Matt, I’m all for more disclosure in target-date fund marketing materials, but don’t you think the SEC could spend its time more wisely?
You didn’t bother to mention in your SEC To Target-Date Funds story on Friday that everybody who had any money invested in the market in 2008 lost their shirt. Every asset class became correlated during that gut-wrenching period, and the only way anyone could have avoided the meltdown was if they had their money under their pillow.
Even money market funds were wavering for a spell and, to remind you, the viability of entire banks was an open question after Lehman Brothers failed. We were literally, as I heard one financial adviser I used to work with at Smith Barney say, a day away from not being able to get cash out of ATMs.
Before June 2007, when two Bear Stearns hedge funds choked to death on collateralized debt obligations and unleashed the true beginning of the worst financial crisis since the 1930s, I was starting to think my IRA seemed so substantial and grown up. Well, not anymore.
If I sound dismissive of the SEC’s attempts to try to make sure investors are properly informed before they choose a target-date fund that’s right for them, maybe it’s because I have a few decades to go before I retire. I have some time to reverse the shrinking effects that this Great Recession and slow, grinding recovery are having on my retirement account. I have the luxury of saying hope springs eternal.
I’m willing to admit that I might be singing a different tune if I were, say, 70 years old. I have nothing but sympathy for senior citizens grappling with an investment environment of uncertainty and volatility. Worse yet, the bond market, long considered a bastion of security for those in their Golden Years, seems anything but friendly. It’s offering paltry yields right now and, over the longer term, it seems like an accident waiting to happen once yields rise and prices crater.
Still, it always seems like people start counting money in the cash register after it’s already gone. No one was complaining when times were good. No one ever does. This cycle of not caring about what’s going on when the money’s rolling in and then looking for retribution when the party stops is as old as humanity itself.
And I’m not at all sure the SEC should take the bait and start spending its time and resources trying to right this alleged wrong.
Minimizing the risks of another flash crash seems far more pressing to me and worthy of as much attention as regulators need to give it. The first time around, it was unsettling. If it happens again, you can kiss investor confidence goodbye for a generation.
Isn’t that where the commission’s focus should be, Matt?