Frontline’s documentary film was broadcast April 23 and is available on line at http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/
“The Retirement Gamble,” offers a glimpse into the precarious state of American retirement, and a ringside seat to the battles being waged in Washington over investor protections. The major theme throughout the film is the meager retirement savings of most Americans and the impact on their retirement savings of higher fees and expenses in retirement plans. While fees and expenses are important, in and of themselves, other questions also need to be addressed in assessing retirement plans. These include: the value of any services provided to participants for the additional fees paid, the reasonableness of any fees received by the advisor, the investment manager, or the third party administrator of the plan and, crucially, the responsibility of the plan sponsor fiduciary for controlling investment expenses.
Industry arguments against the fiduciary standard were also highlighted in the film. In one segment the Head of Retirement at J. P. Morgan Asset Management is queried by film producer, Martin Smith. In this brief segment, the J. P. Morgan executive explains why investors can be better served by a sales broker offering product information meeting the “suitability” standard, (and permitted to generally put his/her own interests ahead of his client), as opposed to a fiduciary advisor required to put the client’s interests first. See it for yourself in the film, but here is the conversation. (The questions have been edited for brevity; the answers are reproduced in full.)
Q. Should I want to work only with someone who has a fiduciary obligation?
A. Not necessarily.
Q. Isn’t it better?
A. It’s different.
Q. It’s not better?
A. It can cost more. You may not get any different advice, or outcome and it can cost you more.
Q. And if a broker or advisor is not a fiduciary?
A. Ask them what that means and see what you think about their answer.
Q. Should I prefer someone with a fiduciary responsibility?
A. That’s a question that can only be answered on a personal basis. Based on what your level of need is, what your risk appetite is, and how much of the investment decision you want to delegate….
