BATON ROUGE, LA. — Like many of his co-workers, Bradley Simon had put in decades at the Exxon Mobil refinery, building up a stout 401(k) retirement account and enviable pension benefits.
So he listened carefully to the investment broker's pitch that he should seize a head start on the golden years.
"He said, 'Why are you still working?' " Simon recalled. "He said, 'I can make you more money staying at home.' "
At 54, Simon quit his job making ethylene and turned over more than $700,000 to David L. McFadden, a broker for Omaha-based Securities America Inc. McFadden promised to keep the portfolio growing and told Simon that he could safely withdraw $65,000 a year for living expenses.
Then the stock market tanked. Simon's savings dropped even more than the market, 65% over two years.
Regulators later said McFadden defrauded his clients by exaggerating the returns they could expect under his program, steered them into overly risky investments with high fees and encouraged them to withdraw more than they could afford.
Simon had to sell his condominium on southwestern Louisiana's Vermilion Bay and go back to work, this time hauling oil equipment to distant cities with a used truck.
"That's my epitaph: 'This guy was stupid,' " said Simon, sitting at the kitchen table of his home in Vermilion Parish, deep in Cajun country. "I'm the rock star of stupid."
As guaranteed pensions are replaced by 401(k) plans, more and more Americans have been left to make their own investment decisions for their retirement savings. As Simon's experience shows, the results are sometimes tragic.
Americans now have $2.9 trillion in 401(k) accounts and similar plans that are largely funded and controlled by workers.
When employees retire, companies are under no obligation to offer guidance on how to manage the money. Most do not, said Don M. Blandin, president of Investor Protection Trust, a nonprofit company that promotes financial education.
"The increasing responsibility on individuals to manage their long-term financial security has reached an urgent stage in American society," Blandin said. "Too many people are getting scammed, and too many people are becoming targets."
Regulators last month banned McFadden from working as an investment broker for life, saying his actions squandered the savings of dozens of Exxon Mobil Corp. retirees and others in the Baton Rouge area.
Common pattern
