Tips for Protecting Your 401(k)

" market -- and so on market clearest sign. That traditional retirement plans aren't always risk free today's market maven has a few ideas for anyone with a 401K. That is Robert Reynolds -- Putnam Investments president and CEO his company has over a hundred billion dollars in assets great to see it thank you for being year. Morning elections are you know I am great let's give people some good advice one thing you suggested is. If you're on the sidelines now is the time to get involved get invested. How do we do that knowing what the right with parameters are given all this volatility."

" Why I think it is clearly did. Good advice is a key in this type of market scenario and there's a funny that a good advice after and I also think with the target date funds that we're really created an early nine nieces put people in appropriate asset allocation. Have proved to be a very very valuable tool. People who pulled out of this market. And went in money market funds. Paying less 1%. They -- one of the greatest moves in the market and then both on the equity market and bond market so. Getting the right advice have you right asset allocation is if he does a successful retirement."

" When you and I lance spoke we talked about the fact that there is upwards of fourteen trillion dollars in money market accounts and in deposits across this country which you rightly point out. Are not getting a good return on investment. For people who don't know about target date funds you're you're trying to do something for the retirement community explain how those would work."

" Right we're a target date fund dog is is in invest chewed it today -- term in the future. For instance -- fewer the days Tony forty. It establishes a portfolio. Did it allows you to meet two goals for 24. Forty retirement date because of the length of time there is much more of an aggressive portfolio. As you get closer to retirement. These -- portfolios become much much more conservative. Which is what you want to do because the risk as we -- demonstrated in 2008 for someone close to retirement. Is vague and that's one of the reasons why in our target date funds. We've incorporated -- will return along with relative return products. To dampen volatility but is still allows the function perform and high level."

" target funds had been fraught with some concerns particularly for those people whose target date funds were set to expire. This year or next year many of them losing a tremendous amount of money when you talk about. Ending in absolute and relative performance to make sure that there isn't too much volatility. Layman's terms what does that mean how does that make it is safer investment."

" Right if you're invest and we're umbrella term return which most funds are today. You're investing against the benchmark and again is demonstrated in 2008 a benchmark can go up or down and as. And shown in the fourth quarter they went down considerably. An absolute return phone is set up to provide a positive return. For the target as it is to provide upon return every single year. And the funds we set up a family of these funds that. Targeted -- return over treasury bills will there be some percent 5% 3% 1%. To allow the advisory unit and the investor to choose the risks they want to take in the type of return they need in the retirement portfolios so. By combining relative and absolute. You dampen volatility but still have the opportunity to proforma level you need to have a successful retirement."

" Let's talk a little bit about systemic changes that could occur in mutual fund industry as a result of this recession. You know I have been speaking quite aggressively. About employer based retirement savings plans you've talked to me the past. 76 million baby boomers out there Social Security -- expected to rise to 84 million people looking to. Take from Social Security between now and 2030. What are the real for stand it changes that you would recommend to congress that we look at today."

" Well I think is multiple bad. 41 K defined contribution. Has become America's retirement system. And right now it covers half of working Americans so we need to work on covering the other half I think that's one of -- he system. Then the people participating in a 41 K the key is to get them to participate. This is why. In a pension protection act 2006. They created what is so called big negative election which means everyone's enrolled in the plan. And you lucked out if you want to participate. They also made negative elections around contributions so you contribute your contributions from the actual amount and -- who elect not to. And then the third thing they do they may default funds these target date funds again. Being in the right asset allocation. Is to key for successful retirement and that's without shall return I mean these target date funds do for."

" You are at the forefront of this year -- this is the conversation you've called de -- workplace savings three point now there was a one point know there was a 2.0. In -- three years there you said to me just a couple of months ago Alexis the next five to ten years in the mutual fund industry will quote. Be one of the best periods ever. Tell me why people want to invest in mutual fund companies not just investing your funds."

" Right guy that -- the mutual funds is the best way to invest because they are. Everything an investor wants other words you have professional money management. You have liquidity. The F transparency. You have reasonable fees I think all the things it. Became a negative last year mutual funds offer true you. And I think the next five to ten years are going to be terrific opportunities in the marketplace we just swung to a decade. Relative flat market. And it all through history. When you have ten years of flat market and next have our. -- have significant upside so I really think. With the aging of the baby boomers and the oldest is 62 years old so there come -- And that you have so many people in this demographic range. That they need someplace investor money -- it cannot be investments earning less 1% so they have to be. Stocks bonds and of course absolute return type vehicles. To reach our goals last question I have to ask you. What if anything else you up at night. Well -- guys. I think we're in a period of time were there's a lot of uncertainty in Washington and whether beyond regulatory from. Health care etc. And the market does not like uncertainty. So the sooner we can. -- a lot of these things down and be able to move forward. With a lot of certainty in making decisions we make. I think they're better off the market's going to be and the better off to investors going to be I think. The again I'm one back too this year. This success it managers have had this year especially active managers verses index. Is one store a lot of people because you haven't. Many many equity firms. A large majority outperforming the indexes. And on the bond side getting double digit equity type returns. And one time risk I think is just tremendous for the investor. I'm Rob Reynolds thank you very much for joining us this morning we appreciate it. Okay elections all of us are right thank you KO --"