Boost Americans’ retirement, but don’t throw them to the wolves of Wall Street
James T. Brett, president and CEO of The New England Council, and Representative Richard E. Neal argue that we should address low retirement savings by increasing people’s financial literacy and access to investment vehicles for savings (“Ensuring secure retirement for all Americans,” Opinion, June 17). However, ordinary people will never match the expertise of financial professionals. Many individuals in the financial industry are honest people, but the industry, structured as it is to take advantage of lax laws and weak enforcement, is a powerhouse that attracts bad actors and overwhelms any knowledge that small investors can or could ever muster individually to protect themselves against professional deception.
Based on Brett and Neal’s description, the House’s SECURE Act and the Senate’s RESA measure sound like they’re designed to benefit the financial industry by increasing investment while enabling a blame-the-victim scenario, in which more people are offered mere literacy but remain decidedly nonprofessional.
If we really think the best way for ordinary Americans to save for retirement is by investing in the stock market, we investors — we citizens — need to band together, through our government, to constrain how retirement investments can be structured and marketed, and we need those constraints to be enforced. Congressman Neal, that’s what we need you to do for us.
Customers need the protection of a fiduciary rule
James T. Brett and Richard E. Neal provide excellent suggestions for improving retirement security but have omitted a key ingredient: the implementation of a fiduciary rule for investment professionals working with retirement accounts.
The big brokerage houses and insurance companies are full of people whose compensation depends on selling products to customers that are often at odds with the customer’s financial goals. Only registered investment advisers are held to the fiduciary standard, meaning that they must act only in the customer’s best interest.
As a volunteer tax counselor for AARP, I have seen many examples of inappropriate investments (for example, Facebook stock for a 90-year-old), and account churning to generate commissions. The Labor Department tried to implement a fiduciary rule, but the Trump administration balked, and a federal court ruled against it last year. The Securities and Exchange Commission has generated a 900-page tome that does nothing for the investor. We need a clear and unambiguous fiduciary rule that puts the customer first, not the financial services industry.
We should be investing in financial literacy, not products
Your recent op-ed by James T. Brett and Richard E. Neal was right to point out the inequities in retirement planning for much of our society. Financial literacy has been in decline for four decades, and I strongly doubt another incentivized savings plan out of Congress will do much to improve the current debacle. How have past incentives worked out so far?
The much-heralded 401(k) plan has been an abject failure for much of our society, with a lack of savings that only enriched insurance companies and investment firms, not citizens. For a refresher, please reread the 2017 Globe opinion piece “Sorry about that whole 401(k) mess.” I fear that any additional cute acronyms out of Washington, D.C., like “SECURE” and “RESA,” will only further enrich the financial services firms, their lobbyists, and the politicians at the public’s expense.
Investing in financial literacy, not products, is the solution to our nation’s retirement dilemma.
Not nearly enough boats are lifted in this rising tide
I read “Ensuring secure retirement for all Americans” with some dismay. James T. Brett and Richard E. Neal clearly identified the crisis facing seniors and others, and the need for Americans to build their retirement savings. The dismay comes when I wonder what they will save. As the saying goes: A rising tide lifts all boats. Our current tax structure has lifted all the yachts. It has done nothing to help working people, rowing furiously.
Forty percent of wealth goes to the top 1 percent. That is largely hoarded or hidden — it does not go back into the economy. A dollar that is spent multiplies over time as successive people gain from its movement through the economy.
Brett and Neal call on the business community and government “to work together . . . to resolve the retirement savings crisis.” They have caused the crisis. Quite simply, more water needs to flow downstream.