Mutual Fund Companies Invited to Lobby for Social Security Reform
March 15, 1999
NEW YORK - The Clinton Administration would welcome testimonials from the mutual fund industry on the capability of the average American investor to make sound investment decisions for his social security funds, with the help of professionals, said Carolyn Weaver, a member of the Clinton Administration Social Security Advisory Board. Weaver spoke on privatization of the Social Security Administration at a symposium sponsored by MFS Investment Management to mark the 75th anniversary of its mutual funds.
Weaver said that some of the most vocal opponents of Social Security reform on Capitol Hill have argued that the average American does not have the "financial acumen or is too ignorant" to know how to invest in financial markets. She encouraged mutual fund companies to lobby Congress to dispel this misconception. They should inform Congress that with the help of financial advisors and mutual fund professionals, individuals can make informed investment decisions.
Weaver portrayed average Americans as, "better equipped than ever before to take an active role in managing their own money" because of the popularity and proliferation of mutual funds. "The world has been revolutionized by mutual funds," she said.
But there has been a lot of "drum-beating on the Hill that [privatization] would mean nothing more than a bonanza for Wall Street" and that a lot of investors could get burned, she said.
"You provide investors the information they need to make sound decisions," Weaver said.
Weaver invited mutual fund companies to make this point to Congress. The Clinton Administration has drafted its proposal for social security reform without any assistance from the mutual fund industry, she said.
"The work is introspective at this point," Weaver said.
If social security funds were turned over to the mutual fund industry, that would mean as much as a $1 trillion infusion, Weaver said. "There will be people out there competing like crazy to get this business," even if it means 140 million separate accounts with less than $1,000 being invested in each of them annually, she said.