John Oliver lambasts U.S. retirement savings system, supports DOL fiduciary rule

The star of a late-night HBO comedy show had some biting words for non-fiduciary brokers, high 401(k) fees and active fund management

Jun 13, 2016 @ 12:53 pm

By Greg Iacurci

Comedian John Oliver criticized the American retirement savings system and expressed bona fide support for the Labor Department's fiduciary rule on his HBO show Sunday night, calling out non-fiduciary brokers, high 401(k) fees and active management using his characteristic satirical brand of comedy.

“Between financial advisers, high fees and underperforming active management, the entire retirement plan industry is a potential minefield, and you need to pay attention,” the British comedian said during his most recent segment on "Last Week Tonight with John Oliver."

A comedian who has appeared on "The Daily Show with Jon Stewart," Mr. Oliver cast a negative light on brokers paid on commission, saying they are sometimes “actively incentivized” to make certain recommendations with sales perks such as gifts or high commissions, and therefore may not be serving a client's best interest.

“Generally, it is currently legal for financial advisers to put their own interests ahead of yours, unless they are what's called a 'fiduciary.' Because not all financial advisers are bound to act in your best interest, but fiduciaries are,” Mr. Oliver said.

Mr. Oliver showed support for the Department of Labor's fiduciary regulation, which raises investment advice standards for retirement accounts by making a fiduciary of any intermediary receiving a fee for their investment advice.

(More: Fiduciary duty finally hits mainstream — and Main Street)

Mr. Oliver said it's “great” the Labor Department is pushing all advisers to act as fiduciaries in retirement accounts. He also mentioned the financial services industry has “fought this rule hard,” already filing five lawsuits to delay the rule and have it vacated, while Congress passed a resolution trying to kill the regulation. (President Barack Obama vetoed the resolution.)

His arguments seem almost lock-step with talking points used by the Labor Department to promote its regulation, and he even references a report by Senator Elizabeth Warren (D-Mass.), a staunch rule advocate, on annuity sales incentives.

“His stuff tends to be a little inflammatory. He puts all the rats on one side of the ship; he really skews it,” said Anthony Domino, Jr., managing principal at Associated Benefit Consultants.

The industry argues the rule would raise compliance costs and litigation risk, potentially pricing some small-account savers from the market by making it more expensive to give and receive advice.

Mr. Oliver also criticizes 401(k) fees that are both high, opaque and difficult to understand. Comparing 401(k) fees to termites, Mr. Oliver said the fees are tiny, barely noticeable and can eat away at investors' futures.

“While it's not unreasonable for them to get paid for providing a service, there can be a lot of different fees,” Mr. Oliver said. Compound interest works both ways, helping to make your savings grow over time, but can also hurt if fees are high and erode those savings, he added.

He also expresses how active management is a loser's game, highlighting the story of a cat named Orlando who chose investments with the help of a toy mouse, ultimately returning 11% while the professionals returned 3.5%.

“That cat wasn't a complete anomaly. There's growing evidence that over the long term most managed funds do no better and often do worse than the market,” Mr. Oliver said.

Aaron Pottichen, retirement services practice leader at CLS Partners, a registered investment adviser, said Mr. Oliver's segment is a service to investors because it perpetuates an important discussion around retirement savings. However, he's skeptical it will ultimately do much to promote change.

“I think it helps, but it's kind of like we're shaving ice off an iceberg,” Mr. Pottichen said. “Ultimately, there's more underneath than what's on top. I think it's a step in the right direction, but I think it ultimately won't change things.”

All of the blame for whatever shortcomings exist in the retirement services industry can't be put entirely on the financial services companies, Mr. Pottichen said. Consumers bear some of the blame as well.

“Consumers are not victims in this circumstance,” Mr. Pottichen said. “It's almost impossible to buy something through a broker without being able to determine what it is. It's just people aren't asking questions. So all the blame can't go on the industry.”

Some of the blame for poor 401(k) plans belongs to plan sponsors as well, according to Fred Barstein, founder and chief executive of The Retirement Advisor University.

“I don't want to be seen as defending the industry, because there are some things we could obviously do better," Mr. Barstein said. "But on the other side of that, this whole thing with indirect fees and revenue sharing and how fees got high, it all started because plan sponsors didn't want to pay and wanted to pass off the fees to their participants.”

It's difficult to engage small employers with their respective 401(k) plans — most small business owners are worried about the day-to-day affairs of their business, and 401(k) plan management is often secondary to those concerns, Mr. Barstein said.


What do you think?

View comments

Recommended for you

Sponsored financial news

Upcoming Event

May 02


Women Adviser Summit

The InvestmentNews Women Adviser Summit, a one-day workshop now held in four cities due to popular demand, is uniquely designed for the sophisticated female adviser who wants to take her personal and professional self to the next level.... Learn more

Featured video


How 401(k) advisers can use 'centers of influence' to grow their business

Leveraging relationships with accounting, benefits, and property and casualty insurance firms can help deliver new business leads for retirement plan advisers.

Latest news & opinion

Things are looking up: IBDs soared in 2017

With revenue up, interest rates rising and regulation easing, IBDs are soaring.

SEC advice rule: Here's what you need to know

We sifted through the nearly 1,000-page proposal and picked out some of the most important points.

Cadaret Grant acquired by private-equity-backed Atria

75-year-old owner Arthur Grant positions the IBD for the 'next 33 years.'

SEC advice rule seeks to tighten reins on brokers

The proposed rule puts new restrictions on brokers, but it is still unclear how strongly the SEC is clamping down.

SEC advice rule hearing updates

Commission says a lot of work ahead, public will have 90 days to comment.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print