John Oliver's Last Week Tonight - Retirement Plans

Anyone watched Last Week Tonight? Lol right in line with some of the Private Wealth CFA material we’ve just studied and been tested on.

He shedd a not so great light on some of the issues with retirement plans and financial advisors and the issue of fiduciary duties.

What did you guys think?

Well I’m exempt from fiduciary duty since I got my Bachelor of Financial Advising signed by the Dean of Financery

Link?

I’m investing with Orlando the cat.

In all seriousness, it was a bit upsetting. Any CFA or candidate is obligated to act as a fuduciary (assuming buy side).

I spend some time on reddit.com/r/personalfinance and everyone there is completely up in arms about fees. Like many (mainly younger) people, they believe fees are the first thing you should consider when choosing an investment option. There’s really no reasoning with them. I agree that fees are important, but it’s more of a tiebreaker in my book.

Anyway, retirement plans are going to look a lot different in the years ahead. DOL is forcing prices down and making pretty much everyone a fiduciary.

What 99% of folks don’t understand, even those of us in the business, is plans can’t turn to Vanguard and other passive investmets for 100% of the choices in their plan. Why? Becuase Vanguard and other extremely low cost funds don’t provide revenue sharing. When one of my funds is used in a plan, we reimburse the plan X bps. This helps offset the cost of the plan. Take away all active managers and the company will bear the brunt of the costs instead of the particpants. This may sound like a good idea, but where do you think that money is going to come from? First thing to go…employer matching.

So, do you want to pay and extra 60 bps for a fund, or do you want to lose a few percentage points of employer matching?

Saw the segment agreed with it. This country would be better off with 90% less variable annuities so thats good, 401k’s are pretty rough as its the extreme lack of options that make them terrible. Retirement for the vast majority of americans seems to be a thing of the past at this point.

Article and the segment is embedded in there.

http://www.marketwatch.com/story/what-john-oliver-learned-while-setting-up-a-401k-plan-for-his-employees-2016-06-13

Many 401ks now come with brokerage windows so you can self-direct your investments. Even those that don’t generally have an okay mix of investments. I see a lot of plans and there’s always a QDIA option (target dates are the norm), an index fund, and a mix of active managers. Some smaller plans are an absolute joke. There are still plenty out there that offer only American Funds.

Yea I have heard of the self directed ones and dont know too much about them, unfortunately my company doesnt offer that. Work for a firm with an AM arm and the bulk of the offerings are our own funds. When I worked with BNY they had a pretty poor offering as well.

I have read a while ago a breakdown of the “top firms by 401k” where they looked at a bunch of their match & offerings and there are clearly some companies that do a great job with them.

The 401k structure in general seems to be a problem, I believe I read a quote from the guy who came up with the idea for the 401k that he couldnt believe the way it was being used and it was never intended to be a replacement for a pension.

Somewhat off topic but I just went over there and scrolled through a bit. Man shit is bleak over there. On the plus side, it made me feel a bit better about my own life.

Really? r/personalfinance makes me depressed that I didnt fall ass backwards into 500k

Them: “Put it all in an index fund that tracks the market and if you’re paying more 10 bps you’re getting screwed!”

Me: “Well, there are other things to consider like OP’s age, risk tolerance, etc. So, throwing it all in a single index fund is probably not the best solution. Plus, a mix of active and passive funds can lead to better results, particularly when you use active managers that cover less efficient markets.”

Downvoted to oblivion.

  1. “Enhanced indexing or gtfo” ~ CFA L3

  2. Reddit punks destroyed forever

  3. ???

  4. PROFIT

Seppuku

to be fair, if a person is really going to reddit for financial advice the best way to go is probably vanguard index as they will most certainly do a terrible job of picking funds. A well diversified portfolio should include some active management IMO (although id certainly advise a large portion be indexed) but finding a trustworthy person to assist you can be a difficult task.

That’s part of their mantra over there though. The hivemind refuses to believe there’s a scenario (outside of winning the lottery) when one should seek the advice of a financial professional. Pay 0.60%-1.08% advisory fee? GTFO.

well reddit isnt exactly known for their diverse opinions. That sub is pretty large, and generally sucks. The larger the sub the worse it is (usually) Reddit is best with its small niche subs where people are great knowledge. The subs like ask science and ask historians do well because of how tightly they are moderated.

r/gonewild for example

So good. That’s one that makes be feel down on my experiences. Of course it’s mostly hot chicks, and the same ones post over and over, so it’s not representative of the population, but whatever.

Hey look OP is a girl!