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CNN Saturday Morning News

Plan Helps People Control Futures of 401(k)s

Aired July 14, 2001 - 08:39   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BRIAN NELSON, CNN ANCHOR: Well, I'm sure most people don't like the news that they're hearing about the 401(k) plans these days, that it's starting to sink. And most feel that they would like to have more control over them. So our next guest has created a plan to do just that and we welcome Spencer Williams, who joins us now from Boston. He's the CEO of Persumma Financial and before that the Mass Mutual Financial Services Group. Retirement plans are his specialty.

Mr. Williams, thanks for being with us this morning.

SPENCER WILLIAMS, PERSUMMA FINANCIAL: Good morning, Brian. How are you today?

NELSON: OK. I'm fine, thank you. First of all, let's hear your take on why 401(k) plans seem to be sinking like a rock these days. Is it just the markets or is there some inherent strategic problem with them?

WILLIAMS: No, I don't think there's an inherent problem with 401(k)s at all. In fact, 401(k) is the greatest retirement savings vehicle ever invented. But what we've got is the wakeup call for the 40 million 401(k) participants out there. The joy ride is over. We've had 20 years of great market performance. Now we've got to each take a look at our account and figure out what to do next.

NELSON: Well, do most people want to do that? I mean historically I think people have been content to let the employer choose a series of two or three options and run with that. Why is that not a good idea?

WILLIAMS: Yes, well, it's not a good idea because that choice is limited. This is a pocket of our financial lives that is incredibly important to us. We're all going to be depending on that 401(k) money. We should have choice, freedom and the tools to help us make the right choices. It's not in any way that the employer is doing the wrong thing. I think people are responsible for their own retirement and need to make those choices.

NELSON: Now, this service that you offer is Web-based and I have a page up here now. We've gone, we've drilled down off the welcome page into something called balances for a fictional individual called Marion Bass. Why don't you tell me what it, what the differences are between your plan and the traditional 401(k)? WILLIAMS: I think the difference is very important. I think we're the first 401(k) provider who has put investment choice and advice together in a way that is easy to use, personalized for you and I and gives us a custom fit for our portfolio.

NELSON: All right, that investment advice comes from Morningstar. What's, you're touting the fact that Morningstar is an independent source of advice on this, right?

WILLIAMS: Yes. I think that's very critical. Morningstar, a well recognized company, good advice, been in this business for 20 years. What's really going on, Brian, is particularly with the statement shock that's out there right now is people are screaming for help and I think what we've done is put the tools in place that lets an individual get that help when they need it how they need it.

NELSON: Well, on this page that we have here, I'm looking at the investment balances of the fictional portfolio here and there are, what, about eight or nine of them right here? But overall there are hundreds of thousands of mutual funds and different stocks that are up for grabs. So, how does the, how does somebody make sense of that?

WILLIAMS: Well, first of all, let's understand that there are actually about 15,000 mutual funds. These are professionally managed tools. This is where the advice and our partnership with Morningstar comes into play, Brian. We'll take that universe, yes, it's a big funnel when you start, but we create a personal profile for you and then Morningstar helps select what the right funds are for you. So it's not a question of tens of thousands of funds, it's which ones are good for you.

NELSON: But how does that, how does a computer program do this? Wouldn't it be safer talking to a human being at the end of a phone or maybe across a desk?

WILLIAMS: Well, certainly we offer that capability as well. For those folks who want that personal help, that's there. But there are some basic investment principles, diversified portfolios, you know, long-term performance of the fund. This is a retirement vehicle. You know, you go through a couple of filters and you get down to a universe that is quite manageable.

NELSON: Well, it still sounds a little risky to me, but I'm sure a lot of people are willing to take that chance.

I want to thank you for joining us this morning, Spencer Williams from Boston. He's with Persumma Financial. And the Web site address is persumma.com, is that right?

WILLIAMS: That's correct. Thanks very much today, Brian.

NELSON: All right, thank you for being with us.

WILLIAMS: All righty.

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