Masters in Business – Managing the Shift from Pensions to 401k with Zach Buchwald

Host: Barry Ritholtz (Bloomberg)
Guest: Zach Buchwald, Chairman & CEO, Russell Investments
Date: January 23, 2026

Episode Overview

In this episode, Barry Ritholtz sits down with Zach Buchwald, CEO of Russell Investments, to explore the transformation of retirement security in America—from defined benefit pensions to 401(k)s—and the broader role Russell plays as an institutional and wealth asset manager. The discussion traverses Buchwald’s unique journey from English major at Harvard to leadership in major financial institutions, Russell’s legacy of innovation, the impact of AI and private markets on portfolio construction, fee compression trends, and the public policy landscape for financial security.

Key Discussion Points & Insights

1. Zach Buchwald’s Unconventional Path to Finance

• Educational & Career Background

  • Zach majored in English at Harvard, initially considered law, but got recruited by Lehman Brothers into structured finance. (03:00)
  • “This was not on the docket that I was going to have a career in finance.” — Zach Buchwald (03:00)
  • Ten pivotal years at Morgan Stanley, then 15 at BlackRock, building up expertise in credit derivatives, CLOs, and ultimately institutional retirement solutions.

• Lessons from Wall Street

  • Shifted from arbitrage and “smelling the money” to wanting his work to have larger social impact during the 2008 crisis at BlackRock, helping the Fed and Treasury restructure toxic portfolios.
  • “I moved to BlackRock where I was helping the government, the taxpayers deal with really critical issues... It was a complete reset of my perspective.” — Zach Buchwald (13:44)

2. Russell Investments’ Legacy & Philosophy

• Open Architecture & Innovation

  • Russell, founded in 1936, is a near-century-old innovator—the original pension consultant, OCIO provider, smart beta creator, and index maker.
  • “We build and implement portfolios... using best-of-breed managers and strategies from around the whole investment universe.” — Zach Buchwald (10:18)

• OCIO and Portfolio Construction

  • Bulk of Russell’s $370B AUM is OCIO (Outsourced Chief Investment Officer) portfolios for both institutional and retail clients.
  • Russell uses an open architecture—selecting external managers to avoid conflicts of interest and maintain best-in-class solutions. (24:09)

3. The Retirement Security Crisis: The Shift from Pensions to 401(k)s

• Defined Benefit to Defined Contribution

  • “Half of retirees have access to a pension... In another decade, it's going to be less than a third.” — Zach Buchwald (15:37)
  • The risk of saving, investing, and decumulation is being shifted from institutions to individuals, a trend most Americans are not prepared for.

• Russell’s Mission

  • Focused on helping individuals achieve financial security—through both institutional partnerships (plan sponsors, matching, plan design) and wealth solutions (income, decumulation strategies, diversification).

• Policy Implications

  • Concern that most Americans are not aware of or prepared for bearing retirement risk themselves.
  • “We have not fully processed that within the country that this is a crisis that's coming.” — Zach Buchwald (15:37)

4. Portfolio Innovation: Manager Research, AI & Smart Beta

• Vast Manager Research

  • Russell actively screens 16,000+ managers globally, investing with ~225, using both tech and human insight.
  • “The data is everything... Managers have strategies that make sense one day and then things change... It really has to stay current.” — Zach Buchwald (21:55)

• Smart Beta & Systematic Investing

  • Russell pioneered smart beta in 1985; now systematic strategies still comprise 10–20% of portfolios, mainly for portfolio completion and alignment.

• AI in Asset Management

  • AI is currently used for first-level manager screening, document analysis, and operation tasks. Aspirations are for AI to drive investment insights and manager research to boost performance.
  • “We have a list this long of sort of desired use cases that we're working on for AI... we're still in early innings.” — Zach Buchwald (26:51)

• Backtesting & AI Cautions

  • AI and backtesting rely on the assumption that the future will mirror the past, but change (like AI itself) makes history only a partial guide.
  • “Sometimes the future doesn't resemble the past. Just look at AI and how it's changing so many aspects...” — Barry Ritholtz (27:55)

5. Private Markets and Alternative Assets

• Private Market Exposure

  • Currently ~7% of Russell portfolios are in privates; heavier for institutions, lighter for retail/wealth—expected to grow.
  • “It’s a really important source of return and risk diversification. But with individual investors, you must be cautious around fees, liquidity, and appropriateness.” — Zach Buchwald (29:54)

• PE Industry & Changing Nature

  • Cautions on the future of PE returns as the model shifts to roll-ups and consolidations versus traditional buy-fix-sell.
  • “My vet's office...my dentist—they're all owned by private equity now... That’s a pretty different investment.” — Zach Buchwald (31:48)

6. Fee Compression and Global Trends

• The Ongoing Fee Squeeze

  • Fee compression is most intense in OCIO, less so in private markets. Russell’s open architecture makes it harder to cross-subsidize, requiring a clear value proposition.
  • “We're not in any way immune to fee compression. But if you provide a really good value proposition, it’s not such a big deal.” — Zach Buchwald (33:40)

• Active vs Passive & Global Dynamics

  • Active management, Russell’s primary business, faces greatest fee pressure. Fee landscapes and competition vary globally, particularly against closed-architecture asset managers.

7. Public Policy: Universal Baby Accounts

• National Investment Accounts for Children

  • Inspired by Buchwald’s “$1,000 Baby Account” proposal (originally published in Barron’s), a new law now gives every newborn an investment account, to be compounded over their lifetime. (38:07–41:03)
  • “Fundamentally what it does is it makes investing universal... it’s not the $1,000, it’s about ongoing contributions and compounding over decades.” — Zach Buchwald (39:22)

• Broader Social Impact

  • The aim is education and empowerment—using milestones and family contributions to spark financial literacy and the habit of investing early.
  • “They have to understand the power of compounding and the long term implications...”— Zach Buchwald (45:14)

• Challenges

  • Resistance from both left (entitlement concern) and right (prefer cash stimulus over long-term investing); general hurdle is Americans’ limited exposure to long-term financial planning.

8. Behavioral Finance: Human Nature, Technology & Decision-Making

• Technology’s Double-Edged Sword

  • Account access via smartphone increases temptation to make shortsighted decisions, especially amid volatility.
  • “If you can pull up your phone and in three seconds you see your portfolio is down...that’s how you get to really bad decisions.” — Zach Buchwald (49:41)

• Advice on Staying the Course

  • Markets are volatile; long-term performance requires discipline, not reacting to daily moves.
  • “The goal is not to pull out when you think the market is going to be down... the bounce backs happen faster and stronger than ever.” — Zach Buchwald (50:21)

9. Looking Ahead: The AI Megatrend

• AI’s Next Phase

  • Buchwald is bullish: AI’s positive impact has barely begun to spread beyond the technology sector, like the Internet’s two-phase revolution.
  • “Every sector is going to be transformed, almost every sector transformed by AI as much as it was by the Internet.” — Zach Buchwald (51:33)

• Challenges and Opportunities

  • Expect both winners and losers as industries adapt, but overall value creation and productivity growth should surge.

10. Personal Reflections and Career Advice

• Value of Outsider Perspective

  • Buchwald’s English major and identity as a gay executive gave him the outsider’s lens for problem-solving and innovation.
  • “Sometimes that being an outsider can actually be a good thing. That it can help you re-underwrite situations and come at it from a different angle.” — Zach Buchwald (59:32)

• Advice for Young Professionals

  • Study what you love; writing and communication remain invaluable—everything you write is a reflection of you. (57:10–58:38)

• Mentorship and Inclusivity

  • “We want folks that have different kinds of backgrounds and approaches... Embrace that outsider’s point of view.” — Zach Buchwald (57:10)

Notable Quotes & Memorable Moments

• “The risk has shifted...from organizations like companies and the government to the individual. We have not fully processed that within the country that this is a crisis that's coming.” — Zach Buchwald (15:37)
• “Russell was the original ‘planner’...the original pension investment consultant. We created that category.” — Zach Buchwald (10:16)
• “I want AI to actually help us with investment insights, with manager research insights that's going to actually drive performance at the end of the day.” — Zach Buchwald (26:51)
• “You have to help [clients] make good long term decisions...not make it easy for people to make bad decisions.” — Zach Buchwald (51:13)
• “The bounce back happens a week. Yeah. Almost instantly and stronger than before. So you know, this is a case where the phone really does not help you.” — Zach Buchwald (50:47)
• “Be yourself... Study what you want to study, do well and, you know, be committed. But if you come at it from an outsider station or point of view, embrace that.” — Zach Buchwald (57:10)

Timestamps for Key Segments

| Topic | Speaker | Timestamp | |-------------------------------------------------------|---------------------|---------------| | Zach’s education and Lehman/Morgan Stanley start | Buchwald | 03:00–04:43 | | BlackRock, the crisis, and shift in perspective | Buchwald | 04:56–06:20 | | Learnings to Russell; open architecture explained | Buchwald | 09:26–11:48 | | Russell’s pension consulting & OCIO innovation | Buchwald | 10:16–12:25 | | Financial and retirement security—the coming crisis | Buchwald | 13:44–15:43 | | Current business lines and manager research | Buchwald | 17:57–19:21 | | OCIO as Russell’s flagship business | Buchwald | 24:09–25:12 | | Smart Beta, open architecture, active management | Buchwald | 25:59–26:51 | | Use of AI in research and operations | Buchwald | 26:51–28:30 | | Private markets and real-world PE impact | Buchwald | 29:54–33:13 | | Fee compression and Russell value proposition | Buchwald | 33:40–36:44 | | Baby accounts, public policy, and universal investing | Buchwald | 38:07–41:03 | | Behavioral errors, volatility, and advice | Both | 48:56–51:13 | | AI megatrend and investment implications | Buchwald | 51:33–53:46 | | Outsider perspective, diversity, mentorship | Buchwald | 53:58–55:34 | | Career and writing advice for young professionals | Buchwald | 57:10–58:38 |

Final Reflections

This episode offers a frank and insightful look at the structural shift in American retirement—from the relative safety of pensions to the uncertainty and opportunity of 401(k)s. Zach Buchwald brings both the macro perspective and personal experience, candidly discussing innovation, technology, policy, and the lifelong impacts of financial decisions. His open architecture approach and mission to democratize investing stand as urgent responses to the evolving roles of institutions and individuals in securing financial futures.

For more insight, check out the full episode on your preferred podcast service and explore previous Masters in Business episodes for further market-shaping conversations.