Warren Buffett
Legendary investor Warren Buffett will step down from his position as CEO of conglomerate Berkshire Hathaway Inc. at the end of this year after nearly 65 years running the company. Buffett generated a 5.5 million percent return since he took control in 1965.
Buffett’s announcement was greeted by a standing ovation at Berkshire Hathaway’s 2025 annual shareholders meeting in Omaha, Nebraska, on Saturday.
Succeeding the 94-year-old Buffett will be 62-year-old Greg Abel, currently the chairman and CEO of Berkshire Hathaway Energy and vice president of the company’s insurance business.
Buffett, known as the “Oracle of Omaha,” has often, over the years, had advice for pension funds and other asset allocators. He said he was no fan of investment consultants and he advocated fixing public pension funding shortfalls.
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“Local and state financial problems are accelerating, in large part because public entities promised pensions they couldn’t afford,” Buffett wrote in Berkshire Hathaway’s 2013 shareholder letter. “Citizens and public officials typically under-appreciated the gigantic financial tapeworm that was born when promises were made that conflicted with a willingness to fund them. Unfortunately, pension mathematics today remain a mystery to most Americans.”
Buffett called on institutional investors to cut out the middlemen—investment consultants and outside investment managers—because of how their fees compound over time.
In Berkshire Hathaway’s 2018 letter, Buffett noted that a $114.75 investment into a no-fee S&P 500 fund in 1942, when he first started investing, would be worth $606,811, pretax, in January 2019. During this period, a $1 million investment by a tax-free institution like an endowment or a pension fund would grow to $5.3 billion.
“If that hypothetical institution had paid only 1% of assets annually to various ‘helpers,’ such as investment managers and consultants, its gain would have been cut in half, to $2.65 billion,” Buffett wrote. “That’s what happens over 77 years when the 11.8% annual return actually achieved by the S&P 500 is recalculated at a 10.8% rate.”
In Berkshire’s 2013 letter, Buffett wrote that a 90/10 portfolio of stocks and bonds (a low-fee S&P 500 fund and short-term government bonds, to be exact), would provide long-term returns “superior to those attained by most investors—whether pension funds, institutions or individuals—who employ high-fee managers.”
“During the next decade, you will read a lot of news—bad news—about public pension plans,” Buffett wrote. “I hope my memo is helpful to you in understanding the necessity for prompt remedial action where problems exist.”
Related Stories:
Warren Buffet Tells Pensions and Endowments to Cut Management Fees
Why Swensen, Buffett Preach Passive—But Bank on Active
Buffett: Public Pensions Are a ‘Financial Tapeworm’
Tags: Berkshire Hathaway, Greg Abel, Warren Buffett
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