A misplaced sense of shame

In a corporate-America ritual rivaling kabuki in its highly stylized movements, Merrill Lynch & Co. Inc. last week ushered in a brilliant new leader, John A. Thain, to replace its once-brilliant leader, E. Stanley O'Neal.

In a corporate-America ritual rivaling kabuki in its highly stylized movements, Merrill Lynch & Co. Inc. last week ushered in a brilliant new leader, John A. Thain, to replace its once-brilliant leader, E. Stanley O’Neal.

As you may remember, Mr. O’Neal was quite successful in spinning gold securities out of straw mortgages — for a while. But after enough people realized that this transformation was too good to be true, Merrill wound up with lots of straw and an absence of gold, and Mr. O’Neal had to go.

To be fair, Mr. O’Neal was, to some degree, a victim of timing. Aside from the prescient Cassandras, few complained about the fairy-tale mortgage market while the music was playing. Unfortunately for Mr. O’Neal, he was the guy without a seat when the music stopped.

Not to worry. Mr. O’Neal has retired with many millions in parting gifts.

Many of us lesser mortals look at all this and notice that something is missing: a sense of shame.

Obviously, CEOs can’t admit that they are not supermen. If they acknowledged that they are just as fallible as the rest of us, they’d be admitting that their imperial paychecks are ridiculous.

Instead, former pooh-bahs must bear the stigma of mismanagement, which these days — to the relief of the dethroned — couldn’t be more ephemeral. Perhaps Mr. O’Neal and others suffer shame privately, but the social opprobrium now attached to a defrocked CEO is less than that assigned to someone wearing white after Labor Day. Given their virtual free pass, would it be too much for an erstwhile chieftain to at least admit he goofed? No one is demanding hara-kiri, but a modest “I’m sorry” might be appropriate as they pick up their multimillion-dollar goodie bag.

Contrast this attitude with the shame many of your clients may be secretly harboring.

Sure, many boomers are blithely cruising toward retirement on empty, but that’s not the whole picture. Many pre-retirees are anxious about how much they have accumulated, worried that it won’t be enough and ashamed that they weren’t more successful. Russell Investments Group of Tacoma, Wash., which recently conducted focus groups with those approaching retirement, found strong evidence of concern and shame.

But is this shame justified? It’s true that Americans — and especially pre-retirees — could be saving more, but the shortfall is not due exclusively to boomers’ profligate spending. Consider the hundreds of thousands of boomers who can no longer expect income from a defined benefit pension in retirement; or the millions of downsized fiftysomethings whose income will never recover; or the boomers who face unexpected medical expenses that deplete their savings; or 60-year-olds who must care for 90-year-old parents.

Many fretful boomers feel that if they somehow had worked harder or smarter or invested more wisely, they could have averted their current predicament. But maybe they just got caught without a chair when the music stopped.

It’s too bad nobody is going to hand them a multimillion-dollar goodie bag.

Evan Cooper is a senior managing editor of InvestmentNews.