Edward D. Jones is broadcasting to its six million clients across the country a 33-minute video that outlines the plan for Social Security reform, but the brokerage giant stops short of publicly endorsing a specific solution.
Titled "The Future of Social Security," the video features panelists discussing reform options, including President Bush's hotly debated private accounts. Other options the panelists discuss are increasing taxes and raising the retirement age, according to The Wall Street Journal.
To stem an anticipated shortfall in Social Security benefits in the next couple of decades, President Bush has floated a proposal that would allow workers to contribute a portion of their earnings to private accounts, most likely mutual funds.
While the President hasn't offered a detailed plan and claims that all ideas to avert a potential shortfall are "on the table," Democrats and powerful organizations like the AARP and AFL-CIO say the 75-year-old pension isn't in trouble. They argue that allowing workers to invest in private accounts leaves their retirement money susceptible to the volatility of the stock markets. In addition, they maintain it would require a changeover that's much too costly, and that the only party that stands to profit from the reform is Wall Street.
The consensus in the financial community is that millions of private accounts would not deliver, at least initially, a windfall in fees to Wall Street brokers. Still, brokers like Edward Jones, Charles Schwab and Wachovia, mutual fund firm Waddell & Reed and the Securities Industry Association, have quietly supported the movement through contributions to the Alliance for Worker Retirement Security, a lobby group in favor of individual accounts.
But as the Journal reports, the Edward Jones broadcast, which was promoted in local newspapers across the country, addressing the Social Security debate with clients as part of a marketing effort is a rare move by a brokerage house.
However, Edward Jones spokesman John Boul said in the report that the firm "didn't advocate any position at all" in the broadcast and that it was intended to be "informational." It begins with a brief history of Social Security set against Depression-era footage. Then the panel, which includes a longtime Edward Jones employee and a popular FOXNews.com columnist, talks about reform.
Schwab and Wachovia officials told the Journal that they don't produce such marketing or educational tools for its clients. A key Schwab strategist, however, recently voiced support for private accounts and another company official has taken part in discussions with lawmakers over legislation that would allow firms like Schwab to oversee management of the accounts. A Schwab spokesperson told the Journal that the firm doesn't endorse any proposal.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.