Retirement Security Law Commons^™

Do Esg Funds Deliver On Their Promises?, Quinn Curtis, Jill E. Fisch, Adriana Z. Robertson

All Faculty Scholarship

Corporations have received growing criticism for their role in climate change, perpetuating racial and gender inequality, and other pressing social issues. In response to these concerns, shareholders are increasingly focusing on environmental, social, and corporate governance (ESG) criteria in selecting investments, and asset managers are responding by offering a growing number of ESG mutual funds. The flow of assets into ESG is one of the most dramatic trends in asset management.

But are these funds giving investors what they promise? This question has attracted the attention of regulators, with the Department of Labor and the Securities and Exchange Commission (SEC) …

Understanding University Fee Litigation: A Few Lessons About The Perils Of Imprudence For Higher Ed Plan Sponsors, Maria O'Brien, Calvin Utter

Faculty Scholarship

Beginning in August 2016, a series of class action lawsuits were filed on behalf of participants and beneficiaries of 403(b) employee retirement plans sponsored by major American colleges and universities. These plans are regulated by the 1974 Employee Retirement Income Security Act (“ERISA”), which sets minimum standards to protect the participants and beneficiaries of voluntarily established retirement and health plans. The allegations in the several lawsuits have centered primarily around breaches of fiduciary duties by those charged with administering the plan.

These cases are all class action lawsuits brought on behalf of the participants and beneficiaries of the plans in …

Behavioral Finance, Decumulation, And The Regulatory Strategy For Robo-Advice, Tom Baker, Benedict Dellaert

All Faculty Scholarship

This working paper surveys the decumulation services offered by investment robo-advisors as a case study with which to examine regulatory and market structure issues raised by automated financial advice. We provide a short introduction to decumulation, describing some of the uncertainties involved in identifying optimal decumulation strategies and sketching a few of the ‘rules of thumb’ that financial advisors have developed in this area in the face of this uncertainty. Next we describe behavioral effects that could inhibit consumers from following an optimal decumulation strategy, concluding that, left to their own devices, consumers are likely to make sub-optimal decumulation decisions. …

Op-Ed: California’S Most Powerful Voice On Wall Street? Its Pensions, David H. Webber

Shorter Faculty Works

The fight over public pensions in California is almost exclusively described as a dispute between people worried about tax hikes and public servants wanting to get paid what they were promised. But this is only part of the pension story — one focused on the “liability” side of the balance sheet.

Finding A Financial Planner, Emily G. Brown Jd

Pension Action Center Publications

This fact sheet provides information on how to find the right financial planner to help you meet your retirement planning goals. This fact sheet suggests things to consider prior to picking a financial planner and answers questions like:

• What do financial planners do?
• How do you know if you need a financial planner?
• How do you find the right financial planner?
• What type of professional title does a financial planner have?

Why Do Retail Investors Make Costly Mistakes? An Experiment On Mutual Fund Choice, Jill E. Fisch, Tess Wilkinson-Ryan

All Faculty Scholarship

There is mounting evidence that retail investors make predictable, costly investment mistakes, including underinvestment, naïve diversification, and payment of excessive fund fees. Over the past thirty-five years, however, participant-directed 401(k) plans have largely replaced professionally managed pension plans, requiring unsophisticated retail investors to navigate the financial markets themselves. Policy-makers have struggled with regulatory interventions designed to improve the quality of investment decisions without a clear understanding of the reasons for investor mistakes. Absent such an understanding, it is difficult to design effective regulatory responses.

This article offers a first step in understanding the investor decision-making process. We use an internet-based …

Retirement Revolution: Unmitigated Risks In The Defined Contribution Society, Anne M. Tucker

Faculty Publications By Year

A revolution in the retirement landscape over the last several decades shifted the predominant savings vehicle from traditional pensions (a defined benefit plan) to self-directed accounts like the 401(k) (a defined contribution plan) and has drastically changed how people invest in the stock market and why. The prevalence of self-directed, defined contribution plans has created our defined contribution society and a new class of investors — the citizen shareholders — who enter private securities market through self-directed retirement plans, invest for long-term savings goals and are predominantly indirect shareholders. With 90 million Americans invested in mutual funds, and nearly 75 …

Evidence And Ideology In Assessing The Effectiveness Of Financial Literacy Education, Lauren E. Willis

All Faculty Scholarship

Financial literacy education has long been promoted as key to consumer financial well-being. Yet the claim has never had more than negligible statistically significant empirical support. This review (1) sets forth the model of financial literacy education underlying public support for these programs today, (2) identifies pervasive and serious limitations in existing empirical research used by policymakers as evidence of the effectiveness of this education, and (3) recommends a number of alternative public policies suggested by the existing research.

Against Financial Literacy Education, Lauren E. Willis

All Faculty Scholarship

The dominant model of regulation in the United States for consumer credit, insurance, and investment products is disclosure and unfettered choice. As these products have become increasingly complex, consumers’ inability to understand them has become increasingly apparent, and the consequences of this inability more dire. In response, policymakers have embraced financial literacy education as a necessary corollary to the disclosure model of regulation. This education is widely believed to turn consumers into “responsible” and “empowered” market players, motivated and competent to make financial decisions that increase their own welfare. The vision is of educated consumers handling their own credit, insurance, …

Variable Annuities, Variable Insurance And Separate Accounts, Tamar Frankel

Faculty Scholarship

The variable annuity is a novel retirement plan. It was devised to minimize the inadequacies of a fixed-dollar annuity as a retirement device. Inflation and an accelerating standard of living have left persons receiving fixed-dollar annuities with only a fraction of the income required to meet their needs.