The documentary covers all the main points of why investors have had problems with their 401(k)s and why the country faces a retirement crisis. It covers market history since the late 1990s when investors were riding sky high making money hand over fist to getting slammed twice in the last decade - first by the dot.com bust and then the housing crisis. It explains very well the impact of fees on 401(k)s and how Wall Street has successfully hidden fees so that it is impossible to understand exactly what is being charged. It even explains the difference between a fiduciary and a broker and interviews a couple of top mutual fund executives which reminded me of kids caught raiding the cookie jar. Listening to the spokespeople of the mutual fund industry explain fees underlines the fact that it is an industry severely lacking in morals.
An eye opening analysis by John Bogle showed that over a 50 year period a 2% difference (the industry take) between what the market makes and what the 401(k) participant earns results in 2/3rds of the nest egg being sacrificed. Investment pros claim not to know this or say they believe the figure to be high but interestingly the documentary points out that they invest in low cost index funds - not the high priced funds they sell!
One criticism I would have of the documentary is that there are ways to invest that avoid high fees and weather the ups and downs of the market. Clearly a number of the people interviewed were not well diversified. Many admitted they didn't know what they were doing. What would really be useful is if Frontline profiled the Thrift Savings Plan and talked about asset allocation and avoiding emotional investing.
Rather than coming away thinking that Wall Street is to be totally avoided and that the 401(k) is a ripoff, investors could learn how to appropriately use the product.
I recommend that everyone watch the documentary and encourage others in their family as well.
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