WEBVTT - Masters: automatic enrollment crucial for retirement saving

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<v Speaker 1>Global business news twenty four hours a day at Bloomberg

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<v Speaker 1>dot com, the Radio plus Mobile Act and on your radio.

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<v Speaker 1>This is a Bloomberg Business Flash and I'm Karen Moscow.

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<v Speaker 1>US dot index future is moving lower this morning. Let's

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<v Speaker 1>go to the First Word Breaking news desk for today's

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<v Speaker 1>morning call. Here's Bill Maloney. Good morning Bill, Good morning Karen.

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<v Speaker 1>We are seeing small losses in the equity futures as

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<v Speaker 1>crude futures dropped two and a half percent down futures

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<v Speaker 1>currently lower by twenty six points. SPS dropped five and

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<v Speaker 1>as the futures fall by eleven. The US ten yeld

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<v Speaker 1>at one point nine seven percent and Upan markets are rising,

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<v Speaker 1>led by one and a half percent gains in Germany

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<v Speaker 1>while you're Egyptian stocks jump six percent after currency devaluation

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<v Speaker 1>and dealing news. Fresh Market to be acquired by Apollo

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<v Speaker 1>for twenty fifty share and Starward Hotels gets offered for

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<v Speaker 1>seventy six dollars a share in cash. Finally, some of

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<v Speaker 1>the walls sheet upgrades and downgrades. Tesla raised out perform

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<v Speaker 1>at Bared price target three hundred, mont Santo cut neutral

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<v Speaker 1>versus by at City Group price target ninety five at Goldman,

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<v Speaker 1>Sachs and Fool and WR Grace cut to neutral, J

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<v Speaker 1>and J raised to neutral, and Echo Lab cut to

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<v Speaker 1>sell h C Holdings raised over a JP, Morgan Consolation

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<v Speaker 1>Brands raised it by its sun Trust and finally Far

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<v Speaker 1>America cut to neutral versus by over at ubs. Live

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<v Speaker 1>from the First Breaking news desk, Go on boll Maloney Karen,

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<v Speaker 1>thanks bail to hear live breaking news of your Bloomberg

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<v Speaker 1>type squawk A. Go on your terminal, that's squ a

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<v Speaker 1>w K go, that's a Bloomberg business flash. Tom and Mike, Karen,

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<v Speaker 1>thanks so much this morning Bloomberg Surveillance brought you by Investco.

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<v Speaker 1>Looking for investment views experienced expersure just to click away.

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<v Speaker 1>Go to investco dot com, slash us to subscribe to

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<v Speaker 1>the investco blog and follow at investco us on Twitter.

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<v Speaker 1>We're thrilled to bring you Seth Masters of Bernstein with

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<v Speaker 1>his exceptional expertise on defined contribution, Eisenhower X number of

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<v Speaker 1>other presidents. We get to a risk as set and

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<v Speaker 1>the four and when I see Alicia Munnell up at

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<v Speaker 1>Boston College, tell me of Americans aren't correctly funded? Can

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<v Speaker 1>I state that Arissa was a failure. Well, I think

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<v Speaker 1>the question is what would have happened without it would

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<v Speaker 1>have been worse. Okay, it would have been worse, but

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<v Speaker 1>come on, percent of us, whatever the good will is,

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<v Speaker 1>are actually not even close to where we need to be.

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<v Speaker 1>What do we do right? Well, I think we, first

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<v Speaker 1>of all don't have a lot of perfect choices. What

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<v Speaker 1>we have to do is be realistic. And one aspect

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<v Speaker 1>of that is that the defined benefit system that was

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<v Speaker 1>one of the major focuses of aristom, really is in

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<v Speaker 1>the process of winding down. That's just going to happen

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<v Speaker 1>organically over time, so most people will not have a

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<v Speaker 1>defined benefit pension going forward. Our children are very very

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<v Speaker 1>unlikely to benefit at all from that kind of system,

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<v Speaker 1>and we have to make sure that that wind down

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<v Speaker 1>happens in an orderly fashion, which is tricky because it

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<v Speaker 1>returns are low. The second thing is to find contribution

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<v Speaker 1>plans will in fact to be the future, and exactly

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<v Speaker 1>how that works um will depend on how well organized

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<v Speaker 1>they become. There they've been, they've been subject to some problems,

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<v Speaker 1>they're being tweaked, and I think they can improve. When

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<v Speaker 1>you say subject to some problems, I mean one of

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<v Speaker 1>the biggest problems is people don't well, people don't trust markets,

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<v Speaker 1>and people don't trust themselves to be involved in markets.

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<v Speaker 1>That's actually not true inside define contribution plans. So that's

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<v Speaker 1>what's so interesting. If you look at most individuals, they

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<v Speaker 1>really do save money in their DC plan if they

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<v Speaker 1>are automatically enrolled, and especially if they auto es if

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<v Speaker 1>if they're not, they're afraid of it, are they? Well,

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<v Speaker 1>that's exactly However, once people are in a defined contribution plan,

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<v Speaker 1>if they're especially enrolled automatically and their amount of contribution

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<v Speaker 1>grows a little bit every year as they are employed.

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<v Speaker 1>If they do have that, they tend to stay in

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<v Speaker 1>that plan and they actually don't fiddle very much with

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<v Speaker 1>their allocations. So it's the one place where people will

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<v Speaker 1>have a long horizon. That's the following question is do

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<v Speaker 1>people get the allocations right in that because they don't

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<v Speaker 1>fill with it because they may not feel like they

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<v Speaker 1>know enough about it, and generally they don't. So the

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<v Speaker 1>key challenges having three things be automated, the way you enroll,

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<v Speaker 1>the way you gradually increase your contribution over time, and finally,

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<v Speaker 1>the default option that you get into and increasingly more

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<v Speaker 1>and more companies have moved to a default option, which

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<v Speaker 1>is effectively a carefully designed strategy to start out relatively

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<v Speaker 1>aggressive when you're just starting out your work, and then

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<v Speaker 1>moved to a more conservative allocation, which probably is appropriate

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<v Speaker 1>once you start spending money. I want to rip up

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<v Speaker 1>the script here. With your immense abilities and skills working

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<v Speaker 1>at Princeton, at Oxford and having an international childhood, you

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<v Speaker 1>got languages at a young age. I want you to

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<v Speaker 1>speak to our global audience about how you get kids

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<v Speaker 1>to engage in languages. You speak English, I believe it's

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<v Speaker 1>good English, Mike mand Or and what else? Do you speak? French? French? Yes?

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<v Speaker 1>And and some German. Look. I think I was very

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<v Speaker 1>fortunate because I did grow up in France for part

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<v Speaker 1>of my childhood and just naturally glommed onto language. I

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<v Speaker 1>think it makes it a lot easier if you're in

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<v Speaker 1>a foreign country. Um and look, I think something we

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<v Speaker 1>all wrestle with because we live in a world with

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<v Speaker 1>lots of distractions. It's hard for kids. What do you

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<v Speaker 1>think of? What is it of the Upper West Side?

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<v Speaker 1>And rolls their kids in Mandarin by age four? Is

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<v Speaker 1>Mandarin a good place to start? I actually think it

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<v Speaker 1>is because speaking Mandarin is not as hard as you think.

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<v Speaker 1>It's very tricky to learn the tones, but there isn't

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<v Speaker 1>a lot of grammar in Mandarin. It's really like English,

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<v Speaker 1>a very idiomatic language, and if you get the rhythm

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<v Speaker 1>and the thought process, it's a fascinating speak Mandarin at all. No,

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<v Speaker 1>but they haven't been older. They're not old enough to

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<v Speaker 1>have been automatically enrolled in the programs. One thing I

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<v Speaker 1>read is that if you don't continue to speak it though,

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<v Speaker 1>you lose it rapidly. And that's one of the problems

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<v Speaker 1>with the Upper West Side and rolling their kids is

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<v Speaker 1>they go through eighth grade learning Mandarin and then they

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<v Speaker 1>can't remember. If I kind to get the well, you

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<v Speaker 1>certainly don't keep languages unmust use them some. I wish

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<v Speaker 1>I could use all my languages more. Um. I think

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<v Speaker 1>in Mandarin the thing that it is toughest to keep

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<v Speaker 1>is actually writing, because that that is very complicated. Yeah,

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<v Speaker 1>but I think, Look, I think it's true you have

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<v Speaker 1>to find ways to to stay kind. So what is

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<v Speaker 1>your track for seventh day grade and through high school?

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<v Speaker 1>For our listeners, what's your advice on engaging kids the

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<v Speaker 1>ugly American like me and Mike in languages. I think

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<v Speaker 1>the challenges really defined a way to have children start

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<v Speaker 1>learning a language early in life and then stick with it.

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<v Speaker 1>Ideally that really needs to have to love it, and

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<v Speaker 1>not every kid does, but the bottom line is they

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<v Speaker 1>have to love it. They really have a lot and

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<v Speaker 1>I think a lot of that is down to the teachers.

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<v Speaker 1>A teacher who can really inspire is a wonderful thing.

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<v Speaker 1>Seth Masters, thank you so much. He is with Bernstein

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<v Speaker 1>on your single digit world. And the challenges are defined

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<v Speaker 1>contribution retirement plan A little bit there, Mike, help me

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<v Speaker 1>here Rosetta stone three two four a BiblioTech can we

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<v Speaker 1>got a commercial there? It is extended my extended Uh French.

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<v Speaker 1>I believe that was French radios turning off the radios

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<v Speaker 1>turning off. Coast to coast oil dont seven fifty seven.

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<v Speaker 1>After a huge week last week, Brent crude was above

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<v Speaker 1>forty now down a full dollar eleven cents. Gold fractionally

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<v Speaker 1>lowered four dollars twelve uh the ounce. It is an

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<v Speaker 1>exceptionally busy economic week. Allen Zetner at Morgan Stanley dropping

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<v Speaker 1>a bombshell in her analysis of Janet Yellin's fed. Next,

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<v Speaker 1>this is Bloomberg's surveillance coming up the with all due

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