Investing In Hypocrisy

James Glassman of Tech Central Station says that AARP needs to make up their mind when it comes to equity investing and retirement:

The President’s plan will likely allow workers to put up to four percentage points of what they now pay in taxes into a small number of broadly diversified portfolios of stocks and bonds.

This is hardly radical. Half of American families already own mutual funds, and most AARP members are retirees who don’t pay into Social Security anyway, so they won’t be exercising the option. But those facts don’t stop the AARP from painting a frightening picture that equates investing with casino gambling.

In one ad, labeled “misleading” by the nonpartisan watchdog, the AARP shows a wild cocoa trading pit with the headline, “Winners and Losers are stock market terms. Do you really want them to become retirement terms?”

Another AARP ad features a man and woman considering the Bush plan and saying, “If we feel like gambling, we’ll play the slots.”

But the AARP is talking out of both sides of its mouth. It says that stock and bond investing is like playing a slot machine at the same time it promotes stock and bond investing by selling 38 mutual funds to its members and taking a cut from each sale.

As former Sen. Alan Simpson (R-Wyo) once said, “I never saw the AARP do anything that would hurt their business.”

Among the AARP funds are far riskier choices than advocates of Social Security reform would ever offer to American workers: for example, a Latin American stock fund, a junk-bond fund, and a fund that holds shares of companies based in such highly volatile markets as Indonesia and Russia.

AARP Services, Inc., the lucrative business arm of the AARP, entered into a deal with Scudder Investments to sell mutual funds to its members as part of a special affinity program. According to a prospectus, Scudder pays AARP an annual fee for the use of its trademark that ranges from .05 percent to .07 percent of assets. That can come to a lot of money. One fund alone, Scudder Growth & Income AARP, manages $5 billion.

The hypocrisy is breathtaking. AARP’s website carries solid information about how to invest wisely, but the organization’s anti-Social Security ads make investing – even under the tough restrictions advocated by reformers — look like a game for dumb suckers and out-of-control gamblers.


Ironically, Glassman says that AARP’s house brand funds aren’t exactly getting stellar write-ups by Morningstar, the veteran mutal fund research and tracking firm.



Trending on PJ Media Videos

Join the conversation as a VIP Member