The Retirement Gamble

Tyler Durden's picture

If you’ve been watching any commercial television lately, you are well aware that the financial services industry is very busy running expensive ads imploring us to worry about our retirement futures. Open a new account today, they say. They are not wrong that we should be doing something: America is facing a retirement crisis. One in three Americans has no retirement savings at all. One in two reports that they can’t save enough. On top of that, we are living longer, and health care costs, as we all know, are increasing. But, as Martin Smith found when investigating the retirement planning and mutual funds industries in Frontline documentary 'The Retirement Gamble', those advertisements are imploring us to start saving for one simple reason. Retirement is big business - and very profitable.

Some highlights of his report and the documentary include:

"...they don’t have to give you the best advice, just advice that isn’t too egregiously terrible..."


"You’ll get lots of advice, but chances are it won’t be worth much. Eighty five percent of all financial advisers and financial planners are really just brokers or salesman. Their incentive is to sell you a product that makes them a higher commission, not necessarily a product that maximizes your chances of saving more. Only 15 percent of advisers are “fiduciaries” - advisers who by law must operate with your best interests in mind."


"...While reporting on retirement plans, nothing has been more surprising to me than the corrosive effect of fees on our retirement savings. It’s this simple: Fund fees can erode as much as half or more of your prospective gains..."


"...Sadly, a recent AARP study reported that 70 percent of mutual fund savers were not even aware that they were paying any fees at all.


Is there hope for change? The Labor Department says they plan to reintroduce a new fiduciary rule this summer that will force the financial services industry to think of us first when it comes to retirement. We’ll see how that goes."

We believe everyone should watch this documentary as, in Martin Smith's own words, "What I uncovered while making this documentary made me rethink my financial future. It just might do the same for you."


Chapter 1 - The Retirement Circus
Americans entrust trillions to financial service providers, but is the system working? 


Chapter 2 - It Used To Be Much Easier
Pensions were once the main road to retirement until an IRS loophole changed everything?


Chapter 3 - The Tyranny of 'Fees'
The father of index funds explains how 401(k) fees can diminsh your retirement savings.


Chapter 4 - Are Index Funds The Answer?
Martin Smith asks whether index funds offer the safest way to save for retirement.


Chapter 5 - Advisers or Salesmen?
Why your financial planner may not always have your best interests in mind



Source: Frontline

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
SheepleLOVEcheddarbaybiscuits's picture

After you adjust your returns for inflation, all you have done is paid fees.

Zer0head's picture



fuck you Loblaws, JC Penny, Ackman


Ackman man up with what you are going to do for the hundreds of dead and injured who no longer need to worry about retirement




and a tour of JOE (Mirman) FRESH's lovely and well engineered home


Can Joe Fresh Save JCPenney... and Retail?


freewolf7's picture

Retirement? Ha, I get to drive this till the wheels fall off.

wee-weed up's picture

I saw that program...

First and foremost... you can ignore the million(s) the financial analysts say you MUST have saved up in order to retire.

That's self-serving bullshit!

Simplify your lifestyle and you can do it for much, much less.

Second, you do NOT need the gubbermint to run your 401k for you...

which was the "subtle" message being purveyed here.

James_Cole's picture

Another gem of a doc from Frontline.

Though everyone should know by now that mutual funds are a total rip-off, like Bogle says INDEX FUNDS. Why does anyone expect an active managed to beat the index over time? Other than persistent myths about human acuity..

lewy14's picture

I was pleasantly surprised that Frontline was positive about index funds. I figured they'd be intent on casting even one such as Bogle as a crook.

But the end game, to be sure, is to confiscate 401Ks and replace them with "safe" government pensions invested in "riskless" securities.

James-Morrison's picture

We can't fear the reaper.  

Who the hell want's to live past 65?

Build your nest egg, and check out around 50.

Shake the dice, if you have bad genes,

Oh well.

See you in the next world...

I am there already.

It's not too bad, except for the Friday Night Fish Fry.

(Too many bones)


Panafrican Funktron Robot's picture

I'm really not positive about index funds.  Too much counterparty risk.  

MeelionDollerBogus's picture

indeed. Indexed ETF’s are great for gains if  bought on the dips, you can write calls from SPY shares held as they dive too later on, for example, or DIA, but counter-party risk, return OF your capital, is the single primary issue here. All the rest assumes an honest market, bank, etc., that doesn’t Corzine you or Cyprus you. WE know better. My retirement is fine … it’s .9999 fine, thank you.

Panafrican Funktron Robot's picture

"Second, you do NOT need the gubbermint to run your 401k for you...

which was the "subtle" message being purveyed here."

Yep, that's pretty much what I came away with here.  It was an effective hit job by the government here, because everything they pointed out was true and are very fundamental problems with the financial industry, but that doesn't entail that we go into a govvy pension plan.

Panafrican Funktron Robot's picture

"but that doesn't entail that we go into a govvy pension plan"

Just an additional note, the finance industry basically runs the various government pension plans via the "external consulting" line item you see in the budgets.  They make most of their bacon directly off of taxpayers.  For example, in Wisconsin, they pay about half a billion dollars a year to various private firms (and they lost about half of the fund value in the crash, so clearly not a good ROI there).  Interestingly, the budget deficit for Wisconsin that led to all those protests was about half a billion dollars.  

Larry Dallas's picture

3 Words That Don't Exist In Mutual Funds:

Allignment of Interests

Never existed. Never will.

Sokhmate's picture


on the other hand, words that do exist or at least implied are: aaaand it's gone it's gone it's all gone.

Silver Bug's picture

Don't count on the fiat in your bank account for your retirement. As they have shown, they will flat out steal that if need be. Your only hope is in physical gold and silver.

PacOps's picture

Then you get to pay off the IRS when you take distributions at what ever tax rate congress deems and those fees took say 3% off the top for 30- 40 years and you take all the risk. Such a deal.

Urban Redneck's picture

Very convenient that Congress has already passed laws and the Surpreme Idiots sought fit to agree- that ex post facto law restrictions don't apply to property, perhaps a move against TBTF property would motivate TPTB to demand CHANGE from their Bitchez in Washington.



LaoTzu60606's picture

imo...from experience...

there are 30 or more foreign countries where one can move when 

62, collect social security and live well assuming moderate income

for 40 years...


+81 on the simplify comment, if you still need the shit you did when 

were younger at "retirement" age, no one can help...


pods's picture

My wife, a fishing pole and a dog.


midtowng's picture

401k's are one of the biggest scams put on the American public. Traditional IRA's are the close second.

Shizzmoney's picture

I love how all of the stock broker people I follow on twitter muse: "Oh, PBS had a slanted look at 401k's.  It's a solid wealth building vehicle".  What schills......even if some happen to be "good people".

It reminds me of when the government and those who work lottery divisions in states across America and their retort to the "tax on stupid" jabs from opposition.

Their response? "But the money goes towards the children and schools!".

ar01's picture

I'm just surprised JPM couldn't find someome even slightly more presentable for the documentary. 

Thisson's picture

It is a solid wealth building vehicle --  IF the government doesn't use it to steal your money by confiscating the fund, raising taxes when you want to draw down the fund, or railroading you into buying treasuries.  That's one helluva big IF!

MeelionDollerBogus's picture

didn’t you know? It’s for the children. It’s always for the children. Byebye retirement, deposit insurance, rights to free speech & self-defense, right to a trial before life in prison-it’s all for the children.

fonzannoon's picture

I was psyched when the DOL said they were going to require each fund provider to make their fees transparent last summer. How stupid I was to think they would do it in a line item form on the first page of the statement along with the account balance. They buried the fees as a "cost per thousand" on page 15 of the statement that no one reads anyway.

God knows how much money was thrown at these guys from lobbyists on both sides.

Dr. Engali's picture

Shit every time they say they are going to make something more transparent it always becomes more difficult to find. I used to work out daily, now I just carry an annuity prospectus with me wherever I go.

pods's picture

Well Doc when you are strong enough you can start to study up on tax law.


NoDebt's picture

Amen, brothers.  The fee disclosure to participants is called the 404(a)(5) disclosure rule.  Fee disclosure to the plan sponsors is called the 408(b)(2) disclosure.  ERISA stuff, obviously.  And most of those statements were absolute CRAP, in my opinion.  I don't even think they met the letter of the law in most cases, let alone tell you anything meaningful.  Insurance company-type retirement plans were the worst.  They were written specifically to obfuscate what they were supposed to explain clearly.  Most participants (and most plan sponsors) didn't even know what the document was or why it mattered when they received it.  Just looked like so much typical "legal boilerplate" they ignored it (like they usually ignore these things).

There is a small but growing movement in the retirement plan world to do this shit the right way.  Get rid of the conflicts of interest (mostly driven by commmissions and "revenue sharing") and have full, CLEARLY UNDERSTOOD disclosure.  No, your plan is NOT free, but you should at least know what you're paying and what you're getting for that cost.

As you might have been suspectd, I'm part of that group and have been for years now.  Full fiduciary duty to all my clients (including taking an ERISA co-fiduciary 3(38) role to the retirement plans I advise) and all that cost shit ON PAGE ONE.  Here's what you started with, here's what you made, here are all the costs you paid (including mine) and here's what you netted.  And surprisingly it doesn't cost any more to do it properly than it does to do it crappily.  Usually less, in most cases.

I'm outnumbered by at least 20:1 by the scumbag brokers who are conflicted against their clients in such unnatural ways it's mind numbing. 

You might be interested to know that your plan's sponsor (your employer) has a fiduciary duty to their plan participants, whether they have a good advisor, a bad one or none.  If they're jacking you with crappy, over-priced funds you can drop a dime on them to the DOL (Dept. of Labor).  Those DOL sons-of-bitches make the IRS look like a bunch of cupcakes.  Complaints to them usually result in plan sponsors phones ringing in about 24 hours.  They LOVE to smack "big bad company fat cats" around.  No lawsuit required.  Just the THREAT of a DOL audit makes them shit their pants. 

Remember that a plan sponsor's fiduciary duty to the plan is not protected by the corporate veil.  It drills right through to the PERSONAL ASSETS OF THE SPONSOR if they are found to be in breech of those responsibilities (which are many).  (Google "401k small company litigation" and read until your eyes glaze over)

If you want to see a change, start bitchin'.  You don't need a lawyer.  You just need the DOL's phone number.  The more you bitch, the more plan sponsors will take this shit seriously, like they're supposed to.

post turtle saver's picture

NoDebt, a cannot plus you up enough for this post. A true gem amongst the sands of ZH. Thank you.

MeelionDollerBogus's picture

+1000 to you sir if I could do so. Knowing how far deep fiduciary duty does drill is something I was not aware of. Now if only that was applied more frequently across the industry!

Stoploss's picture






azzhatter's picture

I semi retired at 58. i would be fine if bernanke pulled his dick out of my ass

freewolf7's picture

I THOUGHT his dick tasted like your ass!
I get so confused anymore.

cowdiddly's picture

you need to think about what you just stated. It does sound like you might be a bit "confused"

freewolf7's picture

cowdiddy, if I have to explain my humor, it's not funny anymore.

No, I didn't really really do those things. Try the right brain.

cowdiddly's picture

It really does not matter how much retirement you have saved. Under the current arragement the hospitals and doctors end up with it all and bankrupt you with your final fight with illness. Has happened to thousands of people I know and knew.

Leave em with one big fat IOU and tell them to F.O.

cossack55's picture

Roger that.  Timing is EVERYTHING.  Become indigent two years prior to needing full=time nursing care.  Give it away or bury it. Fock the system and all those who propigate it.

AldousHuxley's picture

3things guaranteed in life:
At birth you pay doctor
At death you pay doctor
Taxes pay doctors

No doctors can save you from the inevitable death, they just delay the date

AMA used to sponsor cigarettes.

game theory's picture

I know doctors who complain how "it isn't worth becoming a doctor"...while they earn well over $1m a year and live in huge mansions with 5 cars and take multiple vacations a year, etc.  They are making me sick, listening to them.  Death is preferable to paying these f*%kers to save me.  

Precious's picture

The most dangerous fucking place on the planet is a hospital.

The most dangerous fucking people on the planet are doctors.

You want to die?  Let these fucking pricks cut you open in their staph infected microbial pig troughs they call a hospital.  These malpracticing douchebags kill more people accidentally every year than guns and cars combined.

Just fucking pray you don't get sick and hospitalized.  You'll either end up broke or dead, or maybe both.

FreeNewEnergy's picture

In the past 40 years, I've needed a doctor exactly 6 times. Once when I, dumbass, fell out of a tree while drunk, once for a hernia operation, the other four times for virus infections or flu. The past 15 years, aged 45-59, one time and they didn't fix my issue. Fixed it myself by changing my diet.

As we age, diet and exercise become more important. My best exercise comes from gardening/property maintenance. Keep busy outdoors, eat well on food you grow yourself, fuck the system and DON'T EVER RETIRE.

Keep doing what you're doing until you keel over. It's the way nature planned it, after all.

Retirement is a fucking hoax, perpetrated by the bloodsuckers on Wall Street and in Washington.

Fuck you, Bernanke. Fuck the Fed, Fuck the government. If we got rid of all the bankers and politicians, we'd have a pretty sweet deal, but then, what would the parasites do? Maybe we could hire them as sharecroppers, the asshats.

MeelionDollerBogus's picture

What, pray tell, did the doctors do for you during/post flu? Fluids?

I do, however, echo your sentiments about retiring: keep in good health & keep working at things to death. Working as a slave for someone else, no, but working at something. It does keep the mind & heart healthier. A sedentary heart, lungs, legs and mind are a quick way to an unpleasant death.

MeelionDollerBogus's picture

Not everyone dies sick. Live adventurously and die having fun. Or stock up on booze like Phil Katz or pills and don’t die sick, die your way when the day comes.

seek's picture

They're looking for another layer to keep the ponzi going and running out of suck-- er, I mean clients. Of course they're going to be active marketing!

pods's picture

The worst thing about saving for retirement is that all your retirement "savings" are locked into valuation by the FRN, Euro, etc.

You could have $25 million for retirement.  What happens if that is the going rate for a gallon of gas?

Or what if the benevolent US government decides that your retirement is better used to fund THEM (or the banks) instead of you?

Get all the funds you can outside of this system.  Look at any FED chart about money/debt/credit,  Every single one of them looks to be an exponential function.

That is because they are.


max2205's picture

Madoff was a good broker planner

moneybots's picture

Goldman refers to their clients as muppets.


Jim Cramer gave a stinging rebuke of Bush's plan to privatize Social Security.  He noted that the average person knew lttle about investing.

Morgan Stanley ran TV ads saying "your dream is our dream."  Turned out they were running contests to get "advisors" to sell in house junk funds to clients.

"You and UBS."  UBS kept a strong buy on Enron all the way down to 4 days before committting bankruptcy, while "advisors" were told not to warn clients.  For mutual fund holders they had lipstick on a pig programs like PACE.

These companies have conflicts of interest- except that they don't, as their interest is the financial company, not the client.