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