March 15, 2024 • 32 mins
Defined contribution plans, and 401(k)s specifically, are increasingly under attack, criticized by think tanks and academics for perceived (yet easily refuted) flaws. What—and who—is behind the effort? Are the criticisms resonating and why are they happening now? Does the industry need to do a better job defending itself and are we effectively illustrating the 401(k)’s value proposition?
Michael Davis, Head of Global Retirement Strategy for T. Rowe Price and a former Deputy Assistant Secretary for the Employee Benefits Security Administration, joins American Retirement Association CEO Brian Graff for a lively and informative discussion.
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Transcript
Episode Transcript
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Speaker 1 (00:00):
I think it's myopic to say that the DC system
shouldn't be there and shouldn'thave those tax benefits because
it's been such a great providerof retirement security for the
middle class.
Speaker 2 (00:10):
DC Pension Geeks brings you exclusive
conversations with topretirement policymakers and
regulators in and aroundWashington DC, hosted by Brian
Graff, an attorney, accountant,former Capitol Hill staffer and
CEO of the American RetirementAssociation.
If you're looking for aninsider's view of all the twists
and turns that Washington takeson the road to ensuring a
(00:30):
secure retirement for millionsof Americans, you're in the
right place.
Welcome to DC Pension Geeks.
Speaker 3 (00:37):
Hello everybody, welcome to yet another in the
series of podcasts, dc PensionGeeks.
And you may not know this, butmy colleague and friend who's
joining me today is a DC PensionGeek too, although he resides
these days outside of DC.
He did his time in WashingtonDC and we'll get into that in a
(01:03):
second.
But I'm very fortunate today tohave Michael Davis, the head of
global retirement strategies atT-Row Price, with me today and
we're going to talk a little bitabout what his experience was
like being a policymaker in DC,but also what's happening now in
terms of the attacks on the401k system, and I'll give
(01:29):
Michael an opportunity to talk alittle bit about his new role
and how T-Row is trying to be aplayer in terms of helping to
shape a positive retirementpolicy.
So, michael, I like to startthese things by giving you an
opportunity to tell your story,your backstory, on retirement.
Most people sort ofaccidentally find the retirement
(01:51):
business.
Very few people grow up likemyself.
At an early age, five or sixknew that I wanted to be in the
retirement I'm just kidding,wanted to be a retirement policy
person.
So how'd you find yourself here?
Speaker 1 (02:07):
Well, great question, brian, and first of all, great
to be here, great to be with youagain.
We obviously work together alot.
When I was in policymaking andyou came to see us, you always
very thoughtful, prepared,active in these debates.
We always found thoseconversations very helpful.
So great to be here with youraudience today.
So just by way of background,yeah, just like you, I did not
(02:31):
sort of grow up thinking thatthis would be my career path.
I wasn't really sure what I wasgoing to do with my finance
undergraduate degree but Istarted in investments back in
1992, I was in investmentbanking and, to back up even
further, my master's actuallywas in public policy.
So I've always been intriguedwith this nexus between sort of
(02:52):
policy and finance and I thinkretirement is really the perfect
sort of realization of that,because I think this is an area
where you really still havebipartisan policy affecting it
and the retirement outcomes areso shaped by what happens in
policy.
It's great to sort of havethose joint experiences.
So I did sort of six years ininvestment banking at JP Morgan
(03:15):
in New York.
I found my way into the assetmanagement division at JP Morgan
in 1998, covering large pensionand 401k plans on the upper
Midwest.
Then I was asked to step into amanagement role, which I did,
and essentially I'm still doingit today.
So I've been in this businessfor a very long time and I love
(03:35):
it.
I think again, it's a perfectmix of sort of doing good and
doing well at the same time, andI do think that we try to act
in a way that is good forAmerican retirement outcomes and
I just happen to do it from adifferent seat.
Speaker 3 (03:50):
Well, you did take a little bit of a break from that
very impressive resume to spend,like I said, do your time in
Washington DC for the Obamaadministration as debt back for
the Employee Benefit SecurityAdministration.
Talk to me about what yourexperience was being in business
(04:13):
where rational people areoperating in irrational ways
Enough kidding, I'm not kidding,I'm not kidding.
Then kind of moving into thegovernment world, just the way
government I certainly don'tmean that government is always
acting irrationally, because Ioften say I have a lot of good
(04:36):
friends and colleagues in thegovernment, but the process for
how government makes decisionsis clearly different than how
business makes decisions.
Let me talk a little bit abouthow that transition was for you,
as well as what surprised youin terms of dealing with the
(04:59):
characters that are in DC.
Speaker 1 (05:01):
Yeah Well, it's funny , brian, because I thought, like
you thought, that I'd see a lotof irrational things that
didn't make sense in government.
But I always say that tounderstand what people do, you
have to understand theirinfluences.
I think government actorsoperate in a very complicated
and complex environment whereyou have a lot of stakeholders
(05:21):
that are involved.
What comes out the other endmay feel irrational to people,
but if you looked at all thedifferent and disparate
influences, it makes sense.
I found a lot of reallyintelligent people who wanted to
serve.
They felt like that was theircalling and they chose to use
their intellectual gifts in thatway.
I just found every day to bejust fascinating and just very
(05:44):
dynamic.
You think back to those firstdays of the Obama administration
.
There was so much euphoriaaround his election and so many
people that just volunteered tostep forward, that were best in
the field to say look, I want tomake a difference, I want to
help this president besuccessful.
Then, on the other hand, youhad a lot of challenges in the
economy at that time, with thefailure of firms like Bear
(06:05):
Stearns and others that werereally hurting post the
financial crisis.
I think it was an intense time,but also a time of great change
and great pace.
It was just an honor to be apart of it.
When I left JP Morgan, I wasrunning the Western US for our
institutional business and whenObama ran I was just very
compelled by who he was as acandidate.
(06:25):
I never thought in my lifetimeI would see a black president.
I always wanted to be able tosay to my kids that look, you
saw this really momentous thinghappening.
What did you do about it?
I wanted to say I did moreabout it than just clapped and
gave applause.
I wanted to actually help.
I thought he might benefit frompeople who had business
(06:46):
experience, knowing that he hada lot of circles that were more
policy and legal oriented, and Ithought I could help.
I stepped into, as you said,deputy assistant secretary in
the US Department of Labor inthe division called the Employee
Benefits SecurityAdministration that has
administrative oversight overretirement and particularly the
401K and the retirement systemfor private plans.
(07:09):
It was a great experience.
I thought the people there werejust really extraordinary and
it was just an honor to be apart of it.
Speaker 3 (07:15):
One of the things that a lot of folks who tend to
criticize the work that theregulators do is that they don't
understand how the privatesector operates, that there's a
disconnect between the policythat you're trying to achieve
but the practical understandingof how business operates.
(07:38):
Do you think that gap existsand do you have ideas about how
we could bridge that gap?
Speaker 1 (07:48):
It's a great question and I apologize for the noise
outside as an ambulance passing,but yeah, to be honest, I do
think that that gap exists insome respects and you know there
are a lot of people ingovernment that have been there
a long time but I think thatpeople did have a recognition
that there was an opportunity tobring in more people that had
(08:09):
business experience.
I think, in the case of laborand retirement policy, there are
a lot of advisory councils thatthe department does leverage.
In the case of retirement, inparticular, there is the Eris
Advisory Council that is calledfor by statute to appoint people
with business experience thatcan be very knowledgeable and
(08:30):
just advise and provide input.
I would also say, though, that,with respect to my own
appointment, I think I was oneof the first people in that debt
sec position that had businessexperience.
So a lot of people before mewere more policy oriented and
had had a lot of legal andpolicy backgrounds, but they
(08:50):
intentionally brought me inbecause I had that business
experience, and you know therewere meetings I was in where you
know I thought that thatexperience was very helpful.
So I remember some debates and Ican use one example where there
was a policy request to have bylaw every plan be obligated to
(09:10):
go passive and say by, accordingto ERISA, that we would sort of
regulate only passive assets beused in those plans.
And I just remember saying thatis not a good idea.
You have to give plan sponsorsa latitude to make decisions for
what's best for theirparticipants, and so to bring
(09:33):
that voice into the discussion Ithought was a gift, and when I
was in those rooms I always wasthinking about channeling those
voices of the plan sponsors andthe advisors and the consultants
that I knew, to make sure thatthat voice was heard.
And I think that since I was inthat role, they have since
appointed other people withbusiness expertise in those
roles.
Speaker 3 (09:53):
You know, I think that's right and I think that I
remember that debate.
I remember talking to you aboutthe time.
You know it's kind of funny Iwas.
That idea was was being pushedby a former congressman named
George Miller who was at thetime the chair of the House
Education and Labor Committee.
So you know, not aninsignificant member of Congress
(10:14):
, you know, and at the time, ifpeople remember, that there is a
sort of focus on obsession withfees and a big part of the work
that you all did was on feetransparency.
There was a lot, a tremendousamount of work that we supported
that you all did in that regardand it has, I think it's done a
great job in terms of helpingplan participants ultimately.
(10:39):
But it's funny that thatargument around passive, you
know there's this, you knowconcern about the market being
to standardize.
Now people are complaining thattarget date funds there's a
recent Wall Street Journaleditorial and if you saw this
about the fact that target datefunds are too too, you know,
(10:59):
standardized and that's causingquote schisms in the market.
But could you imagine if theentire you know every ERISA plan
can only be invested in passiveindex funds?
Speaker 1 (11:11):
Well, that's what I was saying at the time.
Again, you know the marketplace.
I just think about ERISA ascreating broad guide rails,
right where you provide sort ofa guide rail for people to exist
within it.
And I think about the samething in sports, where you have
referees that say look, you know, we're not going to legislate
the game, we're going to allowyou guys to play, but there are
(11:32):
some guide rails that, if you gobeyond this really broad guide
rail that we do have to sort of,you know, let you know.
And I think of ERISA.
The same way, you don't want tomicromanage what people are
doing.
You want to provide sort ofbroad parameters within which
that they can operate.
And that debate, in particular,was a very spirited debate, as
you might recall.
Speaker 3 (11:50):
And.
Speaker 1 (11:51):
I remember being directly involved in some of
those debates up on the hillaround it.
But to your point abouttransparency for AB2, which gave
sort of transparency to plansponsors from providers, 445,
which provided transparency toparticipants, I used to say look
, you don't need to legislatefees and really have fee caps
(12:12):
and those kinds of things, Justprovide the information.
Those plan sponsors have theinformation.
They are compelled to dosomething with it.
That's all you have to do.
You just have to nudge rightand I think it's made a big
difference.
Speaker 3 (12:22):
No, clearly it's made a huge difference, without
question.
I think that that work, youknow, besides stopping forcing
passive index funds as therequired investment, I think
that work around you know feetransparency, probably.
You know, probably some of thethings that you're most proud of
in your time there.
(12:42):
That's correct.
And what's ironic about some ofthe debate today?
We kind of moved away frompassive you know, forcing
passive index to, you know,prohibiting any thinking or
consideration of, you know,climate-based issues, as you
(13:06):
know, in effect, kind of anotherfrom the kind of opposite
direction, boxing in plansponsors as to what is okay and
what isn't okay.
And I, you know, part of thequestion I have for you here is
why don't they just leave theseplans alone?
I mean, there seems to be every.
(13:28):
I mean I've been doing this for30 years, michael, I gotta tell
you.
I mean I kind of I'm wistfulfor the good old days when, you
know, maybe there was like threeor four bills a year that were
introduced to retirement.
I mean it's a cavalcade ofproposals that are constantly
being introduced to you know, dothis.
(13:48):
You know tinker with that, tellpeople how to invest, tell
people how to do this.
We'll get into some other crazyideas.
You know why do you think thatis?
Why is there more of anobsession by either
administrations or Congressaround the 401K plan?
Speaker 1 (14:06):
in your view, I think there are two things that are
driving it.
One, I think, with so many babyboomers retiring, that
retirement as an issue itselfhas become more resonant for the
country and there's moreconcern around it.
There are more observationsaround it, there are
conversations around adequacyhave we done all the right
things to make sure theseindividuals have enough in
(14:27):
retirement?
So I think it may have feltsort of like a problem that was
a long way off, but that issueis here now and a lot more
people are experiencing thatissue and they vote.
So I think that that is one ofthe things that's driving it.
The other thing I'd say is thatI think there are certain issues
in retirement that have becomesomewhat politicized and I think
(14:47):
ESG is one of those issueswhere that has become sort of an
issue to jure and, as you and Iknow, every administration, I
think since Clinton, has hadsome sort of pronouncement on it
and you know Congress hasgotten involved and you know has
gotten to the States, and soyou know I think some of this
politization has gotten a littlebit overblown and I think it's
(15:09):
just gone far beyond thesubstance of the issue.
I think you know most investorsare really thoughtful about
these issues and again give themthe latitude to make good
decisions, give them the guiderails within which to operate
and for the most part they makegood decisions around it.
And you know, I just wish someof that would die down.
Speaker 3 (15:27):
So you mentioned, you know, expertise, right, you
know there's been sometimes agap of expertise among
policymakers, either, you know,in administrations or on the
Hill, expertise beingexperienced and actually how
these plans operate and howplans sponsor something.
(15:47):
And there's certainly a deficitof expertise among economists.
And so you know, we're seeingand I know you know this, over
the last several months, thelast just one study after
another highly critical of how401K plans are performing in
(16:15):
terms of delivering retirementsavings to American workers.
And you know, oftentimes youknow they've got some, you know
there's been some prettyoutlandish ideas from let's get
rid of the 401K and use all thatmoney to pay for social
security.
Okay, and by the way, it's notan insignificant amount of money
(16:38):
, I'll get rid of the 401K.
The quote tax expenditure,which is the way Congress
measures the revenue costsassociated with just DC plans,
not even IRAs, is one and a halftrillion dollars over five
years.
So you know that's not.
You know, maybe one and a halftrillion is what it used to be
(16:58):
around here, but it's still notpocket change.
And then you know you've gotour friend Teresa Gilliducci,
who's got her proposal to, youknow create a fellow run 401K
plan and offer a generousmatching contribution of 5% to
(17:21):
employees that are in thefederal program.
But of course, you knowbusinesses won't just.
You know businesses will justignore the fact that they can
get this free money from thegovernment and still keep on
doing their plans, at least inher mind, which I think you know
doesn't make any sense.
But where do you?
I mean all this is rooted inthis kind of pervasive view,
(17:44):
michael, that the 401K isfailing and a lot of it's, you
know, based on different surveys.
Teresa hangs her hat on thisMichigan University of Michigan
survey.
That that seems to.
She seems to think that peoplecan accurately assess what their
retirement savings are.
There's the consumer populationsurvey.
(18:05):
No one seems to recognize thefact that the last several
election surveys really haveshown that they really don't
aren't very accurate in terms ofwhat people do, what it's
behind all this?
Why are they?
Why do you think all thisnegativity is coming up all of a
sudden?
Speaker 1 (18:26):
Well, it's a great question and I know a lot of the
people that have submittedthose studies and written books
about them, and so I'm not goingto take on anybody by name.
I would just say in general, wewould disagree.
I would say that some of thoseattacks they don't really start
(18:46):
with.
What is the system done sinceit's been in place?
I think you really have tostart with an accounting of sort
of the history and what thosesystems have really done.
So you know.
Let's just talk about the DCsystem.
So you know and this is theDepartment of Labor data in 1975
, only 11 million workers werecovered by DC plans.
(19:07):
By 2021, that number has risento 115 million.
At its peak, I think DB plans,which I think a lot of us would
agree, gave a lot of retirementsecurity to a lot of people.
At its peak covered maybe 40%of workers.
Dc plans cover a higherpercentage of workers, I think,
right as of the last by far.
(19:28):
But yeah, according to eBreedata, much higher.
So I think, also from adiversification standpoint, dc
systems have really helped planparticipants to diversify more.
You know, you look back in 2005, 65% of workers in 401k plans
had money and equity funds andshort term investments.
You look at 2020 data and thatpercentage has fallen to less
(19:52):
than 50%.
A lot of people now are intarget date funds, which are
much more diversified, provideprofessional management.
They automatically rebalanceall the things that I think
people say is helpful.
And then, from an adequacyperspective, the DC system has
created more than $25 trillionin retirement savings.
Well, I think part of the issuethat people are attacking is
(20:15):
they're only attacking the DCsystem in isolation.
We would say that the DC systemhas to be viewed in combination
with the social security system.
So, for lower paid workers,social security is going to
provide a lot of the incomereplacement for those
individuals as you get into sortof higher middle class levels,
a greater percentage of thatretirement income and that
(20:36):
income replacement comes from DC.
But but I think it's, it's it's.
I think it's myopic to say thatthe DC system shouldn't be
there and shouldn't have thosetax benefits because it's been
such a great provider ofretirement security for the
middle class.
And you know we think that thatsort of existence of DC,
particularly for higher wageworkers, for whom social
(20:58):
security is going to have a muchlower portion of their overall
income replacement, to deny therole that DC plays in those
individuals retirementexperience, I think it is short
sighted and doesn't do justiceto the benefit that it provides
for a lot of middle classworkers in particular.
Now, that's not to say thatthere aren't issues and we do
think that from adequateadequacy perspective, from a
(21:20):
coverage perspective, there'sobviously work to do.
The federal auto IRA bill, asyou know, the Neil bill, we
think does sort of extend a lotof that coverage principle and
we're not against that.
We think that those things aregood to expand coverage, extend
adequacy.
But to say the system itselfhas failed, I think is a wrong
conclusion to reach.
We think the system has worked,is done a lot of great things
(21:43):
for a lot of people,particularly from the middle
class, and we're seeking toextend it and support it with
some of the things that Congressis talking about right now.
Speaker 3 (21:51):
So this, I know you don't want to name it, but I'm
not Similarly restricted, so I'mgoing to.
I'm in the foxhole, michael, ona daily basis on this and, and
you know, just yesterday CVSmarket watch, a certain
(22:15):
economist whose name is Teresasaid that the system is a
complete failure and it's onlyactually worked for the top 10%
of Americans based on income, asin.
It's failed for 90% of Americanworkers.
And you know we can sit hereand we both know that's wrong,
(22:39):
right, right, but the.
But I think the problem isn'tso much that we know it's wrong
because we do.
I don't think the industry isdoing enough to respond to these
attacks and actually tell ourstory, because your point is
exactly spot on.
(23:00):
You can't look at it inisolation.
If you measure it based onreplacement income, the truth of
the matter is, for lower incomepeople, a combination of a 401k
and so security is actuallybetter income replacement ratios
relative to higher incomeworkers.
And if you got rid of socialsecurity, if you got rid of the
(23:21):
401k and use that money forsocial security, the lower
income people would continue tobe pretty good because social
security does, as you said, apretty good job of replacement
income for them it's, and thewealthy people though, they'll
figure it out and it's.
Middle income Americans arereally be the stuff, that ones
who are going to be the troopsone suffering here because the
(23:46):
private savings to employerbased plans has been the way
they have generated wealth forretirement.
Speaker 1 (23:55):
You say it very well, brian.
I would add two additionalfacts to what you just offered
to your point about replacementrate.
I see I research that showedaccounting for taxes, those post
tax, that combination of socialsecurity and the DC system
generates roughly about 90% ofincome replacement.
So and this is the firstseveral years of retirement, so
(24:15):
that's pretty high and that is afact that is not being shared
in some of these debates, whichI think is a disservice.
The other thing I would say toyour point about replacing tax
benefits for DC and sort ofredirecting the money and social
security, that that for us is avery dangerous precedent
because what it would suggest isyou want to start using general
(24:36):
revenue to pay for socialsecurity, because it's not a
good thing.
So that would make socialsecurity more dependent on the
budget process, and one onlyneeds to look at how those
budget processes have worked thelast few years to say, do you
really want so scared to bedependent on it?
So we think it's a verydangerous precedent.
So security should continue tobe sort of self funded.
(24:57):
We think that's very importantto protect.
So our view is, from a policyperspective protect social
security but also do the samewith DC because, again to your
point, the middle of the marketbenefits a tremendous amount
from that system and thatcombination of that plus or
security is an ecosystem that wethink should not be abridged.
Speaker 3 (25:17):
How do we do as an industry, then?
How do we do a better job oftelling this story?
We have this tendency, Michaeland I'm not, this is not
directed at Tiro If all of therecord keepers and asset
managers were on the screenright now, I would say this
universally we'd have thistendency to talk about the
(25:40):
stress, the fact that peoplearen't saving enough.
We have this tendency.
It's almost like we have aself-esteem problem.
We have this tendency to focuson the things that we do wrong,
right, Don't we?
There's too many hardships,people taking too many loans,
there's too much leakage.
People aren't saving enough.
You get where I'm going here,and I think having some
(26:03):
self-reflection is a good thing,but only up to a point where I
think, to some degree, it isused against us.
Speaker 1 (26:14):
Well, I think about this in a lot of ways.
I just think about there's somany different examples of
systems at work but need to beimproved.
I'm a person I watch a lot ofNational Geographic and
Smithsonian on television andI'm really obsessed with these
aviation shows and just thescience of flight.
And I just think about thelanding system.
(26:35):
There's so much sophisticationthat goes into how a plane flies
, how to optimize it, and Ithink about the flaps and the
landing gear and how they workin combination and the
hydraulics, and you abridge anyone of those elements and the
ecosystem doesn't work.
And I would say the same thingabout the retirement system you
abridge any of those really keyelements and the whole system
(26:56):
itself doesn't work.
That's not a story that gets asmuch sort of press attention,
but that's the truth.
And I do think, with respect towhat the industry can do better
, I would say the industry isgetting organized around this
and we are not going to takethis lying down.
And I would say that in myopinion, brian, it's not really
a defense of the industry, it'sthe defense of the system.
Speaker 3 (27:16):
Yes, it is.
Speaker 1 (27:17):
There's more comprehensive story about what
is working for working Americansand for the middle class, and
we are organizing and tell thatstory and you know my firm to
our price.
We are working on research tobe able to tell that story.
We want to raise our voice.
We know some of the tradegroups are doing the same.
We know other firms are doingthe same.
So we are gearing up for thisconversation and we know it's
(27:38):
going to be an extendeddiscussion.
The other thing I would say isfor your listeners this is the
50 year anniversary of ERISA andthis is a big year in the
retirement industry overall.
There's a big event that'shappening in September.
There are a lot of policymakersand members of academia that
will be there.
We will be a part of thatdiscussion there.
We think this is a really bigyear in the history of our
(27:59):
retirement system, one of theoldest in the world.
So this is a great year to havethese debates.
We don't shy away from thedebate, but we want to tell the
whole story and we think thatthe whole story being out there,
the more that we tell it, themore I think Americans can
really appreciate the benefitthat is actually provided.
Speaker 3 (28:15):
I think it's really important.
You know, obviously, you knowwe're in the forefront here of
fighting the fight protectingthe 401k, and I think it's
really important that the keystakeholders, like yourself, be
vocal as well.
And I was very excited to seeyour announcement as a company
(28:40):
about wanting to get moreinvolved from a policy
perspective and the creation ofthis.
You know, global retirementstrategies unit that you're
heading, michael, can you?
Because I mean, if I I'll saythis, I mean historically, tiro
really has not really wanted tobe out there from a public
(29:05):
policy debate standpoint, fromjust from a corporate philosophy
standpoint, and so I think itwould be helpful for folks to
hear you know what's different,what's changed and what are you
guys going to be focusing on andwhat they can look for from
Tiro in the future.
Speaker 1 (29:23):
It's a great question , brian.
Thanks for asking it.
I would just say it's a generalmatter.
We used to say when I was inWashington that if you're not at
the table, you're on the menu,and it's really important not to
be on the menu.
I think that theseconversations are going to
happen with or without us, andwe think that, look, we
represent a lot of plan sponsorsand advisors and consultants
(29:44):
and intermediaries andindividuals and it's important
for us to have a voice, and sowe are working to raise that
voice in Washington.
So, just as a firm, we sort oflook to sort of increase our
brand awareness in terms of whowe are.
To your point, a lot of what wedo is retirement, so over 68% of
(30:07):
our total assets are retirement.
That's roughly almost $970billion.
We record key for over 2million participants.
We have an industry leadingtarget date franchise but, as we
think about it, we have allthese different touch points
around retirement in the US andactually around the world where
we think those insights havevalue.
We certainly have seen thevalue that that research and
(30:29):
those insights can have onCapitol Hill and we want to
share more of that insight tohelp move this conversation
forward for the system and tosupport the system.
And so with this globalretirement strategy effort, it's
really around connecting thosedifferent touch points
internally and telling a morecomprehensive story in terms of
what we know about retirementand using that knowledge to
(30:50):
drive this conversation forwardIn Washington, in the industry,
with our clients, and reallytrying to be more of a help to
this debate as this debatecontinues.
Speaker 3 (31:00):
Well, michael, thank you, because I think I could not
be happier to have you guysinvolved.
Have you involved.
Your input is going to beinvaluable.
The debate's coming.
I think we both know that theTax Cut and Jobs Act expires at
the end of next year.
So regardless of who winseither the White House, who wins
(31:23):
the House, who wins the Senatebetween Democrats and
Republicans, it's really notgoing to matter there's going to
be a tax debate next year inthe new Congress and whenever
there's a major tax legislation,the 401k kind of gets looked
like a piggy bank that they canraid to pay for other stuff, and
it's up to us to make sure thatthey don't do that and they
(31:44):
leave what is really anincredibly successful system in
terms of creating wealth for themiddle class alone.
So thanks for your help on that, thanks for being involved and
thanks for taking your timetoday to talk with me today.
Really appreciate it, michael.
Speaker 1 (32:00):
Really enjoyed it, brian, see you.
I think it's myopic to say that the DC system
shouldn't be there and shouldn'thave those tax benefits because
it's been such a great providerof retirement security for the
middle class.
Speaker 2 (00:10):
DC Pension Geeks brings you exclusive
conversations with topretirement policymakers and
regulators in and aroundWashington DC, hosted by Brian
Graff, an attorney, accountant,former Capitol Hill staffer and
CEO of the American RetirementAssociation.
If you're looking for aninsider's view of all the twists
and turns that Washington takeson the road to ensuring a
(00:30):
secure retirement for millionsof Americans, you're in the
right place.
Welcome to DC Pension Geeks.
Speaker 3 (00:37):
Hello everybody, welcome to yet another in the
series of podcasts, dc PensionGeeks.
And you may not know this, butmy colleague and friend who's
joining me today is a DC PensionGeek too, although he resides
these days outside of DC.
He did his time in WashingtonDC and we'll get into that in a
(01:03):
second.
But I'm very fortunate today tohave Michael Davis, the head of
global retirement strategies atT-Row Price, with me today and
we're going to talk a little bitabout what his experience was
like being a policymaker in DC,but also what's happening now in
terms of the attacks on the401k system, and I'll give
(01:29):
Michael an opportunity to talk alittle bit about his new role
and how T-Row is trying to be aplayer in terms of helping to
shape a positive retirementpolicy.
So, michael, I like to startthese things by giving you an
opportunity to tell your story,your backstory, on retirement.
Most people sort ofaccidentally find the retirement
(01:51):
business.
Very few people grow up likemyself.
At an early age, five or sixknew that I wanted to be in the
retirement I'm just kidding,wanted to be a retirement policy
person.
So how'd you find yourself here?
Speaker 1 (02:07):
Well, great question, brian, and first of all, great
to be here, great to be with youagain.
We obviously work together alot.
When I was in policymaking andyou came to see us, you always
very thoughtful, prepared,active in these debates.
We always found thoseconversations very helpful.
So great to be here with youraudience today.
So just by way of background,yeah, just like you, I did not
(02:31):
sort of grow up thinking thatthis would be my career path.
I wasn't really sure what I wasgoing to do with my finance
undergraduate degree but Istarted in investments back in
1992, I was in investmentbanking and, to back up even
further, my master's actuallywas in public policy.
So I've always been intriguedwith this nexus between sort of
(02:52):
policy and finance and I thinkretirement is really the perfect
sort of realization of that,because I think this is an area
where you really still havebipartisan policy affecting it
and the retirement outcomes areso shaped by what happens in
policy.
It's great to sort of havethose joint experiences.
So I did sort of six years ininvestment banking at JP Morgan
(03:15):
in New York.
I found my way into the assetmanagement division at JP Morgan
in 1998, covering large pensionand 401k plans on the upper
Midwest.
Then I was asked to step into amanagement role, which I did,
and essentially I'm still doingit today.
So I've been in this businessfor a very long time and I love
(03:35):
it.
I think again, it's a perfectmix of sort of doing good and
doing well at the same time, andI do think that we try to act
in a way that is good forAmerican retirement outcomes and
I just happen to do it from adifferent seat.
Speaker 3 (03:50):
Well, you did take a little bit of a break from that
very impressive resume to spend,like I said, do your time in
Washington DC for the Obamaadministration as debt back for
the Employee Benefit SecurityAdministration.
Talk to me about what yourexperience was being in business
(04:13):
where rational people areoperating in irrational ways
Enough kidding, I'm not kidding,I'm not kidding.
Then kind of moving into thegovernment world, just the way
government I certainly don'tmean that government is always
acting irrationally, because Ioften say I have a lot of good
(04:36):
friends and colleagues in thegovernment, but the process for
how government makes decisionsis clearly different than how
business makes decisions.
Let me talk a little bit abouthow that transition was for you,
as well as what surprised youin terms of dealing with the
(04:59):
characters that are in DC.
Speaker 1 (05:01):
Yeah Well, it's funny , brian, because I thought, like
you thought, that I'd see a lotof irrational things that
didn't make sense in government.
But I always say that tounderstand what people do, you
have to understand theirinfluences.
I think government actorsoperate in a very complicated
and complex environment whereyou have a lot of stakeholders
(05:21):
that are involved.
What comes out the other endmay feel irrational to people,
but if you looked at all thedifferent and disparate
influences, it makes sense.
I found a lot of reallyintelligent people who wanted to
serve.
They felt like that was theircalling and they chose to use
their intellectual gifts in thatway.
I just found every day to bejust fascinating and just very
(05:44):
dynamic.
You think back to those firstdays of the Obama administration
.
There was so much euphoriaaround his election and so many
people that just volunteered tostep forward, that were best in
the field to say look, I want tomake a difference, I want to
help this president besuccessful.
Then, on the other hand, youhad a lot of challenges in the
economy at that time, with thefailure of firms like Bear
(06:05):
Stearns and others that werereally hurting post the
financial crisis.
I think it was an intense time,but also a time of great change
and great pace.
It was just an honor to be apart of it.
When I left JP Morgan, I wasrunning the Western US for our
institutional business and whenObama ran I was just very
compelled by who he was as acandidate.
(06:25):
I never thought in my lifetimeI would see a black president.
I always wanted to be able tosay to my kids that look, you
saw this really momentous thinghappening.
What did you do about it?
I wanted to say I did moreabout it than just clapped and
gave applause.
I wanted to actually help.
I thought he might benefit frompeople who had business
(06:46):
experience, knowing that he hada lot of circles that were more
policy and legal oriented, and Ithought I could help.
I stepped into, as you said,deputy assistant secretary in
the US Department of Labor inthe division called the Employee
Benefits SecurityAdministration that has
administrative oversight overretirement and particularly the
401K and the retirement systemfor private plans.
(07:09):
It was a great experience.
I thought the people there werejust really extraordinary and
it was just an honor to be apart of it.
Speaker 3 (07:15):
One of the things that a lot of folks who tend to
criticize the work that theregulators do is that they don't
understand how the privatesector operates, that there's a
disconnect between the policythat you're trying to achieve
but the practical understandingof how business operates.
(07:38):
Do you think that gap existsand do you have ideas about how
we could bridge that gap?
Speaker 1 (07:48):
It's a great question and I apologize for the noise
outside as an ambulance passing,but yeah, to be honest, I do
think that that gap exists insome respects and you know there
are a lot of people ingovernment that have been there
a long time but I think thatpeople did have a recognition
that there was an opportunity tobring in more people that had
(08:09):
business experience.
I think, in the case of laborand retirement policy, there are
a lot of advisory councils thatthe department does leverage.
In the case of retirement, inparticular, there is the Eris
Advisory Council that is calledfor by statute to appoint people
with business experience thatcan be very knowledgeable and
(08:30):
just advise and provide input.
I would also say, though, that,with respect to my own
appointment, I think I was oneof the first people in that debt
sec position that had businessexperience.
So a lot of people before mewere more policy oriented and
had had a lot of legal andpolicy backgrounds, but they
(08:50):
intentionally brought me inbecause I had that business
experience, and you know therewere meetings I was in where you
know I thought that thatexperience was very helpful.
So I remember some debates and Ican use one example where there
was a policy request to have bylaw every plan be obligated to
(09:10):
go passive and say by, accordingto ERISA, that we would sort of
regulate only passive assets beused in those plans.
And I just remember saying thatis not a good idea.
You have to give plan sponsorsa latitude to make decisions for
what's best for theirparticipants, and so to bring
(09:33):
that voice into the discussion Ithought was a gift, and when I
was in those rooms I always wasthinking about channeling those
voices of the plan sponsors andthe advisors and the consultants
that I knew, to make sure thatthat voice was heard.
And I think that since I was inthat role, they have since
appointed other people withbusiness expertise in those
roles.
Speaker 3 (09:53):
You know, I think that's right and I think that I
remember that debate.
I remember talking to you aboutthe time.
You know it's kind of funny Iwas.
That idea was was being pushedby a former congressman named
George Miller who was at thetime the chair of the House
Education and Labor Committee.
So you know, not aninsignificant member of Congress
(10:14):
, you know, and at the time, ifpeople remember, that there is a
sort of focus on obsession withfees and a big part of the work
that you all did was on feetransparency.
There was a lot, a tremendousamount of work that we supported
that you all did in that regardand it has, I think it's done a
great job in terms of helpingplan participants ultimately.
(10:39):
But it's funny that thatargument around passive, you
know there's this, you knowconcern about the market being
to standardize.
Now people are complaining thattarget date funds there's a
recent Wall Street Journaleditorial and if you saw this
about the fact that target datefunds are too too, you know,
(10:59):
standardized and that's causingquote schisms in the market.
But could you imagine if theentire you know every ERISA plan
can only be invested in passiveindex funds?
Speaker 1 (11:11):
Well, that's what I was saying at the time.
Again, you know the marketplace.
I just think about ERISA ascreating broad guide rails,
right where you provide sort ofa guide rail for people to exist
within it.
And I think about the samething in sports, where you have
referees that say look, you know, we're not going to legislate
the game, we're going to allowyou guys to play, but there are
(11:32):
some guide rails that, if you gobeyond this really broad guide
rail that we do have to sort of,you know, let you know.
And I think of ERISA.
The same way, you don't want tomicromanage what people are
doing.
You want to provide sort ofbroad parameters within which
that they can operate.
And that debate, in particular,was a very spirited debate, as
you might recall.
Speaker 3 (11:50):
And.
Speaker 1 (11:51):
I remember being directly involved in some of
those debates up on the hillaround it.
But to your point abouttransparency for AB2, which gave
sort of transparency to plansponsors from providers, 445,
which provided transparency toparticipants, I used to say look
, you don't need to legislatefees and really have fee caps
(12:12):
and those kinds of things, Justprovide the information.
Those plan sponsors have theinformation.
They are compelled to dosomething with it.
That's all you have to do.
You just have to nudge rightand I think it's made a big
difference.
Speaker 3 (12:22):
No, clearly it's made a huge difference, without
question.
I think that that work, youknow, besides stopping forcing
passive index funds as therequired investment, I think
that work around you know feetransparency, probably.
You know, probably some of thethings that you're most proud of
in your time there.
(12:42):
That's correct.
And what's ironic about some ofthe debate today?
We kind of moved away frompassive you know, forcing
passive index to, you know,prohibiting any thinking or
consideration of, you know,climate-based issues, as you
(13:06):
know, in effect, kind of anotherfrom the kind of opposite
direction, boxing in plansponsors as to what is okay and
what isn't okay.
And I, you know, part of thequestion I have for you here is
why don't they just leave theseplans alone?
I mean, there seems to be every.
(13:28):
I mean I've been doing this for30 years, michael, I gotta tell
you.
I mean I kind of I'm wistfulfor the good old days when, you
know, maybe there was like threeor four bills a year that were
introduced to retirement.
I mean it's a cavalcade ofproposals that are constantly
being introduced to you know, dothis.
(13:48):
You know tinker with that, tellpeople how to invest, tell
people how to do this.
We'll get into some other crazyideas.
You know why do you think thatis?
Why is there more of anobsession by either
administrations or Congressaround the 401K plan?
Speaker 1 (14:06):
in your view, I think there are two things that are
driving it.
One, I think, with so many babyboomers retiring, that
retirement as an issue itselfhas become more resonant for the
country and there's moreconcern around it.
There are more observationsaround it, there are
conversations around adequacyhave we done all the right
things to make sure theseindividuals have enough in
(14:27):
retirement?
So I think it may have feltsort of like a problem that was
a long way off, but that issueis here now and a lot more
people are experiencing thatissue and they vote.
So I think that that is one ofthe things that's driving it.
The other thing I'd say is thatI think there are certain issues
in retirement that have becomesomewhat politicized and I think
(14:47):
ESG is one of those issueswhere that has become sort of an
issue to jure and, as you and Iknow, every administration, I
think since Clinton, has hadsome sort of pronouncement on it
and you know Congress hasgotten involved and you know has
gotten to the States, and soyou know I think some of this
politization has gotten a littlebit overblown and I think it's
(15:09):
just gone far beyond thesubstance of the issue.
I think you know most investorsare really thoughtful about
these issues and again give themthe latitude to make good
decisions, give them the guiderails within which to operate
and for the most part they makegood decisions around it.
And you know, I just wish someof that would die down.
Speaker 3 (15:27):
So you mentioned, you know, expertise, right, you
know there's been sometimes agap of expertise among
policymakers, either, you know,in administrations or on the
Hill, expertise beingexperienced and actually how
these plans operate and howplans sponsor something.
(15:47):
And there's certainly a deficitof expertise among economists.
And so you know, we're seeingand I know you know this, over
the last several months, thelast just one study after
another highly critical of how401K plans are performing in
(16:15):
terms of delivering retirementsavings to American workers.
And you know, oftentimes youknow they've got some, you know
there's been some prettyoutlandish ideas from let's get
rid of the 401K and use all thatmoney to pay for social
security.
Okay, and by the way, it's notan insignificant amount of money
(16:38):
, I'll get rid of the 401K.
The quote tax expenditure,which is the way Congress
measures the revenue costsassociated with just DC plans,
not even IRAs, is one and a halftrillion dollars over five
years.
So you know that's not.
You know, maybe one and a halftrillion is what it used to be
(16:58):
around here, but it's still notpocket change.
And then you know you've gotour friend Teresa Gilliducci,
who's got her proposal to, youknow create a fellow run 401K
plan and offer a generousmatching contribution of 5% to
(17:21):
employees that are in thefederal program.
But of course, you knowbusinesses won't just.
You know businesses will justignore the fact that they can
get this free money from thegovernment and still keep on
doing their plans, at least inher mind, which I think you know
doesn't make any sense.
But where do you?
I mean all this is rooted inthis kind of pervasive view,
(17:44):
michael, that the 401K isfailing and a lot of it's, you
know, based on different surveys.
Teresa hangs her hat on thisMichigan University of Michigan
survey.
That that seems to.
She seems to think that peoplecan accurately assess what their
retirement savings are.
There's the consumer populationsurvey.
(18:05):
No one seems to recognize thefact that the last several
election surveys really haveshown that they really don't
aren't very accurate in terms ofwhat people do, what it's
behind all this?
Why are they?
Why do you think all thisnegativity is coming up all of a
sudden?
Speaker 1 (18:26):
Well, it's a great question and I know a lot of the
people that have submittedthose studies and written books
about them, and so I'm not goingto take on anybody by name.
I would just say in general, wewould disagree.
I would say that some of thoseattacks they don't really start
(18:46):
with.
What is the system done sinceit's been in place?
I think you really have tostart with an accounting of sort
of the history and what thosesystems have really done.
So you know.
Let's just talk about the DCsystem.
So you know and this is theDepartment of Labor data in 1975
, only 11 million workers werecovered by DC plans.
(19:07):
By 2021, that number has risento 115 million.
At its peak, I think DB plans,which I think a lot of us would
agree, gave a lot of retirementsecurity to a lot of people.
At its peak covered maybe 40%of workers.
Dc plans cover a higherpercentage of workers, I think,
right as of the last by far.
(19:28):
But yeah, according to eBreedata, much higher.
So I think, also from adiversification standpoint, dc
systems have really helped planparticipants to diversify more.
You know, you look back in 2005, 65% of workers in 401k plans
had money and equity funds andshort term investments.
You look at 2020 data and thatpercentage has fallen to less
(19:52):
than 50%.
A lot of people now are intarget date funds, which are
much more diversified, provideprofessional management.
They automatically rebalanceall the things that I think
people say is helpful.
And then, from an adequacyperspective, the DC system has
created more than $25 trillionin retirement savings.
Well, I think part of the issuethat people are attacking is
(20:15):
they're only attacking the DCsystem in isolation.
We would say that the DC systemhas to be viewed in combination
with the social security system.
So, for lower paid workers,social security is going to
provide a lot of the incomereplacement for those
individuals as you get into sortof higher middle class levels,
a greater percentage of thatretirement income and that
(20:36):
income replacement comes from DC.
But but I think it's, it's it's.
I think it's myopic to say thatthe DC system shouldn't be
there and shouldn't have thosetax benefits because it's been
such a great provider ofretirement security for the
middle class.
And you know we think that thatsort of existence of DC,
particularly for higher wageworkers, for whom social
(20:58):
security is going to have a muchlower portion of their overall
income replacement, to deny therole that DC plays in those
individuals retirementexperience, I think it is short
sighted and doesn't do justiceto the benefit that it provides
for a lot of middle classworkers in particular.
Now, that's not to say thatthere aren't issues and we do
think that from adequateadequacy perspective, from a
(21:20):
coverage perspective, there'sobviously work to do.
The federal auto IRA bill, asyou know, the Neil bill, we
think does sort of extend a lotof that coverage principle and
we're not against that.
We think that those things aregood to expand coverage, extend
adequacy.
But to say the system itselfhas failed, I think is a wrong
conclusion to reach.
We think the system has worked,is done a lot of great things
(21:43):
for a lot of people,particularly from the middle
class, and we're seeking toextend it and support it with
some of the things that Congressis talking about right now.
Speaker 3 (21:51):
So this, I know you don't want to name it, but I'm
not Similarly restricted, so I'mgoing to.
I'm in the foxhole, michael, ona daily basis on this and, and
you know, just yesterday CVSmarket watch, a certain
(22:15):
economist whose name is Teresasaid that the system is a
complete failure and it's onlyactually worked for the top 10%
of Americans based on income, asin.
It's failed for 90% of Americanworkers.
And you know we can sit hereand we both know that's wrong,
(22:39):
right, right, but the.
But I think the problem isn'tso much that we know it's wrong
because we do.
I don't think the industry isdoing enough to respond to these
attacks and actually tell ourstory, because your point is
exactly spot on.
(23:00):
You can't look at it inisolation.
If you measure it based onreplacement income, the truth of
the matter is, for lower incomepeople, a combination of a 401k
and so security is actuallybetter income replacement ratios
relative to higher incomeworkers.
And if you got rid of socialsecurity, if you got rid of the
(23:21):
401k and use that money forsocial security, the lower
income people would continue tobe pretty good because social
security does, as you said, apretty good job of replacement
income for them it's, and thewealthy people though, they'll
figure it out and it's.
Middle income Americans arereally be the stuff, that ones
who are going to be the troopsone suffering here because the
(23:46):
private savings to employerbased plans has been the way
they have generated wealth forretirement.
Speaker 1 (23:55):
You say it very well, brian.
I would add two additionalfacts to what you just offered
to your point about replacementrate.
I see I research that showedaccounting for taxes, those post
tax, that combination of socialsecurity and the DC system
generates roughly about 90% ofincome replacement.
So and this is the firstseveral years of retirement, so
(24:15):
that's pretty high and that is afact that is not being shared
in some of these debates, whichI think is a disservice.
The other thing I would say toyour point about replacing tax
benefits for DC and sort ofredirecting the money and social
security, that that for us is avery dangerous precedent
because what it would suggest isyou want to start using general
(24:36):
revenue to pay for socialsecurity, because it's not a
good thing.
So that would make socialsecurity more dependent on the
budget process, and one onlyneeds to look at how those
budget processes have worked thelast few years to say, do you
really want so scared to bedependent on it?
So we think it's a verydangerous precedent.
So security should continue tobe sort of self funded.
(24:57):
We think that's very importantto protect.
So our view is, from a policyperspective protect social
security but also do the samewith DC because, again to your
point, the middle of the marketbenefits a tremendous amount
from that system and thatcombination of that plus or
security is an ecosystem that wethink should not be abridged.
Speaker 3 (25:17):
How do we do as an industry, then?
How do we do a better job oftelling this story?
We have this tendency, Michaeland I'm not, this is not
directed at Tiro If all of therecord keepers and asset
managers were on the screenright now, I would say this
universally we'd have thistendency to talk about the
(25:40):
stress, the fact that peoplearen't saving enough.
We have this tendency.
It's almost like we have aself-esteem problem.
We have this tendency to focuson the things that we do wrong,
right, Don't we?
There's too many hardships,people taking too many loans,
there's too much leakage.
People aren't saving enough.
You get where I'm going here,and I think having some
(26:03):
self-reflection is a good thing,but only up to a point where I
think, to some degree, it isused against us.
Speaker 1 (26:14):
Well, I think about this in a lot of ways.
I just think about there's somany different examples of
systems at work but need to beimproved.
I'm a person I watch a lot ofNational Geographic and
Smithsonian on television andI'm really obsessed with these
aviation shows and just thescience of flight.
And I just think about thelanding system.
(26:35):
There's so much sophisticationthat goes into how a plane flies
, how to optimize it, and Ithink about the flaps and the
landing gear and how they workin combination and the
hydraulics, and you abridge anyone of those elements and the
ecosystem doesn't work.
And I would say the same thingabout the retirement system you
abridge any of those really keyelements and the whole system
(26:56):
itself doesn't work.
That's not a story that gets asmuch sort of press attention,
but that's the truth.
And I do think, with respect towhat the industry can do better
, I would say the industry isgetting organized around this
and we are not going to takethis lying down.
And I would say that in myopinion, brian, it's not really
a defense of the industry, it'sthe defense of the system.
Speaker 3 (27:16):
Yes, it is.
Speaker 1 (27:17):
There's more comprehensive story about what
is working for working Americansand for the middle class, and
we are organizing and tell thatstory and you know my firm to
our price.
We are working on research tobe able to tell that story.
We want to raise our voice.
We know some of the tradegroups are doing the same.
We know other firms are doingthe same.
So we are gearing up for thisconversation and we know it's
(27:38):
going to be an extendeddiscussion.
The other thing I would say isfor your listeners this is the
50 year anniversary of ERISA andthis is a big year in the
retirement industry overall.
There's a big event that'shappening in September.
There are a lot of policymakersand members of academia that
will be there.
We will be a part of thatdiscussion there.
We think this is a really bigyear in the history of our
(27:59):
retirement system, one of theoldest in the world.
So this is a great year to havethese debates.
We don't shy away from thedebate, but we want to tell the
whole story and we think thatthe whole story being out there,
the more that we tell it, themore I think Americans can
really appreciate the benefitthat is actually provided.
Speaker 3 (28:15):
I think it's really important.
You know, obviously, you knowwe're in the forefront here of
fighting the fight protectingthe 401k, and I think it's
really important that the keystakeholders, like yourself, be
vocal as well.
And I was very excited to seeyour announcement as a company
(28:40):
about wanting to get moreinvolved from a policy
perspective and the creation ofthis.
You know, global retirementstrategies unit that you're
heading, michael, can you?
Because I mean, if I I'll saythis, I mean historically, tiro
really has not really wanted tobe out there from a public
(29:05):
policy debate standpoint, fromjust from a corporate philosophy
standpoint, and so I think itwould be helpful for folks to
hear you know what's different,what's changed and what are you
guys going to be focusing on andwhat they can look for from
Tiro in the future.
Speaker 1 (29:23):
It's a great question , brian.
Thanks for asking it.
I would just say it's a generalmatter.
We used to say when I was inWashington that if you're not at
the table, you're on the menu,and it's really important not to
be on the menu.
I think that theseconversations are going to
happen with or without us, andwe think that, look, we
represent a lot of plan sponsorsand advisors and consultants
(29:44):
and intermediaries andindividuals and it's important
for us to have a voice, and sowe are working to raise that
voice in Washington.
So, just as a firm, we sort oflook to sort of increase our
brand awareness in terms of whowe are.
To your point, a lot of what wedo is retirement, so over 68% of
(30:07):
our total assets are retirement.
That's roughly almost $970billion.
We record key for over 2million participants.
We have an industry leadingtarget date franchise but, as we
think about it, we have allthese different touch points
around retirement in the US andactually around the world where
we think those insights havevalue.
We certainly have seen thevalue that that research and
(30:29):
those insights can have onCapitol Hill and we want to
share more of that insight tohelp move this conversation
forward for the system and tosupport the system.
And so with this globalretirement strategy effort, it's
really around connecting thosedifferent touch points
internally and telling a morecomprehensive story in terms of
what we know about retirementand using that knowledge to
(30:50):
drive this conversation forwardIn Washington, in the industry,
with our clients, and reallytrying to be more of a help to
this debate as this debatecontinues.
Speaker 3 (31:00):
Well, michael, thank you, because I think I could not
be happier to have you guysinvolved.
Have you involved.
Your input is going to beinvaluable.
The debate's coming.
I think we both know that theTax Cut and Jobs Act expires at
the end of next year.
So regardless of who winseither the White House, who wins
(31:23):
the House, who wins the Senatebetween Democrats and
Republicans, it's really notgoing to matter there's going to
be a tax debate next year inthe new Congress and whenever
there's a major tax legislation,the 401k kind of gets looked
like a piggy bank that they canraid to pay for other stuff, and
it's up to us to make sure thatthey don't do that and they
(31:44):
leave what is really anincredibly successful system in
terms of creating wealth for themiddle class alone.
So thanks for your help on that, thanks for being involved and
thanks for taking your timetoday to talk with me today.
Really appreciate it, michael.
Speaker 1 (32:00):
Really enjoyed it, brian, see you.
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