Radical thinking from…BusinessWeek?
Posted by Nancy HwaA timely and provocative op-ed by BusinessWeek’s contributing economics editor Chris Farrell flatly states, “Keep Wall Street Out of the Retirement Business.” Farrell goes on to ask:
Question is, in light of the current turmoil in the financial markets, should Wall Street manage any of our long-term retirement savings funds? Is the 401(k) plan, which has become the main retirement savings vehicle for the American worker over the past three decades, a mistake? The case for rethinking the 401(k) as a pillar of retirement savings is compelling.
Farrell makes several good points that show up the weaknesses of relying too heavily on 401(k) plans — including the average worker’s inability to save enough or to make the right investment decisions to earn high enough returns; the exorbitant fees charged by 401(k) providers; and investment advisers’ conflicts of interest. He hints at an interesting alternative: “annuity-like products that would guarantee workers a steady, inflation-protected income during their golden years but would be less expensive for companies to offer than the traditional defined-benefit pension fund.”
I can’t say that we agree with all of what Farrell says, but it’s an interesting read.  Check it out.
By the way, whatever an “academic quant jock” is, I want to meet one!
Print - 
E-mail