‘The Retirement Gamble’

A few days ago, PBS Frontline ran a made-for-TV special titled “The Retirement Gamble”. Given the stir that this piece generated in our mainstream media as well among our clients, I felt it would be worthwhile to comment.

First, we agree with the premise that most Americans are not adequately prepared for retirement. That is, too few have adequate savings and most do not have a retirement plan in place. As a result, there will be a rude awakening when retirement nears.

Next, the video highlighted the lack of transparency that exists regarding fees. As a result, many company-sponsored retirement plans, annuities and other commission-based products get away with charging excessive fees. Over time, these fees can have a devastating impact on the total return of a portfolio, adding to the under-funding of many investors’ retirement accounts.

Finally, there is a stark difference in how brokers and advisors are supervised and regulated. For example, as a Registered Investment Advisor, Sigma owes our clients a fiduciary duty of care, requiring, among other things, that we act in the best interest of our clients even if it is not in our own financial best interest. Commission-based brokers, on the other hand, generally are subjected to a less stringent “suitability standard”, implying simply that their advice is suitable and reasonable to their clients’ financial situation, but not necessarily in their “best interest”.

The video is available for viewing on the Internet here.

I am proud of the effort that we expend in helping our clients plan and prepare for retirement. Our management fees are transparent and competitive with industry averages. Finally, we strongly embrace the notion that we act as fiduciaries in regards to the management of our clients’ assets and hope that one day, broker-dealers are held to the same standard.

Feel free to contact us if you have any questions or comments that you would like to share

Christopher Kress, CFA