Friday, April 26, 2013

Save My 401(k) - Part 3, Lots of Negativity out there

If you haven't had a chance to see the recent PBC special, ‘Frontline, The Retirement Gamble’, it is worth watching.  It's a little scary in its depiction of the retirement industry.  It’s gotten a lot of industry attention.  I suggest you take a look, if you get a moment.  Linked here. 
After watching it, please think about this excerpt from Phyllis Borzi, assistant secretary of labor in charge of EBSA (DOL enforcement).  Look at the choice of words she uses highlighted below in yellow.  Not new rhetoric, but definitely louder now than ever.  You can sign up for the DOL newsletter at DOL.GOV.
Take Three:
Fresh From 'Frontline,' Borzi on Retirement
Phyllis C. Borzi is the assistant secretary of labor in charge of the Employee Benefits Security Administration, which helps protect the retirement security of millions of America's workers. This week, she appeared in the PBS Frontline documentary, "The Retirement Gamble." We asked her three questions about retirement security in America today.
Frontline says that there's a retirement crisis. Is this true? I think the Frontline episode was right to point out that there are significant challenges that workers face in saving for retirement. We used to have a system of predominantly traditional pension plans, which are professionally managed and invested, and funded by employers. Now it is a defined contribution system, which requires workers to take on more responsibility not only to make sure that they save enough, but also to invest the right way. Part of our job at EBSA is to make sure workers are getting the information that they need, such as information on the fees that they are paying, so that those challenges aren't insurmountable.
What can the average person do to help ensure a secure retirement? There are a lot of steps you can take. First, make sure you are saving now, no matter where you are in your career, and maximize your employer match if you have one. Also, pay attention to the fees you're being charged and make sure you read all of the communications that you receive from your plan. If you have an investment adviser, make sure you're asking them questions to ensure that the person is a "fiduciary," that is, somebody legally required to put your financial interests ahead of their own. We've developed a fact sheet to help you do just that.
Can you tell us more about what the Department of Labor is doing to help? One of the challenges that Frontline identified was that investment advisers and brokers may be encouraging you to invest in products that financially benefit them — and may not be the best option for you. We don't think they should be able to do that, so we're working on a proposed rule to address these conflicts of interest and make sure that when you get advice, it's in your best interest, not your adviser's.

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