31 min
Season 1 Episode 5 - How Target Date Funds and Behavioral Economics Shaped Retirement Plans The Accidental Plan Sponsor®
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- Investing
The future of defined contribution retirement savings will always be marked by two key concepts: putting individual investors first when designing plans, and constantly innovating. Over the course of the next four episodes, we’re going to discuss how regulation, litigation, and the role of consultants both support and deter innovation. We’re going to start with two featured guests who laid the foundation for the modern 401(k):
• Brigitte Madrian, who pioneered behavioral economics work on automatic enrollment
• Larry Tint, creator of the Target Date Fund
Key Takeaways:
[:29] Josh opens up today’s episode with a quick recap of episode 4 which focused on the work of two innovators in the field. He pursues the series by talking about his experience and what he believes the very heart of the issues to be — innovation, regulation and consultancies.
[4:00] How did Larry Tint — former U.S. CEO of Barclays Global Investors — change the trajectory of the retirement industry? Josh and Larry detail his career trajectory and how it led to meeting the future Nobel prize winner Bill Sharpe and the birth of SharpeTint.
[8:00] Most individual investors don’t know how to build investment portfolios! Larry talks about his time at Wells Fargo and his work with Don Luskin to use the technology he created with Bill to the benefit of individuals. The Target Date funds were born.
[11:39] The General Motors exception! Also Larry talks about the innovations he didn’t act on or think of and how this might have changed the course of things even further — wheels on suitcases?
[15:30] Target date Funds were still being held back, and more innovation was required. Josh introduces Behavioral Economist Brigitte Madrian — ninth Dean of the Marriott School of Business at Brigham Young University (BYU).
[17:10] Behavioral Economics was not a thing when Brigitte began her academic career. She speaks to a life-changing moment in data analysis and the 20 plus years of research this generated!
[22:29] So why is auto-enrollment so successful? Brigitte shares what her research points to as well as the kinds of organisations that immediately were on board, and the ones that weren’t.
[26:07] The biggest hurdle… Lawsuits! Brigitte talks about the policy makers that got in touch with her and how she helped shape policy. She also shares the pride she feels about her public and academic involvement.
[28:55] Larry takes a moment to reflect on his contributions to the retirement landscape.
[29:43] Josh thanks his guests for sharing their stories and opens up the discussion on what came after Target Date Funds and automatic enrollment in the retirement planning space.
Thank you for tuning in. If you liked what you heard, please subscribe and leave us a review wherever you listen to your podcasts.
Links:
The Accidental Plan Sponsor
Mentioned in this episode:
More about Larry Tint.
More about William “Bill” F. Sharpe.
More about Don Luskin.
More about Brigitte Madrian.
The future of defined contribution retirement savings will always be marked by two key concepts: putting individual investors first when designing plans, and constantly innovating. Over the course of the next four episodes, we’re going to discuss how regulation, litigation, and the role of consultants both support and deter innovation. We’re going to start with two featured guests who laid the foundation for the modern 401(k):
• Brigitte Madrian, who pioneered behavioral economics work on automatic enrollment
• Larry Tint, creator of the Target Date Fund
Key Takeaways:
[:29] Josh opens up today’s episode with a quick recap of episode 4 which focused on the work of two innovators in the field. He pursues the series by talking about his experience and what he believes the very heart of the issues to be — innovation, regulation and consultancies.
[4:00] How did Larry Tint — former U.S. CEO of Barclays Global Investors — change the trajectory of the retirement industry? Josh and Larry detail his career trajectory and how it led to meeting the future Nobel prize winner Bill Sharpe and the birth of SharpeTint.
[8:00] Most individual investors don’t know how to build investment portfolios! Larry talks about his time at Wells Fargo and his work with Don Luskin to use the technology he created with Bill to the benefit of individuals. The Target Date funds were born.
[11:39] The General Motors exception! Also Larry talks about the innovations he didn’t act on or think of and how this might have changed the course of things even further — wheels on suitcases?
[15:30] Target date Funds were still being held back, and more innovation was required. Josh introduces Behavioral Economist Brigitte Madrian — ninth Dean of the Marriott School of Business at Brigham Young University (BYU).
[17:10] Behavioral Economics was not a thing when Brigitte began her academic career. She speaks to a life-changing moment in data analysis and the 20 plus years of research this generated!
[22:29] So why is auto-enrollment so successful? Brigitte shares what her research points to as well as the kinds of organisations that immediately were on board, and the ones that weren’t.
[26:07] The biggest hurdle… Lawsuits! Brigitte talks about the policy makers that got in touch with her and how she helped shape policy. She also shares the pride she feels about her public and academic involvement.
[28:55] Larry takes a moment to reflect on his contributions to the retirement landscape.
[29:43] Josh thanks his guests for sharing their stories and opens up the discussion on what came after Target Date Funds and automatic enrollment in the retirement planning space.
Thank you for tuning in. If you liked what you heard, please subscribe and leave us a review wherever you listen to your podcasts.
Links:
The Accidental Plan Sponsor
Mentioned in this episode:
More about Larry Tint.
More about William “Bill” F. Sharpe.
More about Don Luskin.
More about Brigitte Madrian.
31 min