismiss the claim that fees are the most important category for choosing funds and say that they are offering a very important service or value, but never state what that value is or what other categories are more important than what you are paying to maintain the investment.

Yes, a pretty sorry rebuttal. I can summarize their point about the 2% fee not being an accurate portrayal: "We're bad, but not that bad. Maybe only 1.5% or so bad. But 2% ?! No, it's only 1.5%."

The rebuttal had an undercurrent of people in the industry feeling aggrieved and hurt that we aren't all so appreciative and grateful to them for the privilege of letting us serve as hosts to their parasites.

I don't think my language is incendiary. I have a significant amount of my savings held captive in a 401(k) plan where I have to pay these parasites for some value (what value?) that I don't want or need. If I could have that same money at Vanguard or the Thrifts Savings Plan I'd be saving a lot of money as the expenses in the 401(k) plan are at least 10 times what I could get independently at Vanguard, and more like 20 times what I pay for my TSP.


2% is an entirely accurate portrayal of a lot of plans. My wife's plan, for example, is administered by Standard Insurance. She has the typical menu of actively managed funds from companies like American Funds, Janus, T Rowe Price, Wells Fargo, etc. Standard Insurance adds its own 1.3% management fee on top of the management fees charged by the individual funds. It appears that the value we receive for this 1.3% management fee is the ability to look at our account balances through their horrid web interface which is far clunkier than any major fund web site. So, to pick one random but mainstream example from my wife's offerings... American Funds Balanced (RLBCX) I have to go to Morningstar to discover the fund itself has an expense ratio of 0.95% which means my wife is charged 2.25% to invest in this fund. If she wants to invest in international stocks she has the choice of Thornburg International Value (TGVRX) which has a fund expense ratio of 1.6% making my wife's total fee a whopping 2.9% if she wants any international exposure. Bonds, you want bonds? The choice she is offered is PIMCO Total Return with a fund expense ratio of 1.1% making her total fee 2.4% if she wants any bonds.

So while it may be technically true that not many mutual funds charge 2% fees, when those funds are made available through 401(k) plans, the TOTAL fees often exceed 2% and may actually be closer to 3%.
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Re: Frontline--The Retirement Gamble

Postby umfundi » Thu Apr 25, 2013 4:25 pm

texasdiver wrote:Retirement savings is the biggest single investment most people make in their lives and to the extent that they are tied to 401(k) or 403(b) plans they are captive to a specific company and have no ability to negotiate on fees.


This may be solvable by employee action. Remember the demise of Stock Savings Plans that required employees to invest in company stock?

We have already seen cases where employees have successfully petitioned their companies to add investment options or even change 401k providers. I think it is a short step to a class action suit that alleges high-cost options with no low-cost options have eroded employees' accounts.

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Re: Frontline--The Retirement Gamble

Postby texasdiver » Thu Apr 25, 2013 4:38 pm

umfundi wrote:
texasdiver wrote:Retirement savings is the biggest single investment most people make in their lives and to the extent that they are tied to 401(k) or 403(b) plans they are captive to a specific company and have no ability to negotiate on fees.


This may be solvable by employee action. Remember the demise of Stock Savings Plans that required employees to invest in company stock?

We have already seen cases where employees have successfully petitioned their companies to add investment options or even change 401k providers. I think it is a short step to a class action suit that alleges high-cost options with no low-cost options have eroded employees' accounts.

Keith


Easier said than done. Raising a stink about 401(k) options is an explicit criticism of the decisions made by the upper management folks at my wife's organization. These are the same folks who determine my wife's salary and whether or not she is promoted. She is very loath to make waves and I don't blame her. I expect most employees find themselves in a similar position. Either (1) they work for a small organization and are liable to be unwilling to explicitly criticize these kinds of management decisions, or (2) they work for giant organizations and are likely to have zero voice or ability to influence these types of decisions.
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Re: Frontline--The Retirement Gamble

Postby umfundi » Thu Apr 25, 2013 4:56 pm

texasdiver wrote:Easier said than done. Raising a stink about 401(k) options is an explicit criticism of the decisions made by the upper management folks at my wife's organization. These are the same folks who determine my wife's salary and whether or not she is promoted. She is very loath to make waves and I don't blame her. I expect most employees find themselves in a similar position. Either (1) they work for a small organization and are liable to be unwilling to explicitly criticize these kinds of management decisions, or (2) they work for giant organizations and are likely to have zero voice or ability to influence these types of decisions.

texasdiver,

I understand the situation your wife is in, but I am more optimistic than you.

The money in the 401k belongs to the employees. If management allows only crummy choices (when much better choices could be allowed) I think they are on thin ice. A few lawsuits, and I believe the whole thing will collapse. How can any company defend allowing their employees only bad investment choices? Would they even want to make that defense?

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Re: Frontline--The Retirement Gamble

Postby texasdiver » Thu Apr 25, 2013 5:06 pm

umfundi wrote:
texasdiver wrote:Easier said than done. Raising a stink about 401(k) options is an explicit criticism of the decisions made by the upper management folks at my wife's organization. These are the same folks who determine my wife's salary and whether or not she is promoted. She is very loath to make waves and I don't blame her. I expect most employees find themselves in a similar position. Either (1) they work for a small organization and are liable to be unwilling to explicitly criticize these kinds of management decisions, or (2) they work for giant organizations and are likely to have zero voice or ability to influence these types of decisions.

texasdiver,

I understand the situation your wife is in, but I am more optimistic than you.

The money in the 401k belongs to the employees. If management allows only crummy choices (when much better choices could be allowed) I think they are on thin ice. A few lawsuits, and I believe the whole thing will collapse. How can any company defend allowing their employees only bad investment choices? Would they even want to make that defense?

Keith


The problem is that the entire process is opaque. The current plan was not selected through any sort of public process that generated minutes. We don't know what sort of alternatives were available. We don't know to what extent they tried to negotiate on fees. We don't even know if the whole process was some sort of inside job with conflicts of interest where the whole plan was kicked over to say the brother-in-law of one of the executives who is now making a tidy profit as a result.

As for threatening to sue? Seriously? Not going to happen.
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Re: Frontline--The Retirement Gamble

Postby umfundi » Thu Apr 25, 2013 5:14 pm

texasdiver,

I am not advocating that you sue. But, someone at another company will.

In my opinion.

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Re: Frontline--The Retirement Gamble

Postby lawman3966 » Thu Apr 25, 2013 5:46 pm

texasdiver wrote:The problem is that the entire process is opaque. The current plan was not selected through any sort of public process that generated minutes. We don't know what sort of alternatives were available. We don't know to what extent they tried to negotiate on fees. We don't even know if the whole process was some sort of inside job with conflicts of interest where the whole plan was kicked over to say the brother-in-law of one of the executives who is now making a tidy profit as a result.
As for threatening to sue? Seriously? Not going to happen.


It's no accident that the process is opaque. The providers pushed for, and got a system, that enables them to very effectively separate the interests of the decision makers and the bulk of participants. It came as a pleasant surprise to me that an alternative was available in the form of Employee Fiduciary, which I think of as the Vanguard of the small-firm 401K industry. I lobbied to replace our 2%-insurance company with a plan from EF at a succession of employers , but was turned down all but the most recent time. I succeeded in the most recent 'go round, but it was time consuming and difficult. It helped that we are a small firm where the partners and participants are friends and where many have known each other personally for a long time. There is much less likelihood here of HR acting in a way that harms the interests of the participants than at a larger employer.

On the lawsuit front, things are more complicated than they appear. Several entities involved each plan have fiduciary obligations (hereafter FO) toward the participants, but only for the task they are charged with. Thus, for the sponsor it's an FO to select a provider in the best interest of the participants. The detail? To best of my recollection, the DOL guidelines require the sponsor to obtain proposals from a reasonable number of providers, compare the plan features, and make an appropriate selection. To date, I'm not aware of any sponsor being sued over a provider selection (even the ones whose funds effectively have 3% fees). As a result, there is likely no case law yet in which a judge has set forth guidelines under which the sponsor's FO is violated. The sponsor could, for instance, truthfully state that he/she called four insurance companies, got offers, and that the total AUM fees were all between 2% and 2.2%. Under those circumstances, it's not clear to me that one could successfully sue the sponsor for selecting a provider with 2% annual AUM fees.

Being realistic, if the industry has the clout to set up the system as it now stands, it seems fair to conclude they have the clout to prevent liability from attaching to people who cooperate with the current regime. The lawsuits I found when I last searched this topic involved conduct quite different from merely selecting a plan with high fees. In some cases, employees were forced to buy company stock. In another case, at a large corporation, the company itself took over the advisory role (why not get in on such a lucrative scam??), creating a flagrant conflict of interest. In that case, the sponsor essentially appointed itself as the provider. I think they settled.

For now, using EF (or other comparable provider if they come about), with or without an advisor (my preference is without) is the only way out of the high-fee regime I've seen for small employers.

Even if the plan advisor is under an FO to the participants, it's not clear what, if any, fee level would violate the obligation. In all likelihood, the advisor's role begins only once a person is enrolled in the plan and has money on hand (or a future stream of salary deferral ) to invest. In this case, the advisor can merely state that by the time he got involved, the AUM fee level had already been decided, and he is not responsible for it. Once that's settled, the advisor may be responsible only for making a reasonable selection of funds from those available in the plan. If all of the funds stink, the advisor is likely not liable for choosing the funds that are tied in desirability with the other funds.
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Re: Frontline--The Retirement Gamble

Postby umfundi » Thu Apr 25, 2013 10:54 pm

Susan Tompor of the Detroit Free Press has picked up on the Frontline piece.

http://www.freep.com/article/20130425/C ... Free-Press

Hiltonsmith, 31, said he sets aside 3% of his pay into his 401(k) — which he quickly admits isn’t nearly enough — but says he faces high costs of living in New York and is paying down $45,000 in student loans. He makes $61,000 a year and has about $10,000 in 401(k) money.


There you go.

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Re: Frontline--The Retirement Gamble

Postby Random Musings » Thu Apr 25, 2013 11:19 pm

umfundi wrote:Susan Tompor of the Detroit Free Press has picked up on the Frontline piece.

http://www.freep.com/article/20130425/C ... Free-Press

Hiltonsmith, 31, said he sets aside 3% of his pay into his 401(k) — which he quickly admits isn’t nearly enough — but says he faces high costs of living in New York and is paying down $45,000 in student loans. He makes $61,000 a year and has about $10,000 in 401(k) money.


There you go.

Keith


Although I linked previously about that the weighted average of ER's is below 1%, I do find that the magnitude argument in the article between neighbor's ER being "extreme" to be incorrect. The TSP plan, with a 0.03% ER can have the unfortunate neighbor paying perhaps 10 to 70 times more in ER.

I'm surprised that no one brings up the question why people can't be pooled into a system like that (or even TSP) as an option to poor 401K plans; even some small increase in fees would be far better than being hostage to a high cost plan.

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Re: Frontline--The Retirement Gamble

Postby umfundi » Thu Apr 25, 2013 11:29 pm

Random Musings wrote:
umfundi wrote:Susan Tompor of the Detroit Free Press has picked up on the Frontline piece.

http://www.freep.com/article/20130425/C ... Free-Press

Hiltonsmith, 31, said he sets aside 3% of his pay into his 401(k) — which he quickly admits isn’t nearly enough — but says he faces high costs of living in New York and is paying down $45,000 in student loans. He makes $61,000 a year and has about $10,000 in 401(k) money.


There you go.

Keith


Although I linked previously about that the weighted average of ER's is below 1%, I do find that the magnitude argument in the article between neighbor's ER being "extreme" to be incorrect. The TSP plan, with a 0.03% ER can have the unfortunate neighbor paying perhaps 10 to 70 times more in ER.

I'm surprised that no one brings up the question why people can't be pooled into a system like that (or even TSP) as an option to poor 401K plans; even some small increase in fees would be far better than being hostage to a high cost plan.

RM

RM,

I agree with what you say. Possibly you missed the irony that Robert Hiltonsmith is one of the experts in the Frontline piece.

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Re: Frontline--The Retirement Gamble

Postby bUU » Fri Apr 26, 2013 7:00 am

umfundi wrote:This may be solvable by employee action. ... We have already seen cases where employees have successfully petitioned their companies to add investment options or even change 401k providers.

And we've seen cases where employees have not be successful in that regard. I've been working hard for many months, often harder at this than at my real job, yet my employer refuses to improve the 401k plan. Why? Because it would cost them money to do so, and they're in business to make profit.

umfundi wrote:I think it is a short step to a class action suit that alleges high-cost options with no low-cost options have eroded employees' accounts.

Unlikely: ERISA outlines criteria, and my employer's plan, for example, is just over the line into the compliant range. It has an S&P 500 Index fund with a ridiculously high ER of 0.86%, but (a) that satisfies the expectation of having a variety of different fund types, i.e., both actively-managed and index funds; and (b) that satisfies the expectation have having at least one fund with ER < 1.0%. The reality is that, while there are good options out there for employers that care about their employees, there are also custodians giving their customers (the employers) what they want, marginally-compliant plans, that cost the employer the least amount of money, which satisfy the need to be able to say they have a 401k plan.

As the labor market has been affected in recent years by increasing off-shoring, lax rules ensuring work visas are only issued where there are no Americans with the necessary skills, increasing automation, etc., I see no indications that the imperative to attract and retain good employees will stop declining.

umfundi wrote:
texasdiver wrote:Easier said than done. Raising a stink about 401(k) options is an explicit criticism of the decisions made by the upper management folks at my wife's organization. These are the same folks who determine my wife's salary and whether or not she is promoted. She is very loath to make waves and I don't blame her. I expect most employees find themselves in a similar position. Either (1) they work for a small organization and are liable to be unwilling to explicitly criticize these kinds of management decisions, or (2) they work for giant organizations and are likely to have zero voice or ability to influence these types of decisions.

texasdiver,

I understand the situation your wife is in, but I am more optimistic than you.

The money in the 401k belongs to the employees. If management allows only crummy choices (when much better choices could be allowed) I think they are on thin ice. A few lawsuits, and I believe the whole thing will collapse. How can any company defend allowing their employees only bad investment choices? Would they even want to make that defense?

Keith

Sorry but I have to go with texasdiver on this. What you're talking about is simply not going to happen.
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Re: Frontline--The Retirement Gamble

Postby cheese_breath » Fri Apr 26, 2013 8:35 am

Way back in the '80s with GM I learned the 'Golden Rule of Business'. It goes like this... "The guy with the gold makes the rules." In today's tight job market the employer has the gold, and people thankful to have a job aren't going to rock the boat.

p.s. In case anyone hasn't figured it out this is an analogy. Gold is an analogy for power. We're not talking about actual gold bullion.
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Re: Frontline--The Retirement Gamble

Postby dmcmahon » Fri Apr 26, 2013 10:26 am

I think the show might have been better as a series hitting some of the issues raised in more depth, to wit (a) decline in traditional pension schemes, (b) high fees, (c) insufficient savings rates, and finally (d) the effects of the serial-bubble economy we've had during most of these folks peak earning/accumulation years.

The show definitely got the fee message across, so if the average viewer took nothing away other than that, it was a positive. The nostalgia for the traditional pension system all but ignored some real mathematical challenges of those systems, as lifespans grew longer while at the same time the rate of expansion of the scheme (the size of the base of younger workers) slowed or even reversed. The pension schemes ultimately face the same array of investment choices we do - there's no magic bullet. The schemes can't work on a steady-state basis unless enough is saved for each worker during his/her working lifetime. Enough wasn't, and isn't. That leads to the savings discussion. I'd like someone to have laid out the math, with inflation adjustments, to show just how much someone needs to save. People working 30 years and then retiring for 30 at something approximating their final year's pay need far more than most realize, either in savings or an equivalent pension fund, unless returns are a lot better than they appear likely to be. Someone saving in TIPS with 0 yield in a tax-deferred account would have to save half his/her income in order to have that same half-income in retirement, or plan to work longer and live on less in retirement. This sort of detail might have been helpful, but I only saw hints of the reality.

P.S. I have a quibble with the sound bite that says "You put up 100% of the capital, take 100% of the risk, and get 30% of the profit". The missing 70% was never there - it was taken in costs and likely consumed as income. But even granting that the fund managers took every dollar of fees and plowed it back into the same investment (but without paying their own high fees), they are now taking an increasing portion of the risk to capture that 70% - towards the back 9 of the graph, as their assets exceed yours, they're taking more than 50% of the risk with what is now their own savings. I'm not defending the high fees here - just saying the statement isn't really accurate.
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Re: Frontline--The Retirement Gamble

Postby lawman3966 » Fri Apr 26, 2013 11:09 am

dmcmahon wrote:P.S. I have a quibble with the sound bite that says "You put up 100% of the capital, take 100% of the risk, and get 30% of the profit". The missing 70% was never there - it was taken in costs and likely consumed as income. But even granting that the fund managers took every dollar of fees and plowed it back into the same investment (but without paying their own high fees), they are now taking an increasing portion of the risk to capture that 70% - towards the back 9 of the graph, as their assets exceed yours, they're taking more than 50% of the risk with what is now their own savings. I'm not defending the high fees here - just saying the statement isn't really accurate.


I don't follow this at all. Once the manager has taken the fees for a given year, the money has disappeared from the participant's account forever. The money taken in fees could be invested in any one of a million places and is no longer part the calculation. Thus, the manager has no risk within the pool of money forming the participant's account. The manager simply continues to take 2-3% of AUM in fees on an ongoing basis.

I'm not sure where Bogle's "30% of the profit comes from". Perhaps it's an approximation based on an expected real return of about 3% per year, with 2% of that going to the manager. Whether the 30% figure is correct or not, the fund manager has no risk whatsoever in the funds that remain in the account once the fees for a given year have been extracted.
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Re: Frontline--The Retirement Gamble

Postby William4u » Fri Apr 26, 2013 11:40 am

lawman3966 wrote:
dmcmahon wrote:P.S. I have a quibble with the sound bite that says "You put up 100% of the capital, take 100% of the risk, and get 30% of the profit". The missing 70% was never there - it was taken in costs and likely consumed as income. But even granting that the fund managers took every dollar of fees and plowed it back into the same investment (but without paying their own high fees), they are now taking an increasing portion of the risk to capture that 70% - towards the back 9 of the graph, as their assets exceed yours, they're taking more than 50% of the risk with what is now their own savings. I'm not defending the high fees here - just saying the statement isn't really accurate.


I don't follow this at all. Once the manager has taken the fees for a given year, the money has disappeared from the participant's account forever. The money taken in fees could be invested in any one of a million places and is no longer part the calculation. Thus, the manager has no risk within the pool of money forming the participant's account. The manager simply continues to take 2-3% of AUM in fees on an ongoing basis.

I'm not sure where Bogle's "30% of the profit comes from". Perhaps it's an approximation based on an expected real return of about 3% per year, with 2% of that going to the manager. Whether the 30% figure is correct or not, the fund manager has no risk whatsoever in the funds that remain in the account once the fees for a given year have been extracted.


I think Bogle is basically right on the 30% profit stuff. Say, for example, you invest $20k per year for 40 years for retirement (not so far off from the average if you max out a 401k, given that the limit will increase over time). So the principle invested is $800k over 40 years. If you average a 5% return, you end up with about 2.5 million, with a 1.7 million profit. If you average a 7% return (due to 2% lower fees alone), you end up with about 4.5 million, with a 3.7 million profit.

Bogle is just pointing out that with the 2% fee, the mutual fund company keeps the 2 million in profit out of the 3.7 million profit (3.7 million-1.7 million). The mutual fund company keeps most of the profit. If you change a few assumptions just a little, Bogle's 70% figure is probably not outside the realm of possibility.
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Re: Frontline--The Retirement Gamble

Postby Ed 2 » Fri Apr 26, 2013 1:19 pm

Thank you for posting this video! This is a MUST to see for every new investor or even everyone.
1 don't assume that your 401k is a good choce if you never study before you invest in your 401k plan.
2 don't rely on someone's "easy money" advise.
3 read the fine print or if there is non,don't even consider to throw your future on a casino.
This video is all I need to know.
Thank you,Ed.
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Re: Frontline--The Retirement Gamble

Postby Fallible » Fri Apr 26, 2013 1:32 pm

dmcmahon wrote:I think the show might have been better as a series hitting some of the issues raised in more depth, to wit (a) decline in traditional pension schemes, (b) high fees, (c) insufficient savings rates, and finally (d) the effects of the serial-bubble economy we've had during most of these folks peak earning/accumulation years. ...


I agree, especially on fees. The show I think nicely established problems with high fees, but did not get more into what might be done about them, i.e., lowering them, making them more transparent. Possibly an entire show could be done just on fees without losing dramatic quality because the numbers alone are so compelling.
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Re: Frontline--The Retirement Gamble

Postby btenny » Fri Apr 26, 2013 2:01 pm

Is this video implying that many 401K have big extra expense fees added on and taken out in addition to the Mutual Fund fees athey publish? Are the 401K group managers adding 1% or so fees on top of the mutual fund fees they publish?

Where would one look to find these extra fees?

Thanks
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Re: Frontline--The Retirement Gamble

Postby Default User BR » Fri Apr 26, 2013 2:58 pm

btenny wrote:Is this video implying that many 401K have big extra expense fees added on and taken out in addition to the Mutual Fund fees athey publish? Are the 401K group managers adding 1% or so fees on top of the mutual fund fees they publish?

Where would one look to find these extra fees?l

Did you get a fee disclosure last year?


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Re: Frontline--The Retirement Gamble

Postby btenny » Fri Apr 26, 2013 3:04 pm

For my daughter. I don't know. She just asked me a week ago or so for advice on her 401K fund selections. But there was one good index fund that said 0.3% expense ratio but said Cl A in some of the notes so now we are asking for more detail. Again most likely hidden fees. But TBD.

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Re: Frontline--The Retirement Gamble

Postby texasdiver » Fri Apr 26, 2013 3:17 pm

btenny wrote:Is this video implying that many 401K have big extra expense fees added on and taken out in addition to the Mutual Fund fees athey publish? Are the 401K group managers adding 1% or so fees on top of the mutual fund fees they publish?

Where would one look to find these extra fees?

Thanks
Bill


Although they are supposed to be disclosed it can still be difficult to find them. For my wife's plan with Standard Insurance one must log into the account access web site and then on the bottom of the account access page in small print is a link to "additional information" which brings up a .pdf of the plan document. Buried in a paragraph on page 23 is the information that the management fee deducted by Standard is 1.3%. Which is of course on top of the expense ratios of the underlying funds within the plan. Out of the 20 offerings, only 2 have fees less than 0.7% which means that for my wife's plan the total fees are higher than 2% for 90% of the fund offerings.

For my own 403(b) plan which is invested directly with Vanguard there are no additional fees taken out by Vanguard. I only pay the underlying fund expense ratios. The only restriction is that Admiral shares are unavailable so regardless of my account balance I can only invest in investor shares. But that is still 100x better than what my wife has.
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Re: Frontline--The Retirement Gamble

Postby Cloud » Fri Apr 26, 2013 3:22 pm

William4u wrote:
lawman3966 wrote:
dmcmahon wrote:P.S. I have a quibble with the sound bite that says "You put up 100% of the capital, take 100% of the risk, and get 30% of the profit". The missing 70% was never there - it was taken in costs and likely consumed as income. But even granting that the fund managers took every dollar of fees and plowed it back into the same investment (but without paying their own high fees), they are now taking an increasing portion of the risk to capture that 70% - towards the back 9 of the graph, as their assets exceed yours, they're taking more than 50% of the risk with what is now their own savings. I'm not defending the high fees here - just saying the statement isn't really accurate.


I don't follow this at all. Once the manager has taken the fees for a given year, the money has disappeared from the participant's account forever. The money taken in fees could be invested in any one of a million places and is no longer part the calculation. Thus, the manager has no risk within the pool of money forming the participant's account. The manager simply continues to take 2-3% of AUM in fees on an ongoing basis.

I'm not sure where Bogle's "30% of the profit comes from". Perhaps it's an approximation based on an expected real return of about 3% per year, with 2% of that going to the manager. Whether the 30% figure is correct or not, the fund manager has no risk whatsoever in the funds that remain in the account once the fees for a given year have been extracted.


I think Bogle is basically right on the 30% profit stuff. Say, for example, you invest $20k per year for 40 years for retirement (not so far off from the average if you max out a 401k, given that the limit will increase over time). So the principle invested is $800k over 40 years. If you average a 5% return, you end up with about 2.5 million, with a 1.7 million profit. If you average a 7% return (due to 2% lower fees alone), you end up with about 4.5 million, with a 3.7 million profit.

Bogle is just pointing out that with the 2% fee, the mutual fund company keeps the 2 million in profit out of the 3.7 million profit (3.7 million-1.7 million). The mutual fund company keeps most of the profit. If you change a few assumptions just a little, Bogle's 70% figure is probably not outside the realm of possibility.


Bogle is right on the money! Excel tells me the following.

Years Invested 50
Interest rate before fees 8.00%
Interest rate after fees 6.00%

Total % Gain with no fees 4590.16%
% Gain with fees 1742.02%
Difference 2848.15%

Your share of earnings 37.95%
Brokers share 62.05%
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Re: Frontline--The Retirement Gamble

Postby Polar_Ice » Fri Apr 26, 2013 4:11 pm

Allan Roth's review

http://www.cbsnews.com/8301-505123_162- ... gle+Reader

I do need to point out, Frontline, that you neglected to include a very critical segment in your documentary -- the vital role that active managers play. Seriously, who do you think keeps markets efficient and allows us indexers to profit? Without the expensive active managers, indexing wouldn't work.


I wish he would of explained this more. Maybe someone else can?
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Re: Frontline--The Retirement Gamble

Postby tfb » Fri Apr 26, 2013 4:28 pm

dmcmahon wrote:The nostalgia for the traditional pension system all but ignored some real mathematical challenges of those systems, as lifespans grew longer while at the same time the rate of expansion of the scheme (the size of the base of younger workers) slowed or even reversed. The pension schemes ultimately face the same array of investment choices we do - there's no magic bullet. The schemes can't work on a steady-state basis unless enough is saved for each worker during his/her working lifetime. Enough wasn't, and isn't.

I agree. It would be easy to go back to a pension scheme if people agree to a 25% pay cut. Here on the forums we have a few threads comparing jobs offering a low salary + high pension contribution vs a high salary + low retirement contributions. Most posters suggested going for the high salary. Pension went away because people didn't want a cash pay cut.

dmcmahon wrote:P.S. I have a quibble with the sound bite that says "You put up 100% of the capital, take 100% of the risk, and get 30% of the profit". The missing 70% was never there - it was taken in costs and likely consumed as income. But even granting that the fund managers took every dollar of fees and plowed it back into the same investment (but without paying their own high fees), they are now taking an increasing portion of the risk to capture that 70% - towards the back 9 of the graph, as their assets exceed yours, they're taking more than 50% of the risk with what is now their own savings.

I also agree. It's 70% only if the managers took risk and the fees they took in early years compound exponentially. If they do that then you are not taking 100% of the risk; the manager is taking the bulk of the risk with their fee earnings. So maybe "You put up 100% of the capital, take 30% of the risk, and get 30% of the profit."
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Re: Frontline--The Retirement Gamble

Postby Cut-Throat » Fri Apr 26, 2013 4:45 pm

tfb wrote:I agree. It would be easy to go back to a pension scheme if people agree to a 25% pay cut. Here on the forums we have a few threads comparing jobs offering a low salary + high pension contribution vs a high salary + low retirement contributions. Most posters suggested going for the high salary. Pension went away because people didn't want a cash pay cut.


I disagree completely! Workers on average have taken the 25% pay cut (Real) and still don't have a Pension. Pensions went away, to increase the Corporations Record, Unprecedented Profits, which they enjoy today. As well as Corporate Executive Pay Packages which exceed world Standards by at least 500%.

Based on your statements, the middle class in America would be awash in money today. What Planet do you live on?
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Re: Frontline--The Retirement Gamble

Postby Fallible » Fri Apr 26, 2013 5:05 pm

Polar_Ice wrote:Allan Roth's review

http://www.cbsnews.com/8301-505123_162- ... gle+Reader

I do need to point out, Frontline, that you neglected to include a very critical segment in your documentary -- the vital role that active managers play. Seriously, who do you think keeps markets efficient and allows us indexers to profit? Without the expensive active managers, indexing wouldn't work.


I wish he would of explained this more. Maybe someone else can?


Thanks for the good article. Here's a link to another Roth column that may be what your looking for: http://www.cbsnews.com/8301-505123_162- ... a-fantasy/
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Re: Frontline--The Retirement Gamble

Postby steeplechase » Fri Apr 26, 2013 7:25 pm

I guess we're lucky that financial advisers don't sell CD's.

"Here's a nice little CD from XYK Bank. It gives you a return of 1.3%, and my fee is only 1%."
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Re: Frontline--The Retirement Gamble

Postby htdrag11 » Fri Apr 26, 2013 7:37 pm

Fallible wrote:
Polar_Ice wrote:Allan Roth's review

http://www.cbsnews.com/8301-505123_162- ... gle+Reader

I do need to point out, Frontline, that you neglected to include a very critical segment in your documentary -- the vital role that active managers play. Seriously, who do you think keeps markets efficient and allows us indexers to profit? Without the expensive active managers, indexing wouldn't work.


I wish he would of explained this more. Maybe someone else can?


Thanks for the good article. Here's a link to another Roth column that may be what your looking for: http://www.cbsnews.com/8301-505123_162- ... a-fantasy/


Well, I recalleJason Zweig said about the dirty secret that most managers are closet indexers, or something to that effect. So Allan Roth's theory of indexing would not work without expensive active managers did not sound right to me. In one of the segments, it was reported that 3/4 of active managed funds under performed the index.
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Re: Frontline--The Retirement Gamble

Postby tfb » Fri Apr 26, 2013 8:51 pm

Cut-Throat wrote:
tfb wrote:I agree. It would be easy to go back to a pension scheme if people agree to a 25% pay cut. Here on the forums we have a few threads comparing jobs offering a low salary + high pension contribution vs a high salary + low retirement contributions. Most posters suggested going for the high salary. Pension went away because people didn't want a cash pay cut.


I disagree completely! Workers on average have taken the 25% pay cut (Real) and still don't have a Pension. Pensions went away, to increase the Corporations Record, Unprecedented Profits, which they enjoy today. As well as Corporate Executive Pay Packages which exceed world Standards by at least 500%.

Based on your statements, the middle class in America would be awash in money today. What Planet do you live on?

It's all relative. I thought data showed worker's real wages stalled, not that they have taken a 25% pay cut plus losing the pension. Anyway, when you compete with a global workforce that do the same work for less, your wages will come down. When your wages come down but you hold the cash part constant, you lose the pension. This is just the reverse of how pensions were created. Laws that froze wages created pensions when workers were in shortage.

The living environment of the people in the documentary looked pretty good to me, including that researcher, the lady who worry about retirement but type away on a Macbook, two people watching TV in a big living room, ... Awash in money went into those. Also see the thread about Mr Money Mustache who retired at age 30. If MMM could do it, so could others.
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Re: Frontline--The Retirement Gamble

Postby Cut-Throat » Fri Apr 26, 2013 10:03 pm

tfb wrote:The living environment of the people in the documentary looked pretty good to me, including that researcher, the lady who worry about retirement but type away on a Macbook, two people watching TV in a big living room, ... Awash in money went into those. Also see the thread about Mr Money Mustache who retired at age 30. If MMM could do it, so could others.


Based on your logic,if Bill Gates could make Billions, we're all just a bunch of Lazy [people --admin LadyGeek]. The middle class is not made up of a few of your chosen anecdotes.
It is society in general. And if you paid attention to the last 30 years, it's shrinking.
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Re: Frontline--The Retirement Gamble

Postby denismurf » Fri Apr 26, 2013 10:44 pm

My son, who is finally getting serious about the financial future because he's about to have his first kid at age 44, took only one thing away from the PBS show. Ditch-the-fees! He has been paying 2% a year to a cousin and friend for almost 10 years to manage his $40K or so stash. His biggest problem now is how to cut the cord without creating a temporary swirl of bad feelings in our extended family. The money is small, but ...
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Re: Frontline--The Retirement Gamble

Postby scouter » Fri Apr 26, 2013 10:46 pm

Cut-Throat wrote:
tfb wrote:The living environment of the people in the documentary looked pretty good to me, including that researcher, the lady who worry about retirement but type away on a Macbook, two people watching TV in a big living room, ... Awash in money went into those. Also see the thread about Mr Money Mustache who retired at age 30. If MMM could do it, so could others.


Based on your logic,if Bill Gates could make Billions, we're all just a bunch of Lazy asses. The middle class is not made up of a few of your chosen anecdotes.
It is society in general. And if you paid attention to the last 30 years, it's shrinking.


Cut-throat, I think the point that tfb is trying to make is that the folks interviewed in the documentary were obviously living in pretty comfortable digs, with all the latest toys, while complaining that they will never be able to retire. He's saying that if half of the money that went into that lifestyle had been invested in their retirement plans, they might already be retired. I agree. It's hard for me to feel sorry for them when their biggest problem isn't their high 401(k) expenses, it's their lack of disciplined saving.
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Re: Frontline--The Retirement Gamble

Postby lawman3966 » Fri Apr 26, 2013 10:54 pm

Polar_Ice wrote:Allan Roth's review

I do need to point out, Frontline, that you neglected to include a very critical segment in your documentary -- the vital role that active managers play. Seriously, who do you think keeps markets efficient and allows us indexers to profit? Without the expensive active managers, indexing wouldn't work.

I wish he would of explained this more. Maybe someone else can?


I will try. Allan appears to be saying that when the relative valuation of Exxon and IBM (for example) changes due to earnings or other factors, it is active traders who end up re-pricing the stock values of the companies to reflect their updated financial conditions. Indexers in theory can't do this because indexing inherently forces investors to buy both stocks or sell both stocks at the same time and to the same extent (that is, accordingly their respective weightings in the index).

Active traders may indeed perform the above needed function. But, active stock trading seems to me be different from active mutual fund account management. I think it oversells active mutual fund account management to suggest that such account managers perform the re-pricing function to keep the markets efficient. The re-pricing of components of the index occurs pretty much continuosly, given the microsecond trading that we now have. I just don't believe that most actively managed mutual funds trade with the level of frequency and precision needed for the pricing adjustment function. The active managers I've seen interviewed in the media seem to use some sort of macroeconomic logic to explain why their stock weightings depart from the weightings in the index.

I recall Bogle saying in one of his books that, in the aggregate, the totality of active fund managers are in fact indexers, just that they are high-fee indexers. This is because most stock shares are owned by active managers, and performance of the sum of all underlying assets of the various active managers is necessarily the same as that of the index as a whole. (However, the net performance is less than that of the index due to fees, taxes, and trading costs).

In sum, active stock trading does appear to be needed to adjust the pricing of stocks within the index. However, this observation, IMHO, bears little if any relevance to the fees charged by active mutual fund managers. Allan no doubt wishes to defend his industry. But, this particular argument doesn't work for me. If Allan wants to pay 2% of AUM annually to invest in the S&P 500, he's free to do so. But I will pass on that offer.
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Re: Frontline--The Retirement Gamble

Postby meowcat » Fri Apr 26, 2013 11:10 pm

Did you get a fee disclosure last year?
Brian


Fee disclosure? John Hancock doesn't seem to know what that is. They did, however, include a line: "Your Summery of Charges" in my last couple of statements. In and of itself, it is a joke. They seem to be laughing in the SEC's face. The line includes one figure, a dollar amount taken for the quarter.
Fine print includes:

"If you would like a detailed transaction history of the charges listed, go online at jhpensions.com to view your statement"Well, this fine print is on my on-line statement so that makes no sense whatsoever.
Further fine print:

"Additional charges associated with the plan's administrative expenses for the quarter were paid from the total annual operating expenses of the investment options in which you are invested. For information related to the total annual operating expenses for each investment option, refer to the Investment Comparative Chart available at jhpensions.com. Speak to your plan administrator for details, or for any questions regarding the charges applicable to your account."

Has anybody actually ever seen a John Hancock Investment Comparative Chart? I've been looking for it for weeks, I don't think it exists.

I thought regulations made it a requirement for 401(k) plans/administrators to clearly show all fees associated with your personal investments. I could have sworn I read somewhere that it must include a dollar amount as well as a percentage of AUM.

John Hancock still has everyone fooled, including the SEC.
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Re: Frontline--The Retirement Gamble

Postby Random Musings » Fri Apr 26, 2013 11:20 pm

tfb wrote:I also agree. It's 70% only if the managers took risk and the fees they took in early years compound exponentially. If they do that then you are not taking 100% of the risk; the manager is taking the bulk of the risk with their fee earnings. So maybe "You put up 100% of the capital, take 30% of the risk, and get 30% of the profit."


Regardless, you are putting in 100% of the capital to get 30% of the profits. That's one joint venture I'll pass on.

Regards,

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Re: Frontline--The Retirement Gamble

Postby Jeff7 » Sat Apr 27, 2013 1:46 am

Toward the end of the show, the journalist essentially asked Michael Falcon, "Should I, or should I not, use a financial advisor who is legally required to act in my best interests?"

You would think that it would be very easy to answer this question. Nope.


It's just amazing stuff going on. Pensions start going away, and soon there's a flood of millions of people, most of whom have no investing or finance experience at all, suddenly joining a market where they don't understand what they want to buy, nor how to evaluate the quality of the product, nor how to evaluate the performance of the product, nor how to determine the price of the product, and they're also fearful that their retirement is in danger.

A bunch of scared customers who don't know what they're doing...Feeding. Frenzy. And it still continues to this day.
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Re: Frontline--The Retirement Gamble

Postby umfundi » Sat Apr 27, 2013 2:44 am

scouter wrote:
Cut-Throat wrote:
tfb wrote:The living environment of the people in the documentary looked pretty good to me, including that researcher, the lady who worry about retirement but type away on a Macbook, two people watching TV in a big living room, ... Awash in money went into those. Also see the thread about Mr Money Mustache who retired at age 30. If MMM could do it, so could others.


Based on your logic,if Bill Gates could make Billions, we're all just a bunch of Lazy asses. The middle class is not made up of a few of your chosen anecdotes.
It is society in general. And if you paid attention to the last 30 years, it's shrinking.


Cut-throat, I think the point that tfb is trying to make is that the folks interviewed in the documentary were obviously living in pretty comfortable digs, with all the latest toys, while complaining that they will never be able to retire. He's saying that if half of the money that went into that lifestyle had been invested in their retirement plans, they might already be retired. I agree. It's hard for me to feel sorry for them when their biggest problem isn't their high 401(k) expenses, it's their lack of disciplined saving.

Yes.

While it's hard to have too much sympathy, I find it hard to blame these folks either. They're in a tough spot.

By the way, I think that people like this (and they are probably a majority) are the source of what Zvi Bodie says: You can't afford to retire, so plan to work longer, lower your expectations, and be very conservative with the savings you do have.

On another point, 401k plans (at least at my company) replaced their old company stock savings plan. Invest in company stock, we'll match some percent, and your savings are vested over 5 years or so.

Traditional defined benefit pension plans used to cost companies about 15% of payroll. It seems to me that companies now offer defined contribution plans like 401ks, but they have mostly simply saved or eliminated the 15%.

Finally, I would argue that wages and salaries are (like stock prices) the result of a competitive and fairly efficient market. The problem for many American workers is that that market, in the last two decades, became global.

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Re: Frontline--The Retirement Gamble

Postby Diogenes » Sat Apr 27, 2013 6:22 am

The program was interesting, excellent point on fund fees. However the personal responsibility aspect critical to investing for retirement was glossed over. There was an undercurrent of 'more government is needed'. Given it was PBS, but that does a disservice to the viewers.

Mr Hiltonsmith seems to like being a student, which is not always the best path to retirement savings. After $45K in debt to obtain a Masters...in Economics and working in NYC, he laments his low savings rate (his choice), and promptly obtains a 'grant' to get his PhD. Whose job is it to ensure you can retire? Whose job is it to educate you?

As far as some of the others, I have many friends who made similar bad choices. Usually it came down to overconsumption, sometimes bad luck, frequently lack of desire to find time to investigate alternatives, nearly always lack of automating savings and using their accounts to fund lifestyle 'needs'.

I think in the near future we will see far more clamoring for 'fairness' (meaning equality of outcomes) as more baby boomers resist lifestyle adjustments. For that they will turn to the government. I would like to see a show that contrasts two types of investors, one with personal discipline at age 25 to follow the BH way, live modestly, and take responsibility for ups and downs; and one who chose to spend it all along the way and hope that someone else will take care of their needs. Oh, and stop with the highlighting of CEO's pay, it is not a zero sum game in life. That is just an emotional red herring.

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Re: Frontline--The Retirement Gamble

Postby TomatoTomahto » Sat Apr 27, 2013 8:14 am

After years and years of only high-priced funds available in my wife's 401k, some Vanguard funds were finally added. I think it is because of expense reporting requirements that this happened but have no proof. Whatever the reason, they are much appreciated.
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Re: Frontline--The Retirement Gamble

Postby George-J » Sat Apr 27, 2013 9:30 am

Even up here in Canada - the recent Frontline's "The Retirement Gamble" is in the national paper - - read John Heinzl in today's G&M -
The 'tyranny' of return-destroying fees
His concluding paragraph -
Fees are the silent killers of investment returns. Don’t make the mistake of thinking a couple of percentage points don’t matter – in the long run, they’re huge.

It also reminds me of the 1996 by Bill Bernstein - Bequeathing Your Assets to Your Broker
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Re: Frontline--The Retirement Gamble

Postby rustymutt » Sat Apr 27, 2013 10:09 am

Even just a .25% over 30 years is huge. The financial institutions understand the math well.
As Mr Bogle points out time after time, it's the math.
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Re: Frontline--The Retirement Gamble

Postby tfb » Sat Apr 27, 2013 12:14 pm

Diogenes wrote:The program was interesting, excellent point on fund fees. However the personal responsibility aspect critical to investing for retirement was glossed over. There was an undercurrent of 'more government is needed'. Given it was PBS, but that does a disservice to the viewers.

Agree. No doubt high fees are bad. But always remember using a 401k is optional. You can always save on your own (but grabiner and math will point out a high-fee 401k is still better). When you save on your own you are not paying high fees. The taxes you pay will fund health care, education, roads, and many great things. High fees are not an excuse for not having enough to retire. Simply live below your means will do it.

"means" = gross income - taxes - saving for retirement.

I'm very weary of pointing out the high fees as pretext for "See your money is just going to Wall St. Give it to me and I will set up a program and guarantee you inflation + 3%." That's the thinktank's agenda.
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Re: Frontline--The Retirement Gamble

Postby Beagler » Sat Apr 27, 2013 12:23 pm

Some interesting posts from this thread:
Silence Dogood wrote:Am I the only one having a hard time feeling sorry for some of the people interviewed for this?
You're making $70,000 a year but only have $20,000 in retirement savings?


investingdad wrote:...there are a LOT of people for whom 'live below your means' is a foreign concept no matter what your earnings. They spend and spend and spend on all kinds of fun and cool stuff and can often make you feel like you're missing out on something (cars, vacations, whatever). But eventually winter comes around and some squirrels haven't put away nearly enough nuts. That's when you'll hear others try to make the savers and investors feel guilty for having saved and invested while others were out making merry with no regard for the future.


Grt2bOutdoors wrote:I liked the opening of the program - Brooks Hamiton being quoted as "if you are not saving 15-20% of your income from day one of working, "in your 20's", you will not be able to retire at age 65". Very depressing, when you think about it, a very small percentage of folks in their 20's are saving and of those, I'd venture probably 5-10% of them (being optimistic here) are saving that much, everyone else is likely saving 3%.


laughlinlvr wrote:.... what should you expect when employees are told all they have to do is put away a modest amount and they’ll have the lifestyle on the glossy 401k packet – you know, the one with the silver-haired couple getting out of their SUV with the two kayaks on top.


bottlecap wrote:My wife also noted that almost anyone with a sob story and a low retirement balance on the program was pictured at home, typing away on their $1,300 MacBook Air... :oops:

http://tinyurl.com/32orzql

Mel Lindauer wrote:I noticed that, too. And the stainless steel appliances in the background.


scouter wrote:...and the guy who said "I guess I'm gonna have to work the rest of my life", when they had just stated that he was unemployed, and they showed him sitting on the couch, watching a big, flat-screen TV.



StormShadow wrote:Because of this episode, my mother has decided to transfer her investments over to Vanguard. :D :D :D
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Re: Frontline--The Retirement Gamble

Postby tfb » Sat Apr 27, 2013 1:00 pm

Fallible wrote:These execs and "pro" active management types all had deer-in-the-headlights looks, almost defenseless, defeatist, not even believing heir own words - when they could get them out. But what's surprising about this is that they didn't more adequately prepare for their interviews so they at least didn't look so unprepared. They couldn't even pretend they believed what they said. Obviously, they knew what was coming and they knew what they were going to say - had to say - and they still couldn't get it right. They must be the ones who Zweig said (with a twinkle in his eye) own index funds.

Could it be better or appearing to be better responses were not included in the documentary? I was taped for a 30-second clip for internal use. I sat there for 1 hour, for many takes. They probably did many takes too, and interviewed many others, but only chose the worst responses for the documentary.
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Re: Frontline--The Retirement Gamble

Postby Beagler » Sat Apr 27, 2013 5:43 pm

RE: pensions
A Bankers Trust Company study found that in 1959, 54% of conventional pension plans required employees to contribute. By 1974, 67% of plans neither required nor permitted employee contributions. The number of plans with mandatory employee contribution provisions declined from 39% in 1964 to 14% in 1974. (Bankers Trust Company of New York, 1975 Study of Corporate Pension Plans, 1975. Private Pension Plans 1950-74, A. M. Skolnik, Div. of Retirement and Survivor Studies, Office of Research and Statistics, June 1976 Bulletin.)

Job changes: A worker has to stick around to earn a pension. While BLS does not keep track of career change stats, they did publish a news release in July 2012 on the youngest members of the baby boom generation, finding that the average person in that group held 11 jobs from age 18-46. They found that these people continued to have "large numbers of short-duration jobs even at middle age. Among jobs started by 40 to 46 year olds, 33 percent ended in less than a year, and 69 percent ended in less than 5 years." It looks like unemployment cannot be to blame for all of these job changes: "The average person was employed during 78 percent of the weeks from age 18 to age 46." (USDL-12-1489, July 25, 20120)
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Re: Frontline--The Retirement Gamble

Postby mickeyd » Sat Apr 27, 2013 8:47 pm

Here is an industry response to the PBS show. It's the workers fault.

Correspondent Martin Smith spoke to big-name commenters like Phyllis Borzi; Vanguard founder John Bogle; Helaine Olen, author of “Pound Foolish”; Jason Zweig, a columnist for The Wall Street Journal; Christine Marcks, president of Prudential Retirement; and Zvi Bodie, an economist at Boston University, as well as regular investors speaking about their experiences with retirement planning.

Brian Graff, executive director and CEO of The American Society of Pension Professionals & Actuaries, issued a statement on Wednesday saying the documentary “conveniently ignores” how difficult it is to make workers into savers.


http://www.advisorone.com/2013/04/25/pb ... =dailywire
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Re: Frontline--The Retirement Gamble

Postby umfundi » Sat Apr 27, 2013 10:34 pm

mickeyd wrote:Here is an industry response to the PBS show. It's the workers fault.

Correspondent Martin Smith spoke to big-name commenters like Phyllis Borzi; Vanguard founder John Bogle; Helaine Olen, author of “Pound Foolish”; Jason Zweig, a columnist for The Wall Street Journal; Christine Marcks, president of Prudential Retirement; and Zvi Bodie, an economist at Boston University, as well as regular investors speaking about their experiences with retirement planning.

Brian Graff, executive director and CEO of The American Society of Pension Professionals & Actuaries, issued a statement on Wednesday saying the documentary “conveniently ignores” how difficult it is to make workers into savers.


http://www.advisorone.com/2013/04/25/pb ... =dailywire

For retirement plans to be successful, according to Graff, employers, advisors and participants all have to work together to make decisions regarding plan design, benefits and investment choices

Really? Who invited the advisors?

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Re: Frontline--The Retirement Gamble

Postby livesoft » Sat Apr 27, 2013 10:46 pm

So did the correspondent Martin Smith who described at one point that his company had a high-fee plan ever go and get his plan changed to a low-fee 401(k) plan perhaps even with Vanguard funds in it? After all, he is CEO of Rain Media which created the documentary, so that he should have complete control of the plan that his company uses. In essence, Mr Smith is a fiduciary for his company's 401(k) plan.

Here Mr Smith admits he dipped into his 401(k) plan to help pay for his children's college education and his divorce: http://video.pbs.org/video/2365000847
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: Frontline--The Retirement Gamble

Postby steve roy » Sun Apr 28, 2013 12:09 am

umfundi wrote:
mickeyd wrote:Here is an industry response to the PBS show. It's the workers fault.

Correspondent Martin Smith spoke to big-name commenters like Phyllis Borzi; Vanguard founder John Bogle; Helaine Olen, author of “Pound Foolish”; Jason Zweig, a columnist for The Wall Street Journal; Christine Marcks, president of Prudential Retirement; and Zvi Bodie, an economist at Boston University, as well as regular investors speaking about their experiences with retirement planning.

Brian Graff, executive director and CEO of The American Society of Pension Professionals & Actuaries, issued a statement on Wednesday saying the documentary “conveniently ignores” how difficult it is to make workers into savers.


http://www.advisorone.com/2013/04/25/pb ... =dailywire

For retirement plans to be successful, according to Graff, employers, advisors and participants all have to work together to make decisions regarding plan design, benefits and investment choices

Really? Who invited the advisors?

Keith



"Therefore, for the workers who DO save, we need to rip them off BIG time. We have expenses to meet, after all."
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Re: Frontline--The Retirement Gamble

Postby texasdiver » Sun Apr 28, 2013 12:21 am

Seems like the solution is incredibly simple.

Just change the law so that everyone is entitled to shelter say $25,000 of income in whatever combination of vehicles they chose (401(k), IRA, ROTH etc.)

You don't like your 401(k), fine. Just take your $17,500 and put it in an IRA instead and dump another $5500 in your Roth. Or whatever. You love your 401(k) or your employer makes a generous match? Fine, keep it. Just make the math work out so that individuals who have crummy 401(k) plans or no 401(k) plan at all can chose to put equivalent amounts in their own IRA or Roth. Since my wife has no match in her plan we would instantly chose to drop the 401(k) and put an equivalent amount in a Vanguard IRA. It is ridiculous that we do not have that choice. And for the IRS it would be a wash either way if the total contribution limits didn't change. Then 401(k) advisors would actually have to COMPETE to keep people in their plans rather than owning them as a captive audience.
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