PBS Documentary Slams Brokers and Advisers for Putting Their Own Interests
Ahead of Investors’
Brokers and financial advisers across the country were slammed for putting
retirement savers at risk in last week’s PBS documentary
“The Retirement Gamble.”
The documentary highlights the problems with 401(k)s and other actively
managed funds, and blames advisers for steering investors into high-fee
investments for their own profit.
It also discusses index investing and the national shift from pension plans
to defined contribution plans, such as 401(k)s.
Zvi Bodie, an economist at Boston University; Assistant Secretary of Labor
at US Department of Labor Phyllis Borzi; Vanguard Founder John Bogle;
Teresa Ghilarducci, an economist at The New School; President of Prudential
Retirement Christine Marcks; Helaine Olen, author of “Pound Foolish”;
and Jason Zweig, a columnist for The Wall Street Journal, are all speakers
in the film.
According to Ghilarducci, 401(k)s are “one of the only products Americans
buy that they don't know the price of it.”
“It's one of the products Americans buy that they don't know
its quality,” she says. “It's one of the products Americans
buy that they don't know its danger.”
Representatives sell the products and other actively managed funds, according
to Ghilarducci, because there is money in them.
“Basically, your guy is out for himself to maximize his sales, and
the way he does it is to be loyal to the
mutual fund,” she says. “They try to sell you the most profitable products.”
Bogle also expresses his concerns about financial representatives, saying
brokers may be making financial arrangements with fund firms in order
to line their own pockets.
"The brokers are getting a little religion here,” he says. “They're
saying, 'Why should I distribute your funds unless you pay me to?
You get these big management fees — I want some of it. You're
getting plenty. Give me some.'”
While the film did have its
share of critics, there were many more supporters. The AARP called the film a “wake-up call on 401(k) fees” for investors, 70% of whom don’t know they pay any fees at
all. A piece in Forbes magazine called the documentary “excellent,”
and said watching it would help investors understand why millions of Americans
are, like PBS correspondent Martin Smith,
too broke to stop working.
National Association of Personal Financial Advisors (NAPFA) also praised
"The Retirement Gamble," saying it made a strong case for “fee-only” planning and calling
it a “wake up call for legislators and regulators to finally do
something to protect American investors.”
“PBS Frontline put a spotlight on how commissions, hidden fees and
expenses can devastate the average consumer’s retirement savings
and how the
lack of a fiduciary standard leaves investors unprotected,” said the NAPFA in a statement.
“While broker-dealers largely want to maintain the status quo, Americans
are struggling to make ends meet and save for their futures —they
deserve the protection of a fiduciary standard from every professional
who touches their financial lives.”
Watch the film and readinterviews with Bogle, Olen, Ghilarducci, and others here.
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