This blog title came directly from a headline in the Sunday Business section of The New York Times. The article focuses on the low regulated 403(b) plans provided to not-for-profit organizations such as schools and churches. The article struck a cord as I too am still suffering as a result of a bad decision made years ago by insiders who established a weak retirement program. This link should take you to the article. To peak your interest to read further, let me quote from the beginning of the article.
“Margaret Jusinski first got to know her investment broker through the breakfasts he provided when he visited her public school in the leafy suburbs of New Jersey, where she teaches middle-school children computer coding and how to build robots made of Legos.
After the bagels, muffins and coffee, the broker made his sales pitch — and Ms. Jusinski bought it. So did many of her colleagues.
The teachers only recently learned how much those meals actually cost them.
Had she been able to choose a simpler, less expensive plan instead of the broker’s costly offering, Ms. Jusinski would have approximately 20 percent more in savings, according to an analysis performed for The New York Times. One colleague would have a balance 50 percent fatter. The list goes on.”
If you have been reading this blog for any period of time, you know the importance of keeping investing fees to a minimum.
While I had no control over a pitiful retirement program, I did speak out against the investment options available to the faculty and staff. At the time I became interested, mutual funds were charging 8.5% load fees and some added 12b-1 fees on top so they could advertise their mediocre products. While I am not up on the current retirement saving rules, back in the 1970s and early 1980s, if five employees approached what is now called Health and Human Resources department, it was possible to request access to different investment vendors. For example, the group of five could request entrance to Vanguard offerings vs. a company that charged much higher fees for their investment products. This moved saved many staff and faculty thousands of dollars – each!
While fees are much lower than they were 30 to 40 years ago, there are still unwitting savers still being ripped off and that is the crux of The New York Times article.