Last April, PBS’ “Frontline” aired a documentary titled “The Retirement Gamble” (now available online). It offers a sobering report on the problems with 401(k) type retirement plans in the U.S. and the obstacles facing working Americans in their quest to achieve a secure retirement. If you were already suspicious of the motives of some in the financial services industry, watching this documentary is unlikely to alter your opinion. There have been both vocal critics and defenders of the show. Here are my observations.
At the outset, the filmmakers highlighted the fact that too many Americans, including the show’s producer, Martin Smith, have failed to save enough money to maintain even a modestly comfortable lifestyle after they stop working. They offered personal commentaries from those who simply failed to adequately plan for retirement and those who lost their jobs and savings as a result of the recent financial crisis.
In the second part of the show, the producers transitioned to the role that financial institutions and their representatives have played in the retirement savings crisis. They unleashed a scathing exposé of the high and opaque retirement plan fees charged by the financial institutions and the conflicts of interest that exist between their salespeople and investors.Although “The Retirement Gamble” focused on workplace retirement plans, the problems of high fees and conflicts of interest with which they go hand in hand are rampant throughout the investment industry. So, even for those fortunate and diligent enough to be earning and saving sufficiently for a comfortable retirement, the program contains important lessons and has significant implications for their financial futures.
Not surprisingly, the shift in the show’s focus from the responsibility of the investor to save aggressively and invest wisely to that of the financial institutions and their representatives to act fairly and transparently sparked outrage from the financial services community. Their central argument is that: the accusations of unnecessarily high fees imbedded (i.e. buried) in many retirement plans and the conflicts of interest between them and the investors they serve are greatly exaggerated.