Guest User

July 23, 2026

The State of Retirement Research | #419 (Jean-Pierre Aubry)

Guest User

July 23, 2026

Jean-Pierre Aubry is associate director of retirement plans and finance at the Center for Retirement Research at Boston College. He oversees and conducts research and data collection, develops new analytic techniques for evaluating retirement plans, and secures funding support. Aubry is recognized as a leading expert on state and local government plans and co-founder of the Public Plans Data.

He also studies single and multiemployer plans in the private sector, as well as state-run auto-IRA programs. He has co-authored numerous studies that have received broad attention, and presented to professional and academic groups such as the Municipal Analysts Group of New York, Moody’s, Standard & Poor’s, and the National Bureau of Economic Research.

Mr. Aubry leads CRR’s retirement plan consulting unit, supporting states and localities considering policy reforms. In that capacity, he has performed large-scale pension analyses for the State of Connecticut and the City of Houston (through the Kinder Institute), as well as smaller initiatives for the city of Philadelphia and the Town of Queen Creek, Arizona. More recently, he has led the CRR’s production of state-specific feasibility analyses to support policy discourse in states considering auto-IRA programs.

Aubry is a member of the Boston Economic Club. He received his B.A. in economics and psychology from the University of Pennsylvania and his M.S. in finance from Boston College.

In this episode, we are joined by Jean-Pierre Aubry, Associate Director of Retirement Plans and Finance at the Center for Retirement Research at Boston College, for a research-driven conversation about retirement investing, financial advice, pension fund management, and inflation. Drawing from years of empirical research, Jean-Pierre shares insights into how households actually invest, how financial advisors shape portfolio decisions, and why investors often hold asset allocations that differ from their own stated preferences.

We also examine the investment strategies of public pension plans, why their increasing reliance on alternative assets has largely failed to deliver superior performance, and the institutional forces driving those decisions. Finally, Jean-Pierre explains how inflation disproportionately affects retirees, why many households overreact during inflationary periods, and why understanding retirement risks—from market volatility to sequence of returns—is critical for long-term financial security.

Key Points From This Episode:

(0:06) Introduction to Jean-Pierre Aubry and the Center for Retirement Research at Boston College.

(6:29) The Center's mission: producing objective, accessible retirement policy research.

(7:03) Why investors' actual stock allocations are higher than their stated ideal allocations.

(9:31) Defaults and target-date funds may explain the gap between desired and actual portfolios.

(10:46) Investors tend to underestimate long-term stock returns and overestimate market risk.

(11:22) Financial advisors generally encourage higher equity allocations by reducing investor pessimism.

(12:06) How advisor compensation can create incentives to recommend higher stock exposure.

(13:42) Research showing advisor recommendations vary more across advisors than across client profiles.

(16:56) The "advisor fixed effect": advisors largely recommend portfolios consistent with their own philosophy.

(18:57) Why working with an advisor often leads investors to hold more equities.

(20:26) How target-date funds work and why auto-enrollment is reshaping retirement investing.

(22:57) Why advisors and target-date funds are generally improving retirement security.

(23:57) The evolution of public pension investing from bonds to equities and then alternative assets.

(30:12) The growing influence of consultants and peer effects on public pension investment decisions.

(31:14) Why pension plans with greater allocations to alternatives have generally underperformed peers.

(32:23) Comparing public pension performance against a simple 60/40 index benchmark.

(36:43) Whether indexing may be a better long-term solution for public pension investing.

(39:35) Concerns about adding private assets to default retirement plan options.

(40:15) Maintaining objectivity while researching politically sensitive retirement issues.

(42:58) Why investment policy remains the "final frontier" for improving public pension systems.

(46:45) Why retirees are especially vulnerable to inflation.

(50:06) How inflation affects retirees differently across age and wealth levels.

(51:52) Why households tend to overspend during inflationary periods.

(53:38) How financial advisors adjust recommendations when inflation and interest rates rise.

(54:11) Why inflation ultimately reduces retirement security for many households.

(54:42) Which retirees face the greatest market risk.

(55:35) Why most retirees have little understanding of sequence of returns risk.

(55:56) Advisors understand sequence risk, but that knowledge doesn't appear to transfer to clients.

(57:23) Why declining equity exposure over time remains the canonical life-cycle investing approach.

(58:25) Jean-Pierre's definition of success: purpose, meaningful relationships, and financial security.

Read The Transcript:

Ben Felix: This is the Rational Reminder Podcast, a weekly reality check on sensible investing and financial decision-making from two Canadians. We're hosted by me, Benjamin Felix, Chief Investment Officer and Cameron Passmore, Chief Executive Officer at PWL Capital.

Cameron Passmore: Great to be with you again, Ben. Episode 419 and this one, as we were just saying to the guest as we signed off, it really is a super interesting and fun conversation about kind of our almost the greatest hits of things we've talked about that really get people energized and learning about. This week's guest that you found, Jean-Pierre Aubry, he's the Associate Director of Retirement Plans and Finance at the Centre for Retirement Research at Boston College, which is a fascinating organization and the research they've done is so varied.

So it was blocked in four different conversation topics and each one is so practical, so pragmatic, so interesting, a little bit shocking, a little bit not shocking, but to have it all wrapped up in nice, tight, completely understandable bundles from JP was a real fun, interesting interview.

Ben Felix: The reason that it comes across as greatest hits of stuff that we've talked about is that they're, JP and his team, are doing research specifically for improving financial outcomes for households, which is kind of what we're trying to do. So it makes sense that the greatest hits would align there and I think what JP brings is his own research on those topics. It's not just a summary of other stuff that we've talked about.

It's a reiteration of it backed by independent research that him and his team have done. So I think that brings a really fresh angle to these topics, even if they're topics that we have covered before.

Cameron Passmore: It's also interesting perspective too, I think, in each of the topics in terms of awareness and not just the public, but also awareness of the advisory community. There's some really interesting insights there that you learn about. For example, asset allocation.

Ben Felix: How do financial advisors impact asset allocation? One of the surprising stats, there is some sample bias here, as JP talks about when he brings this data up, but a huge portion of households do work with advisors. Their impact on asset allocation, definitely that was an interesting point.

The discussion on alternative investments and public pension plans, I personally love.

Cameron Passmore: That's like candy for us, right? Let's face it. It was very balanced and as you quite clearly said to JP, it can change.

Ben Felix: I think that's always an important point to bring up that we can look at the last 20 years and say, all these pension funds are not very smart, but that can change in a couple of years. If, and I'm not saying it's going to happen, everyone knows I support index funds and wish that pensions would use more of them instead of all the alternative investments that they use. However, it only takes a couple of years of a big performance swing for all the stuff that they're doing with alts to look really smart.

Anyway, so we did talk about that. We also covered how inflation affects retirees and how the distribution of the inflation effect on retirees changes across different characteristics, retiree characteristics. Talked a little bit about market risk for retirees.

We talked about the financial advisor piece and how financial advisors impact asset allocation, but we also talked about how individual preferences for asset allocation differ from the actual asset allocations that people have, which is also a bit surprising.

Cameron Passmore: Also, he talked about the asset allocation per advisor.

Ben Felix: Yes, that's another big one. If you take, I can't remember how many they had, but five different whatever number, five different profiles call it, of households with different characteristics that you would expect an advisor to give different recommendations to. The recommendations given an advisor are very flat across those five different profiles, but the recommendations from advisor to advisor are very different, which is something we've talked about in the past.

It's called it an advisor fixed effect. Advisors don't do a lot of customization to individual portfolios, but the portfolio from one advisor to the next can be very, very different, which is not great, right? Because one of the things you kind of would expect is customization based on household characteristics, but advisors, as JP talks about, will tend to have their belief on sort of the optimal asset allocation and their recommendations will reflect that more so than a customization based on household characteristics.

That part was also pretty shocking. Not shocking because it backs up other research, but also, I don't know, at least very interesting to see independent research corroborating something that we've talked about in the past. JP is the Associate Director of Retirement Plans and Finance at the Center for Retirement Research at Boston College.

He oversees and conducts research and data collection, develops new analytic techniques for evaluating retirement plans and secures funding support. All the research we talked about with him is research that he has done in that capacity. He's recognized as a leading expert on state and local government plans and he's the co-founder of the Public Plans Data, which is a database on public pension plan performance that he uses and other people have used to do research.

He also studies single and multi-employer plans in the private sector, as well as state run auto IRA programs and he's co-authored numerous studies that have received broad attention, which again is what we talked about. He's presented to professional and academic groups. He leads CRR's Retirement Plan Consulting Unit, which supports state and localities considering policy reforms.

He's done lots of analysis in that capacity and talked to lots of different groups. It was really interesting, too, to hear about some of his – because I asked him on the public pension plans piece, you've done all this research showing that public plans are not doing a great job. How do those conversations go?

I thought he had some really interesting insights on that, what people say behind closed doors. Anyway, great conversation. As you said, Cameron, greatest hits, but with some independent corroboration of those greatest hits from someone who's done a bunch of their own research.

I've followed JP for a while, like every time he puts a new paper out, I'm going to read it. They're always quality, interesting and practically relevant for people making financial decisions.

Cameron Passmore: Love it. Great setup. You're good to go?

Ben Felix: Let's go to our episode with JP Aubry. JP Aubry, welcome to the Rational Reminder Podcast.

Jean-Pierre Aubry: Thanks for having me. Really happy to be here.

Ben Felix: We're very excited to be talking to you. You got some really great research that we're going to talk about. To kick it off, can you explain what the mission of the Center for Retirement Research at Boston College is?

Jean-Pierre Aubry: At the CRR, Center for Retirement Research, our mission is really to produce first class accessible research for the policy community and practitioners in the private sector around retirement policy. It was 1998 when the center was founded. We really built a reputation for being the objective resource on all the major aspects of retirement policy.

Ben Felix: Like I said, you've done a bunch of interesting research. We're going to jump into that now. Can you talk about how investors own asset allocations compared to their desired asset allocations?

Jean-Pierre Aubry: We just did a recent study on this where we looked at what individuals want to hold in terms of stock. We have this huge shift that's been happening since the 80s from defined benefit plans to the defined contribution plans. Defined benefits are the old working at GE your whole life.

You retire after working on the line. You get payments, a check coming in the mail for the rest of your days from the employer you work with.

That was the old way. The new way is the 401k system, which is basically a glorified savings account that you invest in the market. That has its challenges for individuals where they're trying to, depending on the market goes, how that goes, that's how their retirement goes, essentially.

That was not the case under the old model where the check came basically hell or high water. You get the same amount in the mail. Given that risk, trying to understand, given the market risk in 401k's, it's really important to understand how much individuals are comfortable with and whether they are taking on the risk that is right for them.

This research was really looking at that issue. What we did is we surveyed individuals with about $100,000 or more in the markets. We wanted people with money.

To save, you have to have money. You have to have assets. That's the population we're looking at.

We asked them how much they'd like to hold in stock. What's their ideal allocation? If they just thought about it quickly.

On average, we saw that was around 30, high 30s, 37, 38% in stocks. That's pretty low. These are older individuals.

I think our lowest age is 48. It goes up to 70. You're mixing it with people at the tail end, people who may not want any risk.

That's what we're seeing. There actually wasn't that much variation across age. That's the average.

When you look at actual allocations in other datasets, it's closer to among the same basic population of 45, 48 to 70. You basically see holdings are closer to 45, 46, about 10% higher. Takeaway from this was that it seems like actual allocations for individuals are somewhat higher than what their pie in the sky, what their gut tells them for what they would like to hold in terms of stocks and the risk they'd like to be exposed to in the market.

Cameron Passmore: What explains that difference between the actual and desired?

Jean-Pierre Aubry: We're still actually doing some research to understand that, but our hunch is that it's defaults in the retirement system, essentially, potentially TDFs, but there are other defaults before TDFs came about, and other frictions, just the most salient investment in the lineup, maybe equity-heavy, maybe an index fund, that kind of thing. People default to those, whether explicitly or implicitly. That's where they stay.

People also don't make much, usually aren't too active in their retirement accounts. That's what we think is driving some of that. Now, I think an important distinction is also that individuals on the whole have pessimistic views of what stock returns will be relative to what history has said.

There's been multiple studies over time that have confirmed this year after year, repeated surveys show that at any given point in time, individuals always underestimate returns, overestimate volatility, again, relative to history. The presumption is that, or the thought we have is that maybe being a little bit higher than they would desire on their own may not be as bad as what we think, given that most people harbor relatively pessimistic assumptions about stocks.

Ben Felix: Yeah, that is really interesting. It's like people hold pessimistic views and therefore have low ideal allocations to equities, but defaults, salience or whatever, pushes people up to a higher allocation, which is probably a good thing because it's almost like de-biasing their beliefs.

Cameron Passmore: But still not very much.

Ben Felix: Yeah, still not much. That's true. It's still, even in the actual allocations, it's still pretty low, even for an older investor, at least I would say it is.

There can be a lot of variation around that opinion too, which we will ask about in a second. What do you see as the role of financial advisors for retirement investors?

Jean-Pierre Aubry: Their role is what you alluded to before. It's trying to de-bias or just provide more information to help investors, retail investors be better informed. What we see in our data, again, is that those that work with financial advisors are more likely to have higher allocations.

They're more likely to say that working with an advisor changed their opinion of stocks. They're more likely to say that it also, when they worked with an advisor, they were more likely to want to hold more stocks. If you view that from the benefit of the doubt and a generous view of that is that they're helping people correct their innate, pessimistic biases on stocks to hold more ultimately.

Ben Felix: What's the less generous view?

Jean-Pierre Aubry: The less generous view that our data shows is that in many cases, we found a relationship basically between recommending higher allocations to stocks and how the advisor is compensated. Essentially, if they're compensated as a percent of assets, they're more likely to recommend higher equity allocations. The idea here is that your pile is going to grow more if you have it in equities.

If you're getting a percent of that pile, you want them to be more in equities. There's that dynamic also at play. Which one is really driving the story is hard to know.

Ben Felix: That is a really interesting one. I do say this as someone who works at a firm that does charge an asset-based fee, but it's like there's a conflict there for sure. Incentives are also somewhat aligned because the pie growing bigger is yes, good for the AUM advisor, but it's also good for the client.

Jean-Pierre Aubry: At some level, yes. Growing the pile is the ultimate goal, but there's risk that comes with wanting to do that. That's the question, that trade-off.

If there's no change in risk for growing the pile, we should put it all on red and just go for it. I think that's the dynamic and pushing a client too far relative to the risk when the downside is mostly in the client's side. That's the worry.

Ben Felix: Right. Okay. Yeah.

Jean-Pierre Aubry: I think on the whole, it's a positive thing. The differences between where people are and where they want to be is not huge. It's meaningful. It can't be ignored, but it's not they want 20% and they're being put to 80.

Ben Felix: Okay. We understand now advisors are increasing equity allocations for clients, which is probably a good thing, but how much variation is there in advisors and investment recommendations given a client profile?

Jean-Pierre Aubry: Pretty significant, actually. That was really surprising. We did two things in the paper I think you're referring to, or the research I think you're referring to, where we looked at desired allocations on the individual side and then allocations and recommended allocations from the advisor side.

On the advisor side, we basically presented a survey to advisors where we provided four or five prototypical clients and asked advisors, what would you recommend for them? There was less variation than we thought we'd see across the prototypes, the archetypes, and much more variation across advisors. So for any given advisor, the difference across archetypes was very small for what we thought were very different people when we set it up.

Someone who's got a DB in their 70s versus someone who's 40 and has a house. We just had what we thought were very different people and really they didn't see much difference other than if we said explicitly they had a different risk profile, like risk aversion in the term of art.

Cameron Passmore: So this is per advisor, there wasn't much difference across the archetypes.

Jean-Pierre Aubry: Right. So per advisor, there's not much difference across the archetypes given the individual's characteristics, which we thought were materially different. When we set it up, we hoped that they were.

The only factor that led to some variation across the archetypes was when we explicitly changed their risk aversion. And I think this is something that's very salient to advisors. Many times when they're thinking of asset allocation, they'll actually provide their clients like a little worksheet to fill out so they can understand where they are at the risk tolerance scale.

And so moving that around created some changes for any individual advisor, but it was not nearly as much as we saw the kind of shifts, level shifts we saw across advisors.

Cameron Passmore: Can you just expand a bit on what may have explained the variation in those stock allocations? I know you mentioned compensation and specific risk commentary, but are there other factors at play here?

Jean-Pierre Aubry: Yeah, I'm trying to remember specifically some of the things. We looked at risk profile, we kind of set up individuals to have essentially the same overall wealth, but for some it would be in a DB and a little bit in a DC. For others, they would have a house and less in financial assets.

And then obviously the risk profile was another aspect, but we tried to keep the overall wealth similar. It's just hard to change the composition of that wealth and to see what advisors would do. I think it was the test.

So it's housing, DB versus DC. I think we also had something in about whether the person wants to leave money for their child as a factor and the risk tolerance. And the other factors didn't matter much outside of risk tolerance.

Ben Felix: So that's the client level factors, which you did not see much variation across, but then there was a lot of variation. It sounds like across advisors. So each advisor.

Jean-Pierre Aubry: Right. So the idea is that advisors have some number they think is good for people. If I were to kind of summarize what I'd get out of that, is that each advisor has a number they think is kind of good for people.

And regardless of the client profile or the client characteristics, they kind of stay around that number. That number can vary quite a bit.

Ben Felix: Advisor fixed effects, I think it's what it's called in the research. Is that what explains the variation or are there other factors explaining the advisor to advisor differences?

Jean-Pierre Aubry: We didn't see much else actually. I mean, again, the one thing we found was how the compensated effect kind of where you set your level and a little bit about the baseline strategy that they were using, whether it was like a total return strategy or a kind of floor strategy, which kind of promised you a guarantee, a guaranteed level of income. In that case, they're taking on less risk.

They're trying to kind of guarantee some flow, a total return had more risk. So there were some aspects of the kind of strategy that the advisor primarily like to use. But I kind of put that in the bucket of fixed effects.

It really is what the advisor's approach is to this kind of work. Think about total return as the kind of ideal approach for their clients. And then how are they compensated showed up as well.

Ben Felix: From the client's perspective, it's like choosing an advisor is almost like choosing an asset allocation.

Jean-Pierre Aubry: Interesting. I never really thought about it that way, but that's what our data would suggest. Advisors come to the table with their ideas about where to start the conversation.

I think that most advisors probably do their best to hear what the client wants and make some adjustments. This is just a survey, not a real world client to advisor match, but it suggests that they're humans. They come to the table with their own ideas, what good investing looks like. That's where they start.

Ben Felix: So interesting to think about because the client will not come to the table knowing what their asset allocation should be. And so they can't really choose an advisor based on the asset allocation they think they should have. They're just going to get the asset allocation they happen to get from the advisor they happen to choose. It's a funny dynamic.

Jean-Pierre Aubry: They might have a feeling ex-post when they get there, like, oh, that's not quite what I thought I wanted but once he presented it to me with the narrative. But I think you're right. They come to the advisor for some guidance.

They don't often come with much of an idea of where they want to go.

Ben Felix: You've touched on this and maybe the question is redundant, but I want to ask it anyway. How do financial advisors' recommendations actually impact their client's portfolios?

Jean-Pierre Aubry: When we asked individuals who had worked with a client, I think in our survey, just to give you a sense of the population, I think it was like two thirds of our individuals worked with an advisor. These are people with money and assets. So this is not the general population.

That number is really general population. But those who did work with an advisor, they were more likely to say that working with an advisor changed their opinion and it changed their opinion towards more stocks. That was kind of the main takeaway.

So it all hangs together. What we hear from what the advisors recommend on average versus what the individuals say they want on average, how the advisors react to different clients. It all hangs together in that way.

But again, I'm not sure how bad of a thing it is that they nudge clients towards more risk given that their baseline is usually guided in some extent by pessimistic beliefs relative to history.

Ben Felix: I think like you said earlier, it's probably a net good thing. There's that old paper in the Journal of Finance called Money Doctors, which basically argues that that sort of trust-based ability to get people to take more equity risk is the reason that financial advisors can command relatively high fees, even if they don't beat the market.

Jean-Pierre Aubry: I think there's something to that. TDFs, they're starting to take some of that role away, I guess, that you're kind of getting the defaults that are doing that automatically for individuals. We suggest that TDFs are part of the story in our piece.

Being defaulted into a TDF is still relatively uncommon.

Cameron Passmore: Really?

Jean-Pierre Aubry: Most plans don't have defaults.

Yeah. I mean, it's the requirement for a new plan to have defaults just came about with SECURE 2.0. So it's really only new plans that have to have defaults, like auto-enrollment, that defaults you into the TDF. Most older individuals with a 401k or assets were in the system a long time ago, just were.

Even to the extent that there was some voluntary pickup of auto-enrollment for SECURE 2.0, that was minimal. If you're an employer and giving a match, what you hope for is you give them a match and no one enrolls. You gave the benefit, you're lowering people's wages with the presumption that they're going to put some money...

It's overall compensation for the employer. So you're saying, okay, I'm going to give you a wage with the narrative that you're going to be also getting a match from me. And so you're thinking about that whole thing.

If you don't take it, you're lost. So auto-enrollment adds a significant cost to employers because now everybody's going to get a match. So you don't see a lot of voluntary adoption of auto-enrollment.

So the take up of TDFs was more about the lineups, saliency, other things like that. And that was still pretty powerful. TDFs are still through a lot in the space as the investment vehicle of choice, even without auto-enrollment.

But with auto-enrollment coming in, they're going to, I think, take over the retirement space.

Cameron Passmore: Just for clarity, JP, can you just briefly describe what a TDF is in case some listeners don't know?

Jean-Pierre Aubry: So what a TDF is, what that stands for, that acronym is Target Date Fund. And essentially, what it does is it changes asset allocation over time automatically for the investor. So you just put your money in the fund.

It starts off at a high stock allocation generally for younger ages. And as you age, it will decrease your allocation towards stocks and put it more towards bonds. The idea being, as you get closer to retirement, you want to take less risk on your pile.

You want to know what's going to be there. You don't have the long horizon to make up any losses, et cetera. There's a lot of actually very deep and thoughtful theory behind it, economist and financial, economic and financial theory.

But essentially, it's what it's doing. And that's why. Usually, they start off at really high, like 60% or 70% when you're young, even higher than that, going down to around 40 by the time you're 60.

Cameron Passmore: So based on your findings when you boil all this down, what effect do you think advisors and TDFs have on retirement security?

Jean-Pierre Aubry: Generally, I think it's a net positive overall. The fact that most individuals are wary of stocks for reasons that aren't reflected in the historical data. The fact that both TDFs and advisors seem to nudge people towards more exposure is a good thing.

It's going to grow the pile for individuals over time. There's really no way to save for retirement without taking some exposure to stocks. You can't invest in bonds.

No one has enough money in their back pocket to invest in bonds and be able to replace the income they're earning during their lifetime and keep that same income or something close to that same income in retirement from their savings.

Ben Felix: All right. I want to move on to public pension plan investment strategy. And this is part of your research that I found you through, I don't know when, years ago and started following your writing since then.

This was the first taste that I got. Can you talk about how public pension plans typically approach asset allocation and maybe touch on the evolution over time, just how that's changed?

Jean-Pierre Aubry: This is how I cut my teeth as a young researcher, was in public pensions. Started studying them back in 2009 before they were on the radar, I guess is the word I would use for the research, maybe at least. Well, that's even before that.

It was 2006, excuse me, before the global financial crisis where we started studying public pensions as a kind of undergrad RA, essentially. And so I've been studying them for two decades and following their evolution over that time. It's an interesting space because they are government entities entrusted with investing money, which is just not a place where governments usually reside.

It's kind of by design in our system in America where state and local governments in particular, there's supposed to be money in and money out, not holding huge pots. The kind of political risk of that, et cetera, has always been thought to be high. And we'd just rather not have that in our system, the way it's designed.

So this is kind of an odd duck in the state and local government policy world. These huge institutional investors directly playing in the markets in a political economy. The investment evolution of public pensions has been interesting.

I mean, they were basically all in bonds until the 70s. And like everyone else in America, the 80s were equity time. People had seen what had been going on with equities.

They had realized that there was growth potential being left on the table. The perceived risk of equities, I think, was a lot lower then. And so they slowly shifted from basically being in not just treasuries, but mostly municipal bonds to starting to allocate more towards equities, with the thought being that it would be cheaper.

You can grow your pile faster with less money and still provide the benefits to retirees that you're promising. And that, on the whole, worked out pretty well, I would say. The public plans did exactly what they thought.

Their pile grew. And by the 2000s, they had trillions of dollars in aggregate in the markets saved to pay retirees benefits. Cops, teachers, police officers, DMV workers.

And so starting in the 2000s, though, we had a series of downturns. Dotcom bust in 2002, global financial crisis in 2008 and 2009, blip in COVID. And so those bumps really changed how public plans started thinking about stocks in particular.

What happened, essentially, is they shifted away from vanilla stocks and bonds, which they'd done well by up until 2000. They started shifting towards alternatives. Alternatives are basically private equity, more real estate, private, generally, commodities.

I think primarily one of the initial favorites was hedge funds, which are basically more analogous to stocks, but just taking bets. The stocks will go down. It's just a little bit more of taking bets on stocks.

And that part has not turned out well. We should have shown continually that transition. When you look at public plans, those who have made more significant shifts away from stocks, vanilla stocks and bonds, towards these alternatives have underperformed the others.

In particular, those that made shifts after the global financial crisis, which is when a lot of plans said, whoa, stocks are scary. They had seen other plans who had dipped their toe earlier do pretty well, because these markets were nascent. They were underdeveloped, so there were still opportunities.

But they jumped in when the towards the tail end, I think, or tailor end of these trends, they jumped in after 2009. It really underperformed peers. And we've looked at plans against other plans.

We've looked at state and local plans in aggregate against the Basic Index Fund, which is our most recent research. And it's always come up the same, that it hasn't worked. To the extent that it has worked, the gains have just been minimal.

Public plans are in a position where they have to really defend why it's worth all the trouble to make this transition. These asset classes are opaque. They're difficult to explain.

And they're in a political economy where transparency is king. They aren't nimble investors. They can't jump in and jump out of opportunities, because, again, transparency is king.

So to decide they want to make an allocation shift, they have to have five board meetings over the course of a year. By the time they make the leap, whatever they saw a year ago is no longer an opportunity. And so they just aren't, I think, well-suited for this nimble institutional investor game, because they really aren't well-suited to turn on a dime, given market trends.

That's the story of public plans. The shift to equities worked out pretty well since 2000. The shift away from stocks towards alternatives has not been as fruitful and has also come with lots of headaches politically for public plan investors trying to explain what's going on, because they're just such a different animal and oftentimes pretty opaque.

Ben Felix: And fees have gone up and liquidity has gone down.

Jean-Pierre Aubry: And when we study public plans, we actually give them a lot of credit for the things they've done right since the global financial crisis, in terms of there were lots of benefit increases in the early 2000s when the pie was growing after the 80s and 90s and stock run-ups. And so they've kind of curtailed the system of some of the excesses of that period. They've really tried to rectify how they fund the system.

They're more conservative in how they fund and their assumptions and their benefits. In terms of asset allocation, from what I can tell, they're just actually doubling down on this approach of shifting to alternatives. And actually, recent research not done by CRR, but used our database, the public plans database, researcher coming out of Harvard and I think USC, they were asking the same question, what's driving this transition?

Because a lot of it is going from stocks to alternatives, not even getting out of bonds as one more risk, but changing your risk profile. And to do that, you have to have some really strong beliefs that these other things are better than stocks. That's why you'd shift.

And what's driving that belief? And they provide evidence that it's primarily consultants, essentially.

Ben Felix: Yeah, I've seen that paper. It's consultants. And I think, is peer effect another big one in that paper?

Jean-Pierre Aubry: Peer effects, too, yeah. Anecdotally, I think that rings true. I mean, our system is set up where board members are not experts.

They're representatives of factions, and they rely heavily on outside expertise for all the decisions. Actuarily, I think if you're looking towards for any of the whys around what public plans are doing in particular, it's around the professional consultants and service providers they have, because they rarely push back. They don't have the expertise to push back.

It's the same as the individuals. It's like that same dynamic, but we're putting trust in them. So it is what it is.

Ben Felix: Warren Buffett's talked about that conflict with consultants for a long time now, where consultants won't command the fees that they do if they just come in and tell you to buy index funds. There's that funny conflict there. We are going to ask more about the public plans versus index funds research, but have you also found that public plans with higher allocations to alternatives have performed worse than public plans with lower allocations?

Jean-Pierre Aubry: Before we did this index analysis, we had done two papers that looked at the shifts in alternatives and always looking just within public plans. So looking relative to each other, who's done better or worse based on their allocation. And what we found was those that had higher allocations to, and mostly to private equity hedge funds, commodities underperformed their peers.

The real driver of that was hedge funds and commodities. To be honest, private equity basically held its own, but hedge funds and commodities were really drags on public plan performance. And again, in particular, in terms of private equity, prior to the global financial crisis, plans that went into private equity outperformed; after the global financial crisis, they underperformed.

So on the whole, it's a wash for private equity. For the other asset classes, they just were basically a net negative.

Cameron Passmore: Can you talk about the approach you took to evaluating the performance of the pension funds relative to index funds?

Jean-Pierre Aubry: We had to create a benchmark. We were looking at the performance of pension funds relative to indexes. We had to figure out what index are we talking about?

What do we mean in terms of index funds? And so we wanted something that was somewhat representative of overall what public plans are trying to do, because they're kind of trying to present an alternative approach to see if they're doing better than that or not. At the same time, we wanted something that was salient and understandable by the public.

I mean, the point of our research is for it to be accessible. So I think the tried and true, simple 60-40 allocation for stock index and bond index was kind of fit the bill, for what we were looking for. Some can argue that that's not really the risk profile or the risk, the intended risk profile of pension funds, that it might be more like 70-30, and maybe you want to put in some international stocks in there, index international stocks to really kind of map what a passive index approach for public pensions would look like in aggregate and compare.

But you can quibble about exactly. But 60-40 was salient, and it's hard to argue with as kind of an alternative when you're saying, you know, as all this fancy stuff public plans have been doing, you see my hands here, has that really done anything for you? That's what we wanted the readers to lead with.

And I think when you do the other types of index allocations, you still get essentially the same story. It may not be as significant, like the differences, but you still get the same story that public plans underperformed relative to this index approach. But we didn't want to get too caught in that world of trying to match what they're doing too much.

So we looked at this 60-40, basically, the Wilshire 5000, the stock side, and Barclays Ag index on the bond side, 60-40, track that over time, pretty straightforward. On the pension side, we have their actual returns, how they've actually performed year over year for about 250 pension funds in our sample. Clearly, that's not all the cities and towns in America, but it actually is 95% of all the pension fund assets and 95% of all public sector workers are in these plans.

So everything we've left out, all that little tail, they don't add up to much. There are definitely states with a bunch of small towns that have their own little pension. And that's a different analysis that might be interesting to see how these very small plans do, but this is where everybody is, where all the money is.

And when we look at how the larger public plans have performed relative to the index, no matter how we cut it, they underperformed. I think one thing we're trying to do is really look at this many different ways in terms of the time periods. I think that's one knock people always have is because of analysis.

Well, if you're looking from 2009 to 2018, of course, you're going to see this. If you're looking from 2001 to 2008, of course, you're going to see this. There's always this idea that you're cherry-picking your time period for the point you're trying to make.

So we wanted to avoid that. And so we did rolling periods of 5 and 10 years from 2001 to 2018. So we kind of got 2001 to 2005, 2002 to 2007, 2003 to 2008, and we kept doing that.

So you get kind of all these 5-year chunks, all these 10-year chunks. And let's see how many of them end up positive and how many of them end up negative kind of idea. And the majority of the time across all these little ranges from 2001 to 2018, all these 5-year periods, all these 10-year periods, the majority of time, pension funds underperformed the index.

So the point we're trying to make there is, yeah, there were some periods probably here or there where pension funds outperformed. But on the whole, they've lost more times than they've won. Our call to action for public plans from that research was that if you're going to keep doing this, you need to find a way to defend yourself.

Is it worth the trouble anymore to keep doing this? We've looked at all the different periods, all the different times, and it's just hard to make a strong case for this complex approach that pension funds have shifted to over time. And it may not be that indexes have to be the right answer, but it's just this is relative to, I think, more vanilla asset classes at the very least.

You can still do active investment and other things.

Ben Felix: Indexes probably are the right answer though.

Jean-Pierre Aubry: Yeah. That debate is for a different time. But I do agree.

Now is a weird time in the broader stock market. Also, with some of the concentration issues, I can kind of appreciate the argument against indexes a little bit more than I used to given the current situation.

Ben Felix: Yeah, that's fair. Is the Nevada State Pension Fund that's kind of famously an index investor?

Jean-Pierre Aubry: He comes in with ramen noodles every day, clicks one button and goes, oh yeah, something like that.

Ben Felix: And has whatever top quartile performance relative to everybody else.

Jean-Pierre Aubry: Yeah. He doesn't have to defend himself in meetings. It's easy.

Ben Felix: You summarize other research in the paper, so I do just want to ask about it. How do your findings in this research compare to other research that has tried to look at how public plans or just institutional investors more generally have performed by investing in alternatives?

Jean-Pierre Aubry: It jives with our own work from before, showing that allocating away from vanilla stocks and bonds towards alternative asset classes has been a net negative. It jives with the more recent research coming out of Harvard and USC by Emil and Julianne, tries to understand the reasons for the shift, which seems to be kind of a consultant class. And I think importantly, it pushes against the main argument.

Whenever analysts try to look at specific periods to argue against public plan investments, one argument refuting that is always that public plans say, hey, you're cherry picking your period. I am sympathetic to that argument. And so I think a really important aspect of what we did was trying to look at all different periods over time.

Because you can always say something about a given period, the context, what's happening in the world markets. We try our best to kind of nip that in the bud with our approach. I don't think it's hard also for the average individual who kind of follows these asset classes at some level to feel this too.

It's not hard to find a story of private equity not being able to offload their assets, having tons of dry powder, not finding investments of only top or top performers actually doing well. There's a drumbeat of this that I think corroborates the more in-depth academic and academic light, I guess, research.

Ben Felix: You said your sample ended in 2018?

Jean-Pierre Aubry: The recent research we did ended in 2023.

Ben Felix: Okay. 2023. Since then, I mean, I'm just thinking about like out of sample for that research, I don't think things have turned around.

I think it's probably gotten worse.

Jean-Pierre Aubry: Yeah. Which is at the center why we struggle to wrap our heads around the desire to add private assets to 401k lineups. I mean, I get the, everyone should have access.

Ben Felix: Should they though?

Jean-Pierre Aubry: Yeah. Right. I think there was a time people said that about international equities.

There's something there. What I don't think is that people need to be defaulted into it. That's my big red line.

I think a lot of the TDFs being built where people might get defaulted into TDFs with private equity or private assets is a sneaky way of just finding a buyer for the assets no one currently wants right now because they're trying to go to third rounds, fourth rounds.

Ben Felix: You do this research and you show this in pretty solid analysis that's say hard to argue against, and you addressed, as you mentioned a couple of times, some of the common criticisms. Now the research is out there. What kind of feedback do you hear from the actual people that it impacts?

Jean-Pierre Aubry: We are very proud of the fact that at the center, we are seen as objective. Whenever you see our name in the media, quoted in Wall Street Journal or somewhere else on a list or wherever, there's never a qualifier in front of our name, like the left-leaning, the right-leaning, the center, right? It's just the Center for Retirement Research.

That is, we worked so hard to keep that our name qualifier-free, and so we just call it as we see it. There were years where public plans were under serious attack for having egregious benefits. Every time there's a story of a firefighter that went on disability and they caught him on a beach, every public pension plan should be closed down.

We spent years being the defenders saying, actually, you know what? Look at total compensation. They get paid less in wages.

That's why they get a bigger pension. They're actually getting the same money over their time. They're just getting less of it in the front end, more of it in the back end.

You could kind of get that in the private sector, too. We just get, well, all wages, you could just put more of that in your bank account, but no one wants to do that. And I get that.

And so you could be weighted that way, too. But what we found is basically the overall compensation package is the same. There are other times, too, where we had to kind of step up and call it as we see it, which has given us credibility in the public plan space to say the things we're saying now, because a union member once said, I love the Center.

I just don't know if they're with us or against us. That's like two thumbs up for me. It depends on the issue.

And so if we think the issues are wrong. So going back to what you asked about the response here, behind closed doors with investment teams, like CIOs of other pensions, what I do hear is that we're asking ourselves these same questions. They're working within constraints.

They have a board. They have other entities who want to keep costs low. So like shifting away from things that promise higher returns has a cost.

So they're navigating a different landscape. But the investment officers and their teams are definitely on this and trying to figure out, is this really worth it? And how do we unwind if we want to unwind?

What does the next phase look like? And also those in the investment community, especially those who have left the space right to speak more freely. I get a lot of input from those from individuals who used to be a CIO, used to work investment team, but now I'm out.

Let me tell you what it's really like in these rooms kind of thing.

Ben Felix: I've had those conversations too. And those conversations are crazy always.

Jean-Pierre Aubry: And so nothing officially from public plans generally, which I wouldn't expect. I think the crickets is like what I would hope for best, because again, I think we've gained enough respect in the community where they were calling something like this. It's because it deserves looking at and they kind of leave it at that.

Cameron Passmore: So to bring this segment home, how would you articulate the key practical takeaways from your research?

Jean-Pierre Aubry: So for public plans generally, I think it really right at the ship across all facets of public plan administration of the major ones for us in terms of creating a more stable system going forward, other than the investment side. This is the last element. And this one is arguably the most challenging because it will lead to higher costs.

But we think probably over time as they start really internalizing long-term expectations, shifting out of risky assets. The bottom line here is we thought retirement costed X and it actually costs Y, which is bigger. And that reality takes a while to sink in.

And what's really going to reflect that new cost most painfully when they start shifting asset allocation, I understand that. That's been our takeaway of our work since really trying to give public plans kind of the space to start thinking about this shift by continuing the drum beat, while also giving them credit for other things that they've done, which have also been painful and costly, politically costly, has resulted in lower benefits for public sector employees, higher costs for state and local governments. I mean, these aren't easy decisions.

I don't want to make it sound like they should just, like they are easy. There's lots of trade-offs. They don't work in a silo.

But this is the final frontier for public plans, I think, in terms of the last steps they need to do to get their house in order for the long-term.

Ben Felix: Super interesting. It's such a hard problem because it's like, obviously we can't predict the future. Maybe it happens that to your point earlier about the state of the US market, maybe we do have a lost decade or more and private assets all of a sudden look really smart.

We see this in Canada too, where the Canada Pension Plan, which is our actually funded version of social security, sorry. They take a ton of criticism for their active management strategy, which has a ton of alternatives and has underperformed their index benchmark. I mean, there's lots of other stuff they get criticism for related to that too, but that can change in two good years for alternatives relative to public markets.

Then all of a sudden, they look really smart as opposed to not so smart. It's such a hard problem.

Jean-Pierre Aubry: It really is. I'm glad you mentioned that too, because we often look to Canada as our more sober neighbors for thoughts on how to approach this. They had made this shift, and I saw the pieces against their own indexes, which I also give them credit for reporting that and just reporting it and not hiding behind it.

Ben Felix: Well, I mentioned that they have taken criticism for other things around that. They've stopped reporting their performance against their index. They've created a new benchmark.

Anyway, it's a whole thing up here.

Jean-Pierre Aubry: That's too bad. You're right. I think that's all.

I think our former director, who's now kind of an emeritus, she still writes a blog. She did one on Canada when they came out, performance relative to the index, to bring it back to the US because all we do is think about ourselves. It was kind of like, if Canada can't do it, they pay their investors.

You guys actually pay your investment teams real money. You're competing with the private sector in Canada and elsewhere for top-notch investors, where we don't do that in America, for sure. You go to the public sector as an act of service with a pay cut.

So take that for what you will, but in a world where people are playing with money and thinking about money, you're not giving them money. It's hard to think you're going to be getting the best of the best. That was kind of our takeaway from that.

If Canada can't do this, we should be reshaping our approach as well.

Ben Felix: That's an interesting point because they do get paid very well. I mean, that's one of the things Canada Pension Plan Investments has been criticized for is they are paid really, really well and yet they're underperforming. So it's kind of a different angle on what she's talking about.

Okay. That was an awesome discussion. I want to move on to some of the stuff you've done on retirees, starting with inflation.

Can you talk about what effect inflation has on older households specifically?

Jean-Pierre Aubry: So I guess I should back up and say at the Center, we are engaged in kind of a longish term research agenda, assessing various risks in retirement. The paper you referenced earlier about desired allocations for individuals and recommended allocations for advisors comes out of the market risk portion of that series. We've also done health risks, family risk, policy risks, all the risks in retirement and doing research pieces on.

This piece was on inflation risk. It was particularly salient as the risk given what we went through in the wake of COVID and are still going through to some extent today, or more like the repercussions of that we're still going through today. Inflation is not going up anymore, but we still have high prices relative to before COVID.

People feel that. What we saw from our research, what we found is inflation is good if you're holding things like stocks and other things that go up with prices. Businesses, when inflation goes up, those things rise.

It's also good when you have debt, because debt payments generally are fixed. And so everything else is going up. Anything else you own that rises with inflation is going up, but the debt's not.

Your wages are going up with inflation. People often don't think of it that way, but it's happening. Another little side note, there's this cute little research piece that looked at how people view inflation.

When it comes to wages, they see it not being driven by inflation, but only their hard work. The prices of everything else is purely inflation. The raising of your wages, though, has nothing to do with inflation at all.

It's just you and your hard work is what's making it go up. They just don't always appreciate the connection between all of them. So when we look at retirees versus other cohorts, let's think about that.

So retirees often have more fixed income. They don't want to hold less in equities because they want to take on less risk, which means they're not getting some of the gains that equities appreciate during inflation. They also often have less debt, they've paid off their house.

They don't have these fixed mortgage payments that are declining relative to everything else. They don't have wages, which is the primary source of income for workers and those who aren't retired. That's going up.

So they have all these things that are actually making inflation pretty painful relatively compared to other cohorts, less equity, no wage, less debt. It sounds like a good thing, but it can be in terms of your net gains in an inflationary period, you lose that effect. And then they have a lot of fixed income, which doesn't go up with inflation, actually decreases their value as well.

If you're getting fixed income from that, it's also not going up. They're in a particularly tough spot. I think the one good thing for retirees is they have social security, which goes up with inflation.

But for those who have to rely on their financial assets, well, the signals that we kind of think about when we do our research, then all these things matter much more. The fact that your bonds aren't going up, you don't have much in stocks, you don't have debt, you don't have wages. Social security is a small part of what you're relying on.

That is inflation index, but it doesn't matter as much to you. So for retirees, it's tough. Inflationary periods can be tough.

Ben Felix: You kind of touched on this. Can you just maybe more explicitly talk about how the effect of inflation varies across the age and wealth distribution?

Jean-Pierre Aubry: The reasons I just mentioned on the age front, they have these different allocations and often less debt. So I kind of explained the age, differences in the age profile just a moment ago. In terms of wealth, it's somewhat similar the way that that looks.

I mean, if you have less wealth, then you are relying more on social security. That's better for you. In terms of inflation protection, not in absolute terms, what you rely on moves with inflation.

If you have less wealth, then you're likely to still have debt, other forms of debt. And those two things make your, at least relative to inflation, make you kind of better off than the wealthy. That's a little more of a complicated narrative because having more money is always good.

The wealthier individuals have more money, but in terms of how their situation changes, I guess, with inflation, the situation changes more dramatically if you're wealthy because you're relying on more non-inflation index stock to retire. You're relying on financial assets that are more likely to be invested in bonds. You're less likely to have debt because you've paid it off and you rely less on social security.

So as you go up the wealth gradient, you're also relatively more affected in terms of how your situation changes with inflation than those with less, which is a good thing. I think policy-wise, if I was thinking about who can bear periods of inflation, like who can bear some of the downside, it's those with more means. That's the reason social security is inflation indexed.

Those that are at the lowest rung and are really relying on this, they're really relying on it. So it has to move with all the prices. That's kind of what our data show.

Cameron Passmore: So let's keep going on that, JP. How do households tend to respond to inflation?

Jean-Pierre Aubry: I think what you would expect, I think the interesting thing is kind of the magnitude. With the rise in inflation, what most individuals did is they pulled consumption forward. What that means in layman's terms, they spent more of their money right away instead of letting it stay in the bank account and buying it later, which makes sense if you think about what inflation does.

If you wait, things would get more costly. So if I was going to buy something in two years and I see inflation is going up, I'm going to buy it now instead if I can at a better price. And so that was the basic trend that people saved less and consumed more in the current period if they had a belief of high inflation.

What's interesting is that the amount that they pulled forward, at least over the five-year period, was essentially like an overreaction in terms of what it meant for their net wealth and income going forward. And so our behavioral data in terms of how people respond to inflation and kind of decrease in savings and increase in consumption was basically more than they consumed, more than they needed to kind of land where they would otherwise be at the end of the five-year period. So that was kind of the major takeaway.

It's not surprising that people move money forward, but it was just that it was kind of an overreaction given their expectations.

Ben Felix: Did inflation have an effect on household asset allocations?

Jean-Pierre Aubry: It has some, but it was – takeaway was that it was minimal. Like I think we found – trying to think closely, I think it was a minimal effect. I'm not sure if it was even significant, but if it was, the magnitudes were so small that it was a nothing burger as a technical term.

Cameron Passmore: And what about financial advisors' recommendations? Did they change in the face of inflation?

Jean-Pierre Aubry: Yeah. So what we found in our research is that advisors did kind of shift a little bit more, actually conservative, towards kind of fixed income during inflation periods. But that was more we found because of rising interest rates that go along with it, not really quite as like an inflation hedge.

There's two things that often happen at the same time. It makes bonds more attractive. Like if you already hold bonds, but if you're going to go buy them, they have higher interest rates attached to them.

Ben Felix: So when you reflect on this inflation research, what are your biggest takeaways on how inflation affects the retirement security of households?

Jean-Pierre Aubry: Our main takeaway is that when you incorporate behavioral responses, it's a net negative on retirement security because people overreact. Periods of high inflation don't make retirement security any easier. Again, retirees are hit the hardest and people overreact.

The net effect of inflation periods are generally they come out the other side, less secure in retirement than before.

Ben Felix: We talked a little bit earlier about the market risk research because it was related to the financial advisor questions we have. Which retirees, which group of retirees is market risk most relevant for?

Jean-Pierre Aubry: It's most relevant for those living off of it. Totally right. It's retirees who are retired and no longer have prospects of going back into the labor force.

And that's why you see decreased allocations for stocks with higher age. It's kind of an economic theory that wages are a form of bond-like income. When you're working, you can put a bunch of money in equities because your overall portfolio, if you include wages, already has lots of bonds.

And once you retire, you don't have that bond-like income and you're really exposed just to equities. And so risk is much more relevant for retirees who are living on this financial assets and trying to kind of reallocate their income flows because they don't have wages as for bond-like income is important.

Cameron Passmore: I'm really curious. How aware are retirees of the importance of sequence of returns risk?

Jean-Pierre Aubry: Not much.

Cameron Passmore: That was my guess.

Jean-Pierre Aubry: And I think we actually had a survey question in there specifically, and I can't recall exactly what.

I know the result was that they don't have much understanding of that phenomenon and what it means, but I don't think it played a heavy part in our research because of that.

Ben Felix: That makes sense for households. Do financial advisors understand sequence of returns risk?

Jean-Pierre Aubry: They do. Actually, I think our data shows about 75%, I think three quarters of advisors understand the importance of sequence of return risk. What's interesting though is that among, and not even clients, I guess it's retail investors overall, there's actually no difference in understanding sequence of return risk, whether you have an advisor or not.

So even though advisors understand it, it's not clear that it's transferring at all to clients in terms of appreciating the importance of sequence of return risk, in particular when you're retired, because that's when you're withdrawing money and it can have a significant impact whether bad returns come at the beginning or come at the end when you're pulling out money each period to pay for bills.

Ben Felix: Right. We never really defined what sequence of returns risk is, but like you said, it's if you're taking money out of a portfolio and you have multiple bad years of returns in a row, that can be really damaging to the longevity of a portfolio. It is interesting though that households who have advisors don't have a better understanding of sequence of returns risk, but I guess if they're delegating that thinking, maybe it makes sense.

Jean-Pierre Aubry: In the end, as long as they get it right in terms of their execution, whether they only internalize the reason, maybe it's not as important and hopefully financial advisors are helping them do that.

Ben Felix: You talked about as your human capital, which is bond-like decreases over time, your overall risk exposure changes. How should financial asset allocation generally change over the life cycle to deal with that changing risk exposure?

Jean-Pierre Aubry: The canonical approach is kind of how TDFs were designed to be candid. I mean, it should decline over time. As you get near to retirement and get older, that your risk profile should change and decrease your exposure to stocks more towards something that's bond-like.

That's kind of what you see with TDFs, what you see in people's actual practices just for how they feel about the kind of exposure they want, but it's also economic theory that shows that for a life cycle model, that kind of declining exposure to risk, that's what you'd expect.

Ben Felix: In your survey research, how important is input from financial advisors for people actually building out sensible life cycle allocations?

Jean-Pierre Aubry: We don't look at that directly. What our data shows is that it helps individuals hold more in equities. I don't think it's inconsistent doing the right thing, but life cycle model, but we don't really ask directly whether an advisor kind of explains to you how your path should look over time.

Cameron Passmore: Our final question, JP, how do you define success in your life?

Jean-Pierre Aubry: For me, I think success is having purpose. I am fortunate that I feel like I found that in my work. It doesn't have to be your work.

I mean, I find purpose in my family, community, but I feel lucky I've also found it in my professional life. Keeps you going. That's really important.

And then having meaningful relationships as well. Longstanding friends, work colleagues, and not to tie it all back to retirement, but you need some kind of income in your life to kind of enjoy these things and to have the bandwidth to search for purpose, to have the bandwidth to have meaningful relationships. You need to have some kind of baseline security.

Money isn't everything, obviously, and everyone knows that. These other things I'm talking about don't really have to do with money, but having baseline security allows you to do the things that matter in life. And so I think our work is trying to ensure that people, that policies we have and individual decisions people make help them reach that goal.

Cameron Passmore: Great answer.

Ben Felix: That's a really good answer. Money isn't everything as long as you have enough of it.

Cameron Passmore: This has been a great conversation, JP. Really interesting topics. Thanks for joining us.

Jean-Pierre Aubry: It was a pleasure, guys. Anytime.

Cameron Passmore: Awesome. Thanks, JP.

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