401(k)s are the achilles heel of employer-employee relations since many plans are not well supervised and managed with an eye on containing fees and expenses. These higher fees cost participants thousands of dollars over their working careers and are designed to benefit 401(k) plan administrators, not workers. When combined with anti-fiduciary practices, this is a recipe for taking advantage of millions of less sophisticated investors.
As this press release states, the upcoming PBS Frontline special, “The Retirement Gamble,” should give national attention to this retirement planning problem. This show should also present what it means to millions of employees who have diligently invested in their retirement plans, but not received the best results mainly due to poor performance and excessive fees.
While I have not obviously seen this show since it has not yet aired, I covered many of these 401(k) deficiencies in my book (“How 401(k) Fees Destroy Wealth and What Investors Can Do To Protect Themselves.”) IMHO, this is a solid discussion topic for labor-employee relations people since it illustrates an abuse in one of the last benefits offered to employees by employers.
For more on the upcoming PBS show, which airs on Tuesday, 10 pm/ 9pm CDT, see the link to the trailer below.
Public Television’s well-respected and Pulitzer Prize-winning show, “Frontline,” is the latest media outlet to critique and raise questions about 401k plans and how Wall Street deals with them. This should be required viewing for anyone who invests in a 401(k) plans, financial industry professionals and people in employer-employee relations.
Why This Show Is Important
This show airs at a key time because some Republicans are pushing to reduce Social Security benefits and other entitlements. Since pensions are rarely available today, with the exception of employees in the public sector, 401(k)s have become the default retirement savings option for millions.
It is also important because few financial reporters and commentators know about 12b-1 fees, revenue sharing, the debate over the fiduciary standard, and which financial professionals (brokers, registered reps, advisers, RIAs, financial planners, etc.) truly provide objective advice. The entire discussion about conflicts-of-interest which permeate the financial services industry today is rarely discussed by the major media. This show may shed some light on this major problem.
Finally, the show may indirectly point out that individual investors do not have any advocates in Washington and even fewer in the financial services industry. This is true among elected politicians at the federal and state levels, as well as among organizations which claim they are “pro-investor,” such as Morningstar, the American Association of Individual Investors and the Investment Company Institute (the lobbying group for the mutual fund industry.)
Sadly, even well-intentioned groups, such as the Consumer Federation, do not have the political muscle and money to be taken seriously when they advocate for pro-investor initiatives. This is a short list of organizations which nominally even say they speak for individual investors. But the everyday reality is that investors are largely on their own when it comes to building a secure financial future. While this show has yet to air, my bet is that these themes will emerge from the show since they would reflect some of the same conclusions I learned when writing my book, “How 401(k) Fees Destroy Wealth and How Investors Can Protect Themselves.”
The show should also include more substantial critical interviews with former industry individuals and not those currently working in the industry. The way it works is that once knowledgeable people leave the industry, they feel more free to discuss the unethical practices they observed. Sadly, they don’t often raise these issues while working and that is why some unethical, anti-investor practices can continue uninterrupted for years.
