BLACKSTONE COO: We're the solution to America's retirement crisis

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April 21, 2017 7:23 PM

Following the release of Blackstone's first quarter earnings, the chief operating officer discussed the mounting retirement savings problem in the US.

Tony James, president of the Blackstone Group

America has a massive retirement savings problem.

People are living longer, and they don't have the ability to build up the necessary amount of money to sustain themselves when they leave the workforce.

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the $368 billion private equity and asset management firm, addressed the mounting retirement crisis.

And James said savings accounts that only yield 2% to 4% interest don't cut it.

"The only answer to that, particularly with the markets, where they are, is to move out of purely liquid markets into alternatives," James said.

"Private equity had the highest average gross return, estimated as 13.5%, but had the second highest average net return of 11.4% because the impact of expenses," the report said.

In contrast, hedge funds ranked second last. The asset class that finished last, US other fixed income, included cash.

"If cash is excluded from U.S. other fixed income as an aggregate asset class, then hedge funds/TAA would have been the worst performing asset class with a 17-year arithmetic average annual net return of 5.5 percent," the report said.

James is not the only one on Wall Street who thinks regular savers should be able to invest in private equity and other alternatives. Across the alternative investment space, firms have been pushing for regulatory reforms to allow 401(k) and ordinary investors to invest in their funds. Rachel Butt at Business Insider noted in an article last year:

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That could change under the Trump administration, which has made financial deregulation a cornerstone of its agenda.

In February, President Donald Trump signed an executive order that set in motion a potential repeal of a rule that would have made it harder for financial advisers to give conflicted advice.

The so-called fiduciary rule, which was slated to go into effect April 10, requires advisers to prioritize their clients' interests ahead of theirs. The rule has drawn criticism from Wall Streeters who think the rule limits consumer choice.

The rule has been delayed for 60 days, and potentially could go into effect in June unless action is taken to delay it further or completely repeal the rule.

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