Money man Bruce Bent can be a bit prickly about one of his progeny and how "clean" it is.
After all, as the chairman of The Reserve, an asset management company, he was the first user of a debit card tied to the 401(k) plan, a program he rolled out, one that lately has been getting excoriated by AARP, Sen. Charles Schumer and others as an avenue for workers to fritter away their nest eggs on "impulse" spending, as Newsday reports.
His ReservePlus debit card loan idea got its start about seven years ago, after he encountered resistance while trying to persuade employees around office to join the company's 401(k) plan. Participation at his company was only 35 percent back then, he said.
"What do you mean you can't afford it?" the boss said he asked his employees. "You're giving away money. If you put in four dollars, I'm giving you a fifth dollar. It's a 25 percent return on your investment. Personally, I wish I could get a 25 percent return on my investment."
So there he was, the man who in 1970 pioneered the money market mutal fund -- trillions of dollars in it now -- but who couldn't get his employees to invest the price of a fancy cup of Starbucks in their own retirements.
When Bent pressed workers, he said, they finally told him, "In case I need the money, I can't get the money."
So Bent and his company researched the problem, crafting a service that lets employees put 401(k) savings in a separate money market fund, which they can borrow from whenever they want, with servicing and other fees on top of the interest rate.
Right before ReservePlus was offered to businesses as an option on retirement plans, the chairman tested out the card. In fact, he defaulted -- and he's proud of it. He took out $1,300 and spent it fast.
"I personally defaulted on the loan to see what were the statements we were sending out, what were we doing to encourage people to repay the loan and all the mechanics of it," said the Manhasset resident, 71, who lost the 2001 Nassau County executive race to Thomas Suozzi.
What did he spend it on?
"Wine, women and song," Bent joked. "The best things, right? Maybe I went to Americana and bought myself Ferragamo shoes or an Escada blouse."
Well, it's just what the critics expected.
-- Ellen Yan