00:00Yeah, I mean, I think it's a number of different things. I think when we think about retirement, we tend
00:04to think about it in isolation. But the reality is that it's competing for dollars with health care. It's competing
00:10for dollars with emergency savings. It's competing for dollars with groceries in the pump. And all of those things are
00:16pain points for the consumer. And I think that weighs on their confidence when it comes to retirement as well.
00:22Now, I would note that that's Fed data. And when you look at the time series with the Fed data,
00:27it peaked 2021 time period. Before that, it was still roughly in these low mid 30s, 40s. So there was
00:35kind of a ceiling with confidence.
00:37Is it because we're a glass half empty economy and that we're too conservative in our Empower 401k?
00:45You know, what's interesting is that when we look at what the do-it-yourself investors are doing. So this
00:50puts aside the diversified portfolios. My expectation was that I would see more cash, more stable value. And there are
00:58certain markets that do favor that type of investing. But actually, there's far more heaviness on the equity side.
01:05So if you're thinking about what is the hidden risk for some people who are kind of investing on their
01:10own in retirement, it might be that they're taking on a little bit too much equity than is appropriate for
01:15their particular situation.
01:17We were talking just, I think, yesterday maybe to the folks at PensionBee over in the UK. And their 401k
01:24participation is much higher than the U.S. because there it's not an opt-in. You're there.
01:29Here in the U.S., you have to opt into the 401k and make that conscious decision. A lot of
01:35people don't do it for a variety of reasons. How does that change, do you think?
01:39Okay, so this is where I think we've actually seen a lot of improvement because increasingly there is this push
01:44for automatic enrollment.
01:45So if you're looking generation by generation and you're looking at something like Gen X, that's where there was more
01:52kind of do what you want and there weren't as many pensions for those folks.
01:56But if you look at something like Gen Z, they are being opted in. Now, they can always opt out.
02:00So you're not seeing 100% participation.
02:03But for the plans that say, hey, you're in it, if you don't tell us otherwise, you actually see pretty
02:10good participation.
02:11So I think plan design has improved a lot and kind of leaned into the behavioral elements that we know
02:17matter so much.
02:18I like in your notes this point here. The retirement investor is not the retail investor. What do you mean
02:24by that?
02:24Okay, so when we think about individual investors, we tend to think of them as the retail subset and we
02:29tend to think of them as the people who are pushing the mean stocks higher or who are just so
02:34emotional in their investing.
02:36But the retirement investor is really on autopilot. You know, they're doing their dollar cost averaging. They're, you know, automatically
02:44enrolled in many cases.
02:45They're just on this steady state where they're not checking their statements on the regular.
02:50And I think it's one of the healthiest things that we can do is to just leave it alone.
02:55What's the what's the biggest mistake you see in portfolio allocation in power in retirement plans?
03:03To me, it used to be over diversification. But what's it now?
03:06Yeah, I mean, I think we're always going to have to wonder whether that next marginal asset that we're adding
03:12to the portfolio is actually adding value.
03:13I think that's something that we're always going to have to think deeply about. And that's more on the professional
03:17side of things.
03:19On the personal side, I think a lot of folks could be upping their savings rates.
03:23I think, you know, maybe they do the automatic enrollment, but they're not necessarily.
Comments