Some retirement savers want advice to help them choose the best investments or to actively manage accounts. Customer service call centers and websites at financial services companies have received record numbers of inqueries from consumers seeking reassurance about their investment strategy and even a little hand holding ever since retirement account balances faultered last year. But Arkadi Kuhlmann, CEO of the nation’s largest direct bank, ING Direct USA, says most people don’t need advice to meet their retirement goals. He says avoiding fees as much as possible and building an emergency fund to buffer market losses are two of the most important factors to help your nest egg grow. On Friday, I asked Kuhlmann about his retirement plans. Excerpts:
You’ve said that saving for retirement is actually a simple process. Why is that?
Everyone keeps worrying about weight. If you eat less and move more you will be OK with weight. If you are putting money aside to save for things – for that rainy day or retiement down the road – you will be OK for retirement. This actually is not complicated. The whole idea that everything goes up on a straight upward slope is not real. Your health goes up and down. The idea that you can perfectly plan for retirement is not true. If you had to retire this year, you just lost 40 percent of what you had last year. Thinking for the future and building in some big what ifs is probably the biggest lesson in retirement.
Do investors want advice about their retirement accounts or are they comfortable investing on their own?
I think they can probably do it without advice. The people who need advice are basically in very complicated situations. Right now you can get almost any answer you want by two or three mouse clicks. I think there’s an ever growing segment of people who are somewhat cynical and wrestling with trust, so they like the idea of the click. It’s always difficult for people to say goodbye or move on and I think they like the freedom of being able to do that with a click. We also offer no fees and we’re always available online.
Many baby boomers lost a lot of money in the stock market. Do they want someone to reassure them about their retirement prospects?
Those people who have a lot of money, they are worried about how to make it up and if they have time to make it up. As people get into retirement they do have more problems. They don’t have the time to make it up if they lose something. They have a heightened sense of concern and if things go wrong it’s very difficult on the boomers. The boomers also had 50 years of good times. Their party never stopped and Mick Jagger is still singing. I think people have to put more aside or have bigger buffers for their retirement than ever before and I think that’s the great lesson from the last year.
Have you found that most people are comfortable keeping their nest egg with an Internet bank?
Five or 6 years ago there were concerns about older savers not being comfortable with a direct bank. But I think now it’s getting so pervasive. As my mother used to say, ‘We’re older, but we’re not stupid. We can figure out how to do e-mail and use the Internet.’ The Internet is just clicking.
ING customers are generally younger than those of traditional banks. Are your customers interested in saving for retirement?
If you haven’t been in the market, this looks like a very attarctive time. People are starting with small amounts of money or modest amounts between $5,000 and $10,000. Then they choose a modest array of investments. If it’s easy and straghtforward, you don’t have to have a lot of money. They are probably getting in at a pretty good time.
A recent ING Direct survey found that 40 percent of Americans believe the economic climate will force them to delay retirement. Are you planning to work during the traditional retirement years?
I think I will try to continue to serve as long as people think I am adding value. We’re trying to get Americans to save more. I think of retirement as more of a second career rather than retirement. People are going to continue working because people are looking at the economic realities of what they are facing. Your stress and your happiness about what you are doing is very important. Some of our greatest things in this country have been done by people officially in the retirement age. There are a lot of good things that can happen and it isn’t always regulated to the age you are in. The new logic should be, don’t find a young spouse to keep you happy, find a job to keep you happy.