(CBS) What kind of a retirement plan allows millions of people to lose 30 to 50 percent of their life savings just as they near retirement?
David Wray, president of the Profit Sharing/401k Council of America and a lobbyist for the 401(k) industry, says it's one that empowers people to make their own investment decisions. "401(k) is the absolute best way people can save for retirement," Wray told Kroft. "They absolutely are the best retirement vehicle we have."
"How can you say it's the best available if it has let down tens of millions of people at the time they need the money the most?" Kroft asked. "That's not a 401(k) problem. That is our entire investment system," Wray argued. "This is about the markets went down for everybody. Nobody was saved in the current thunderstorm."
Wray says that many people still have more money in their 401(k)s than they've actually contributed. He says everyone had multiple investment options, including low-yield guaranteed returns. And he thinks people who lost money have no one to blame but themselves.
"In America, it's a society based on freedom and choice and personal responsibility," he said. "We need to help them understand these responsibilities and execute them to the best they can. 401(k) is part of that. There are no guarantees."
"What about the people who are 63 or 64?" Kroft asked. "A lot of those people were thinking about retiring. …And now they aren't." "A lot of them were retired and have to go back into the workforce," Kroft added.
" Well, that was not a 401(k) problem. That's an investment system problem. The markets go up and down. And if those people chose to take equity risk, there was a logical outcome," Wray replied.
Read on.
Great interview by Steve Kroft asking the tough questions to Wray as Wray gave nothing but BS. Kroft raised the question for fees that are taking from individuals' 401k that is not apparently fully disclosed from the financial planner or the employer. Kroft does raise the concern for one to ask for transparency on this issue.
In 2007, Wray testified the House committee of Ways and Means. Click here.
Here is an interesting excerpt in Wray's testimony on principles of reform:
• New Disclosure Requirements Will Carry Costs for Participants and So MustBe Fully Justified. Participants will likely bear the costs of any new disclosure
requirements so such new requirements must be justified in terms of providing a
material benefit to plan participants’ participation and investment decisions.
• New Disclosure Requirements Should Not Require the Disclosure of
Component Costs That Are Costly to Determine, Largely Arbitrary, and
Unnecessary to Determine Overall Fee Reasonableness. We believe that the
requirement to “unbundled” bundled services and provide individual costs in
many detailed categories is not particularly helpful and would lead to information
that is not meaningful. It also raises significant concerns as to how a service
provider would disclose component costs for services that are not offered outside
a bundled contract. Any such unbundling would be subject to a great deal of
arbitrariness. These costs will ultimately be passed on to plan participants
through higher administrative fees. The increased burden for small businesses
could inhibit new plan growth.
• Information About Fees Must Be Provided Along with Other Information Participants Need to Make Sound Investment Decisions. Participants need to know about fees and other costs associated with investing in the plan, but not in isolation. Fee information should appear in context with other key facts that participants should consider in making sound investment decisions. These facts include each plan investment option's historical performance, relative risks, investment objectives, and the identity of its adviser or manager.
What is interesting that the House committee was the 109th Congress [a dominated GOP Congress). The committee consisted of 15 Dems and 24 GOPS which makes sense why certain issues such as transparency of fees of 401 (k)s are stalled in Congress. Some of the individuals on this committee are currently in the 111th committee. This issue needs to be raised in the current House committee. Click here to see the members of the House committee of Way and Means in 109th Congress.
David Wray, president of the Profit Sharing/401k Council of America and a lobbyist for the 401(k) industry, says it's one that empowers people to make their own investment decisions. "401(k) is the absolute best way people can save for retirement," Wray told Kroft. "They absolutely are the best retirement vehicle we have."
"How can you say it's the best available if it has let down tens of millions of people at the time they need the money the most?" Kroft asked. "That's not a 401(k) problem. That is our entire investment system," Wray argued. "This is about the markets went down for everybody. Nobody was saved in the current thunderstorm."
Wray says that many people still have more money in their 401(k)s than they've actually contributed. He says everyone had multiple investment options, including low-yield guaranteed returns. And he thinks people who lost money have no one to blame but themselves.
"In America, it's a society based on freedom and choice and personal responsibility," he said. "We need to help them understand these responsibilities and execute them to the best they can. 401(k) is part of that. There are no guarantees."
"What about the people who are 63 or 64?" Kroft asked. "A lot of those people were thinking about retiring. …And now they aren't." "A lot of them were retired and have to go back into the workforce," Kroft added.
" Well, that was not a 401(k) problem. That's an investment system problem. The markets go up and down. And if those people chose to take equity risk, there was a logical outcome," Wray replied.
Read on.
Great interview by Steve Kroft asking the tough questions to Wray as Wray gave nothing but BS. Kroft raised the question for fees that are taking from individuals' 401k that is not apparently fully disclosed from the financial planner or the employer. Kroft does raise the concern for one to ask for transparency on this issue.
In 2007, Wray testified the House committee of Ways and Means. Click here.
Here is an interesting excerpt in Wray's testimony on principles of reform:
• New Disclosure Requirements Will Carry Costs for Participants and So MustBe Fully Justified. Participants will likely bear the costs of any new disclosure
requirements so such new requirements must be justified in terms of providing a
material benefit to plan participants’ participation and investment decisions.
• New Disclosure Requirements Should Not Require the Disclosure of
Component Costs That Are Costly to Determine, Largely Arbitrary, and
Unnecessary to Determine Overall Fee Reasonableness. We believe that the
requirement to “unbundled” bundled services and provide individual costs in
many detailed categories is not particularly helpful and would lead to information
that is not meaningful. It also raises significant concerns as to how a service
provider would disclose component costs for services that are not offered outside
a bundled contract. Any such unbundling would be subject to a great deal of
arbitrariness. These costs will ultimately be passed on to plan participants
through higher administrative fees. The increased burden for small businesses
could inhibit new plan growth.
• Information About Fees Must Be Provided Along with Other Information Participants Need to Make Sound Investment Decisions. Participants need to know about fees and other costs associated with investing in the plan, but not in isolation. Fee information should appear in context with other key facts that participants should consider in making sound investment decisions. These facts include each plan investment option's historical performance, relative risks, investment objectives, and the identity of its adviser or manager.
What is interesting that the House committee was the 109th Congress [a dominated GOP Congress). The committee consisted of 15 Dems and 24 GOPS which makes sense why certain issues such as transparency of fees of 401 (k)s are stalled in Congress. Some of the individuals on this committee are currently in the 111th committee. This issue needs to be raised in the current House committee. Click here to see the members of the House committee of Way and Means in 109th Congress.
2 comments:
I saw him SPB on 60 minutes tonight. Any client he has should fire him and as for him being a Lobbyist he's nothing be a shark stealing money. I love how Steve Kroft called him out and said but you get their money. As for as the 109th Congress will we know they covered up for the Corruption and gave Bush the blank check.
Also the trend for the last few years has been no employer matching for 401Ks.
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