HEADS UP: If you have a 401-K --PBS FRONTLINE Tonight..."The Retirement Gamble"

[KoKo]

The Retirement Gamble
Coming April 23, 2013Check local listings »
The Retirement Gamble raises troubling questions about how America’s financial institutions protect our retirement savings.
“The Retirement Gamble” Facing Us All
April 23, 2013, 10:09 am ET · by Martin Smith

Retirement is big business in America, but is the system costing workers and retirees more than what they’re getting in return, asks FRONTLINE correspondent Martin Smith.

Press Release: “The Retirement Gamble”
April 16, 2013, 3:51 pm ET

“The Retirement Gamble,” airing Tuesday, April 23, is an eye-opening investigation of a financial services industry that may be draining your retirement savings with every passing year.

http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/

[a kennedy]

1. Yup, we're going to tune in. eom

[KoKo]

6. We made big changes after our "SAFE" 401-K crashed in Wall Street Meltdown...

We Repositioned and managed to get out of the "Mutual Funds" we had been pushed into (with our own research we selected them...but, they Crashed..and they were rated ("Safest of the Safe&quot ...and we managed to pull out them after the crash to "Manage our Own Account." Not everyone could do that...because we'd transitioned from "Employed" to "Own our Own Business"...so we could take advantage of "loop holes" we didn't know about when we did our 401-K originally.

But...this should be fascinating to see if PBS/Frontline does with this . Who do they side with "Wall Street--It's coming back!.......OR....WALL STREET SCREWED YOU...and here's "What You Need to Do about it!"

I can't wait to watch it!

[still_one]

2. If your 401k plan is not self- directed, and only allows you to buy certain

funds it is

[BlueStreak]

3. I wonder if we over-estimate the security of self-directed funds

I certainly agree with the caution about restricted funds, ESPECIALLY the ones that only allow investments in the company you work for. That is horrible.

But who is to say that Vanguard, Fidelity, PIMCO, Schwab, Janus, et al are squeaky clean?

We know about the too-big-to-fail banks, but failure of these giant fund companies would have just as much impact on the economy.
In theory, failure is impossible because they are just holding debt and equities that are real. The funds simply reflect the current value of those instruments, right?

Well, not exactly. I challenge anybody to find a single bond fund from any of the "bigs" that isn't heavily leveraged at least 2:1, and good luck finding any dosclosure about just how leveraged they are. That is potentially a house of cards. And even without a collapse of the leverage, there is still the possibility of companies cooking the books. In theory, there is insurance against that. But if the big ones tumbled, I bet the insurance could not cover it.

If that happened, would the government step in?

And for those who would say, "You worry too much. These funds are all audited very carefully." I would simply point out that Arthur Andersen was possibly the most respected name in accounting the week before Enron collapsed. For those who are too young to know the rest of that story, do yourself a favor and look it up.

[still_one]

4. They sometimes aren't. I was also referring by self directed to buy individual stocks , bonds, etc

[BlueStreak]

5. Individual purchases eliminates the risk of a fraudulent fund

That probably is not best for most people because it is hard to get a sufficient level of diversification.

And then there is still the issue of the custodians. I'd like to think there is very little risk that a custodian would lose your securities.

The bigger risk is the collapse of the markets altogether. In that case, we are all screwed every which way. How much risk is that?

Hard to say. Right now the market P/E is not historically high but that is mainly because the biggest corporations have been able to suck so much blood out of the middle class. That's how they got those big "E"s on the P/E ratio. And there just isn't much blood left to suck. That doesn't necessarily cause a market collapse, but it is hard to see how the bull market gets much further before society itself collapses.

And by society collapsing, I'm not necessarily talking about riots in the streets. I'm talking about chronic un- and under-employment, health care costs eating us alive, chronic underfunding of the government, and $21 trillion in assets stashed offshore.

[progree]

7. Kick. And I eagerly await the airing in 50 minutes. What about the employer offering high fee

funds? The Newshour aired a segment of it, and it was mostly about how mutual funds have an average of 1.3% in fees, with some as high as 5%. But why is an employer offering their employees such high-fee choices for their 401 K's? Why not Vanguard index funds that are like 0.10% expense ratio as the basic choices (like Xcel Energy offers its employees)?

[KoKo]

8. KICK...STARTING NOW..for EAST COAST!

[Yavin4]

9. I invest with Vanguard. I invest in their Index funds. I'm an investor, not a gambler.

I have a savings account, index funds, and precious metals (just in case). My strategy is to maintain my savings over time and earn enough of a return to thwart inflation.

An investor should strive to maintain their accumulated wealth. If you're trying to get rich, then you're gambling.

[mahatmakanejeeves]

10. I saw this. It was great.

Additional links:

Phyllis C. Borzi, the head of the Employee Benefits Security Administration appeared in the episode.

A Look at 401(k) Plan Fees

And from Forbes:

Educating Gina Raimondo, Rhode Island's Wall Street-Friendly State Treasurer

Edward "Ted" Siedle, Contributor
I cover pensions, investment management and securities matters.

Investing |4/23/2013 @ 11:38AM

In recent years the U.S. Department of Labor, the Securities and Exchange Commission, and the General Accountability Office have each publicly acknowledged that conflicts of interest related to firms that provide investment services to pensions are widespread, and that these conflicts have resulted in reduced returns and higher fees for retirement investors.

More recently, Phyllis C. Borzi, Assistant Secretary of Labor of EBSA, told the Wall Street Journal of widespread conflicts of interest in the marketplace for retirement advisory services. She went on to state that there is a good deal of evidence that these conflicts have resulted in reduced returns and higher fees for retirement investors, as reflected in the DOL’s own investigations and cases, the SEC and the GAO reports, published securities cases, academic literature, and other sources.

My firm worked extensively with the SEC, the DOL and the GAO since 2003 related to their investigations of conflicts of interest and malfeasance in the pension industry. Our investigations have consistently revealed that breaches of fiduciary duty by financial advisers and vendors to pension plans result in substantial, quantifiable harm. That is, conflicts of interest, unethical business practices, and undisclosed compensation agreements that are pervasive in pension investment management undermine the integrity of pension investment processes and detrimentally impact performance.

Further, such industry abuses may contribute to the demise of pension plans. Indeed, a 2007 study by the GAO revealed that one form of industry abuse alone affecting pensions with over $4.5 trillion in assets – pension consultant conflicts of interest – can undermine a pension plan’s investment performance by 1.3% annually. Many other breaches of duty, such as those related to securities trading, money managers, and custodians (which the GAO did not examine), I have found to also be harmful to pensions.