Silence Dogood wrote:Am I the only one having a hard time feeling sorry for some of the people interviewed for this?
For me, it's not a matter of not feeling sorry for them, it's a matter of regretting that the show mixed up separate matters that detracted from the fee issue. I saw at least three issues in the segment: (a) insufficient savings rates; (b) inappropriate investment allocations; and finally (c) high and hidden fees.
It's just my opinion, but I think the overall segment would have been better if they'd picked one topic and stuck to it. There are things you can blame on the big-name advisory firms (such as the fees), but an insufficient savings rate isn't one of them.
I also noticed a contradiction in the presentation. The show lamented the presence of fees, and allowed J. Bogle to present a convincing case for low-cost investing. Then, in another part, the show interviews attendees at a 401K seminar and stresses the complexity of investing in general and why it was so wrong to expect participants to do this by themselves. The complainants can't have it both ways. If advice is too expensive, the plan should include a minimal number of index funds, and a few target date funds, not provide advice, and have low fees (which is precisely what my employer has done). Complaining about the lack of advice, and stressing how complex investing is seems to play into the advisory firms' hands.
This show was a good start. But, I would guess that will take hundreds of presentations like the one on Fronline to change the 401K system. In the meantime, participants need to educate themselves and press for different and better 401K providers, because the high-fee providers will not change their ways any time soon.