The oppressed are rising up against their oppressors. Teachers are starting to pay attention to the strangle-hold insurance companies have over their retirement funds. More importantly, they are starting to take action against the powerful vested interests that siphon billions of dollars from their retirement accounts annually.
A teacher in Illinois, Mark Eichenlaub, recently sent me a presentation he intends to share with his colleagues and other teachers around the nation. It is a simple but brilliant argument condemning the current state of affairs, but also provides a blue print for future change. The Busy Teacher’s Guide to 403(b)s speaks to teachers directly, without the financial jargon that is often used to confuse and distract.
He goes through the issues that are at the heart of the problem: lack of transparency; high fees; confusing access; and the poor returns that accompany variable annuities found in 403(b) plans.
He poses some excellent arguments supporting the use of low-cost index funds.
Why do people who are supposedly “in the know” use them for their retirement plans, such as President Obama and Hilary Clinton.
Why did Warren Buffet tell Lebron James to invest in these products instead of the expensive annuities 70% of teachers have in their retirement accounts?
Why did some of the smartest people on the planet, Google employees, choose low-cost index funds as their retirement option rather than broker-sold products that teachers are often stuck with?
The answers to these questions prove his point. The only reason teachers are denied access to these investments is due to ignorance and persuasive sales tactics employed by insurance companies.
He runs the numbers and displays the enormous long-term inferior investment performance of broker-sold variable annuities versus low-cost Vanguard index funds.
Most teachers will be shocked to see the devastation that 3-4% yearly fees will have upon their retirement accounts. Mark’s slides serve as a cruel but necessary slap in the face.
Finally, he gives advice on how teachers can band together and demand that their districts provide better investment options.
In the end, this is how the system will change. A grass roots rebellion once begun is very difficult to stop. I am overjoyed that I played a small role in Mark’s decision to take a stand and fight back.
I know there are many more Marks out there. My job is to get them the information so they can also become 403(b) evangelists. The potential army we can raise will put fear into the hearts of large insurance companies who have gotten away with too much, for too long.
Vladimir Lenin once said ” There are decades where nothing happens; and there are weeks where decades happen.” We are at the beginning of some of those weeks.
Read the entire presentation here: The busy teacher’s guide to understanding their 403(b)
