Putnam CEO on Retirement, Baby Boomers' Social Security Needs

This morning, Robert Reynolds of Putnam Investments joined me exclusively on The Opening Bell. Robert Reynolds is the president and CEO of Putnam. He was hired several years ago after a lengthy career as vice chairman and chief operating officer of Fidelity, one of Putnam’s largest competitors.

Since Mr. Reynolds arrived, he has slashed pricing on funds in some cases by as much as 30-35% to become more competitive, and has also accumulated more assets under management and created numerous funds. One of the recent fund announcements is called the Retirement Ready Fund which uses a target date that integrates absolute and relative return fund strategies. Confused? I asked Mr. Reynolds to explain the strategy behind these funds this morning. In essence, a target fund selects a target date when you plan to retire and invests based on the duration of that target date keeping in mind how the asset allocation mix needs to change the closer you get to retirement or the maturity date. Mr. Reynolds believes his target funds are different than his competition because they use other investment strategies to dampen volatility.

Mr. Reynolds has become one of the faces of employer-based retirement savings plans, talking about necessary changes in the industry. This morning he told me, “401(k) defined benefit plans cover 50% of America’s retirement system but I’m concerned about the other 50% who need coverage. The key issue is how to get employees to participate.”

The average baby boomer in this country is 62 years old. There are roughly 76 million baby boomers. They’re becoming eligible for Social Security and he predicts that by 2030, 84 million people will be on Social Security’s payroll. Today, approximately 50 million receive Social Security. It is easy to see why Mr. Reynolds believes the next 5 to 10 years will be “greatest period ever in the history of the mutual fund industry.”