After PBS aired a documentary on Tuesday, “The Retirement Gamble,” some industry organizations were quick to respond to the claims made by the latest broadcast from the Frontline series.
The documentary covers topics like the shift from defined benefit plans to defined contribution plans, how fees affect account balances, and the benefits of index investing. Correspondent Martin Smith spoke to big-name commenters like Phyllis Borzi; Vanguard founder John Bogle; Helaine Olen, author of “Pound Foolish”; Jason Zweig, a columnist for The Wall Street Journal; Christine Marcks, president of Prudential Retirement; and Zvi Bodie, an economist at Boston University, as well as regular investors speaking about their experiences with retirement planning.
Brian Graff, executive director and CEO of The American Society of Pension Professionals & Actuaries (ASPPA), issued a statement on Wednesday saying the documentary “conveniently ignores” how difficult it is to make workers into savers.
The problem, Graff wrote, is that the documentary relied on data from a study published by Demos, a liberal think tank, in May that ASPPA “debunked” for overstating typical mutual fund fees in 401(k) plans. “What is more troubling, however, is Frontline’s take that fees are by far the most important factor to be considered when choosing an investment, and the retirement industry offers participants little value. In other words, that the industry is nothing more than a commodity,” Graff wrote.
For retirement plans to be successful, according to Graff, employers, advisors and participants all have to work together to make decisions regarding plan design, benefits and investment choices. The service that entails comes at a price, but Graff stressed that price should never be the only consideration in a plan. “If you were having trouble with the law, would you simply look for the cheapest lawyer? Certainly not. For something as important as retirement savings, you should not base your decision solely on cost either.”