58 Pages Posted: 4 Oct 2016 Last revised: 8 Nov 2016
Date Written: October 1, 2016
Americans have a tough time saving for their retirement. To make matters worse, the move from defined benefit (DB) to defined contribution plans (DC) over the years has required greater investor sophistication, discipline, and sound investment advice. Unfortunately, the current rules regarding investment advice for defined contribution plans do not address the two critical deficiencies of the current system, namely opacity and conflicts of interest. We propose that one-master standard be instituted along with strict transparency requirements to control the conflicts of interest and improve retirement savings advice. We also recommend that only passive, well-diversified index funds for stocks and bonds should qualify as retirement vehicles.
Keywords: Defined contribution plans, pension funds, investment advice, transparency, conflict of interest
JEL Classification: J26, J32
Suggested Citation: Suggested Citation
Avci, Sureyya Burcu and Narayanan, M. P. and Seyhun, H. Nejat, How Should Retirement Plans Be Organized? (October 1, 2016). New York University Journal of Law and Business, Vol. 13, No. 2, 2017, Forthcoming; Ross School of Business Paper No. 1332. Available at SSRN: https://ssrn.com/abstract=2847655 or http://dx.doi.org/10.2139/ssrn.2847655