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Reynolds is outspoken advocate for overhaul of US retirement system

By Todd Wallack
Globe Staff / May 15, 2011

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Robert L. Reynolds spent most of his career at Fidelity Investments, where he served as second in command to chief executive Edward C. “Ned’’ Johnson III for seven years. But the West Virginia native is now trying to turn around another well-known Boston financial icon, Putnam Investments. He has also become a leading voice on retirement and other public policy issues. Reynolds, 59, recently sat down to talk about Putnam and other topics with Globe reporter Todd Wallack.

What were the most important changes you made when you came to Putnam?

The most important changes were bringing in people where we needed to and leaving areas alone that were doing well. Sometimes that is the hardest thing to do because when you are brought in you want to make changes.

If you look at our total lineup, we still have more work to do on international/global. We have a new fund manager joining us in July, and I think that will be very helpful, but we are also adding to the international/global research team.

What are the country’s biggest challenges going forward?

I think everyone from a macro sense has to be concerned about the deficit. I think there are a lot of tough choices that need to be made and the clock is ticking. Hopefully, the right people are seeing the warning signs. I think the fact that both Obama and the Republican leadership in Congress have come out with ways to address the deficit, especially on the spending side, is a positive step. Now whether they can they get together and really do something remains to be seen.

How concerned are you about the country’s retirement policies?

I think the 401(k) has become America’s retirement system. It covers half of working Americans. The challenge is to make it even better. The Pension Protection Act of 2006 (which allows companies to automatically enroll workers in plans, escalate their contributions, and guide their savings) is working, so why not make it mandatory for all 401(k) plans? There’s a proposal out there called the universal IRA that I think would go a long way toward covering all working Americans. And then you’ve got the public system, which is Social Security. It needs to be fixed.

How would you fix Social Security?

I have a son in ninth grade. He could fix Social Security, but politically it’s hard. You probably have to raise the retirement age. And right now the contribution cuts off at $106,800 salary; you’re probably going to have to raise that. All of these are going to take compromise. I am confident that it will be addressed at some point. And hopefully, it is this Congress.

Why have you spent so much time talking about public policy issues?

I think they are important to the country. One of the things in all these budget discussions that comes up is the idea of doing away with the deduction for retirement. I think anything that goes after personal savings is bad for the country at this point. Because we need to move from the economy we had in 2007 — which was no savings, high debt, your house was your ATM — to an economy where people are saving and investing and creating jobs. I think anything that is negative toward savings is something that every American should stand up and fight against.

What’s your view of the business environment in Massachusetts?

I think if you go back over the last 10 years, Massachusetts has lost more jobs than any other state except one. The bad part is we have lost more population between the ages of 18 and 25. It’s all about jobs. Massachusetts needs to be as business friendly as possible. There are more corporate headquarters in Cincinnati than in Boston.

Let me ask you about the stock market. Any concern we might be at the top of the market?

No, none. First off, if I were to tell you Jan. 1 that the Middle East was going to blow up, we would have one of the largest natural disasters ever in Japan, there would be problems between the President and Congress over the budget and the deficit, you’d say that would be a bad environment to invest. But the market was very strong in the first quarter, which shows we’re in for a strong market. And on top of that, this year it looks like we’re going to have record earnings. And it looks like next year is going to be even stronger. So I’d say for the next year or year and a half everything looks very, very good.

Since you were in the running to become NFL commissioner a few years ago, do you have any thoughts on the labor dispute in football?

Only as a fan. I think the strike will be settled before the season. I just think there is too much involved on both sides.

Just think, you could have been dealing with that.

You wouldn’t have had a strike. Or a lockout.