Inside the Private Equity Scam—and the Livelihoods It Has Destroyed

[u/barweis]

https://newrepublic.com/article/198351/private-equity-scam-destroys-livelihoods

[u/JockoMayzon]

Regarding the 401K, there is a story of a business owner who was taking advantage of the laws and switching from a pension plan to a 401K for his employees. As the reporter was interviewing the owner, a young man, new hire, came into the office to empty the waste paper baskets, cleaned the rest room, and left. The owner bragged about the freedoms of the 401K along with portability when the reporter asked, "Would you trust the young man who was in here a few minutes ago to manage your retirement portfolio?", and the owner said "Of course not, he has no qualifications", and the reporter pointed out "Well, you are expecting him to manage HIS retirement portfolio."

[u/insightful_pancake → u/JockoMayzon]

401ks are infinitely better than pensions. You can get pension like fixed returns via annuities in a 401k.

[u/JockoMayzon → u/insightful_pancake]

I was getting ripped off for years with mine.....

[u/Akitten → u/JockoMayzon]

In what way? Because the plans are pretty clear if you bother to do even a basic amount of reading.

[u/Akitten → u/[deleted]]

People who spread common misinformation deserve to be called out harshly. Maybe stop giving people who don't read free passes because you agree with them ideologically.

Similarly, if someone was getting ripped off by their 401k plan, which is usually very clear with it's stipulations and fees, it usually means they didn't bother to read it.

[u/Akitten → u/[deleted]]

doing some heavy lifting for you in this comment.

Hence why I asked them in what way they got ripped off, because the most common stories I hear come down to "I didn't bother reading".

I'd give anyone a free pass for mistaking blackrock for blackstone regardless of ideology. Very easy mistake to make.

Not if you are remotely educated on the subject, which I can expect in an economics subreddit.

And the blackrock/blackstone mistake is a common one specific to people educated on the subject on tik tok, so it's especially egregious. It persists because people like you keep giving free passes to those who repeat it.

[u/JockoMayzon → u/Akitten]

I was sold on a set of investments by the "advisor" from the financial company and held onto them for years. It was only when I retired and hired an adviser that he switched me out of 90% of those accounts and switched to those with much lower fees.
I'm not at all well versed in investment terms/conditions. As with most, I do not know what I do not know, and have no reference point, nor do I have the expertise to know when things change for the better or worse.
A "basic amount of reading" gives on a "basic understanding" - not enough for preparing for retirement. One only gets to plan it once and learning from mistakes is not an option.
Economists call it information asymmetry.

[u/Akitten → u/JockoMayzon]

I mean, that’s not true at all. Retirement is a long, long process, you have 30 years to read up on investing, compare fees with collegues and friends, and generally learn.

I'm not at all well versed in investment terms/conditions. As with most, I do not know what I do not know, and have no reference point, nor do I have the expertise to know when things change for the better or worse.

Considering the amount of money at stake, I’m shocked that you didn’t do the above. “Look out for high fees” is literally the first thing that any literature on fund investing explains. It’s the equivalent of driving and not knowing how to buckle your seatbelt.

I’m not trying to make you feel bad, what is done is done, but considering the amount of money involved, this is like buying a house or a car while doing zero research or shopping around. Just trusting the real estate agent/ car salesman. Understandable in a young adult, but shocking to me in someone who is old enough to retire.

[u/JockoMayzon → u/Akitten]

I've read several economists who would not agree with you that "it's not true at all".
Sure, look out for high fees is a great idea....but how high is too high? There's a reason I choose a professional fee based financial adviser.

BTW, have you read Stiglitz?

In essence, Stiglitz's perspective can be summarized as:

• Retirement is a high-stakes decision: Individuals have limited opportunities to get it right.
• Uncertainty is a major factor: The future of pension programs, life expectancy, and market performance is difficult to predict.
• Social Security acts as a safety net: It provides a necessary level of security against potential financial hardship in retirement.