Managing the Shift from Pensions to 401k with Zach Buchwald

Summary of Managing the Shift from Pensions to 401k with Zach Buchwald

by Bloomberg

56m•January 23, 2026
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Overview of Managing the Shift from Pensions to 401k with Zach Buchwald

This episode of Masters in Business (Bloomberg) features Barry Ritholtz interviewing Zach Buchwald, chairman & CEO of Russell Investments. The conversation covers Buchwald’s career (Lehman, Morgan Stanley, BlackRock → Russell), Russell’s business model and capabilities (OCIO, model portfolios, manager research, implementation services), and large structural trends shaping retirement security: the migration from defined‑benefit pensions to defined‑contribution 401(k)s, fee compression, private markets, AI adoption, and public policy ideas like universal baby investment accounts.

Guest background

  • Zach Buchwald: English major at Harvard; early career in structured finance at Lehman, 10 years at Morgan Stanley (ran CLO platform), ~15 years at BlackRock (advisory, insurance business, head of institutional business). Joined Russell in 2023 as CEO/Chair.
  • Russell Investments: Founded 1936, manages about $370B (per interview). Known for Russell Indexes (index business now owned by LSE), legacy in pension consulting and as an OCIO pioneer.

Key topics discussed

  • The retirement shift: defined‑benefit pensions → defined‑contribution 401(k)s; increasing responsibility and longevity risk now borne by individuals.
  • Russell’s role: outsourced chief investment officer (OCIO), model portfolios for retail, manager research and open‑architecture portfolio implementation.
  • Manager research & data: Russell evaluates ~16,000 strategies, invests with roughly 225 managers; systematic/smart‑beta tools used to complement active strategies (10–20% of portfolios).
  • Implementation value: transitions, overlays, hedging and completion mandates can generate alpha and manage risk beyond manager selection.
  • AI adoption: currently used for task automation (RFPs, filings, pitch decks); goal is AI‑driven investment & manager‑research insights—still early innings.
  • Private markets: ~7% of Russell portfolios on average today (higher in institutionals); potential to grow but requires careful consideration for retail/401(k) investors (liquidity, fees, suitability).
  • Fee compression: ongoing pressure, especially at OCIO level; Russell emphasizes demonstrating value via open architecture and implementation services rather than product capture.
  • Public policy: support for universal “baby accounts” (government seed $1,000 per newborn in recent legislation) to broaden investing exposure and financial literacy over time.

Main takeaways

  • Retirement security is the central industry challenge: as pensions recede, individuals must manage saving, asset allocation and decumulation—systems and product design must help them do so.
  • Open architecture OCIOs offer independent manager selection and full implementation—this is Russell’s core differentiator vs. closed‑architecture providers.
  • Implementation (trading, transitions, overlays, hedging) is a critical and potentially alpha‑generating part of portfolio delivery, not just manager selection.
  • AI is already helping operationally; the next frontier is reliable AI inputs into investment decision‑making and manager research.
  • Private markets will rise in importance, but product design, fees and liquidity constraints must be carefully matched to investor type (wealth vs. retirement savers).
  • Behavioral and choice architecture matter: making information visible via smartphones can prompt harmful short‑term reactions; plan design should nudge long‑term behavior.

Notable quotes / insights

  • “Financial security is a central challenge for this industry.”
  • “The risk has shifted from organizations… to the individual.” (on DB → DC shift)
  • Russell’s mission: “helping people achieve financial security” via institutional partnerships and wealth solutions.
  • On being an outsider: Buchwald credits his nontraditional background (English major; gay executive) for bringing a different perspective that can be an advantage.

Actionable recommendations (for different audiences)

  • Plan sponsors / employers:
    • Consider offering lifetime‑income options, matching, and better automatic features to offset the DB → DC shift.
    • Use OCIOs for specialist implementation and risk management if internal resources are limited.
    • Design participant communications and portals to reduce impulsive decisions (choice architecture).
  • Financial advisors / asset managers:
    • Emphasize implementation capabilities (transitions, overlays) as client value.
    • Invest in AI use cases that move from task automation to investment insight and manager selection.
    • Maintain open architecture where appropriate to ensure best‑of‑breed manager access.
  • Individual savers:
    • Start early and take advantage of compounding—even small, early contributions materially change outcomes.
    • Favor diversified exposures over single‑stock gifts.
    • Avoid reactive trading based on short‑term market movements; use automatic contributions and long‑term plan design.
  • Policymakers / advocates:
    • Support universal starter accounts (baby accounts) and education programs to widen investing access and build long‑term savings behavior.

Market & policy risks highlighted

  • Fee compression: continues to reshape business economics, especially for open‑architecture active managers and OCIO providers.
  • Private markets: changing composition of deals (roll‑ups, fee structures) may alter historical returns—due diligence and vintage/strategy distinctions matter.
  • Behavioral risk: instant portfolio visibility increases propensity for poor short‑term decisions; plan/UX design should mitigate this.
  • AI concentration: to date value capture concentrated in tech; broader sector adoption will create winners and losers and change many industries.

Short Q&A highlights (rapid takeaways)

  • Smart Beta/Systematic: Russell still uses systematic strategies to complement active managers; systematic typically ~10–20% of portfolios.
  • Private allocation today: ~7% average; expected to grow, especially in wealth channels, but not uniformly appropriate for all 401(k) participants.
  • AI today: useful for operational tasks (RFPs, filing review); aim is to use it for manager research and investment insights.
  • Public policy idea: baby investment accounts with an initial government seed ($1,000) can normalize investing and teach compounding—potential to scale to broader retirement support.
  • Career advice from Buchwald: Be yourself; diverse backgrounds (English major, nontraditional pathways) add value—writing and communication skills are underrated.

Recommended next steps for listeners who want to act on the episode

  • If you’re a saver: check contribution rates, automate contributions, diversify holdings, and resist short‑term selling.
  • If you’re an employer or sponsor: review plan design for lifetime income, automatic enrollment levels and potential OCIO partnerships.
  • If you’re an advisor/manager: audit where implementation can add client value (transition management, overlays) and pilot AI for manager research tasks.

This episode provides a practical, client‑centered view of how investment firms like Russell position themselves to manage the retirement transition, emphasizing open architecture, implementation expertise, and the need to redesign systems to support individuals taking on more retirement risk.