Some Teachers Need Tough Love

It is easy to blame insurance companies and greedy brokers for the awful state of the 403(b) market. There is no disputing their role in this mess. It would be unfair to say they are the only culprits.  Individual responsibility and poor choices play a large part, as well. It is time to create a new culture of candor.

A recent article in The Wall Street Journal  described an interesting new corporate movement. It is called “radical candor”, “mokita”, or “front-stabbing.” This involves giving workers a direct, and sometimes painful, critique of their ideas or behavior.

While the intentions are correct, bruised egos and hurt feelings are often the result. Many feel the temporary pain is worth the long-term results.

I told my wife we should do this with family members regarding their “questionable behavior.” Needless to say this did not go over too well.

I have decided to shift my new strategy to Teachers. We have a crisis on our hands regarding teacher’s retirement plans. This calls for tough love.  The mindset of, “Everyone makes the Honor Roll” will not work anymore.

I have seen some pretty bad decision making in my experience as a teacher and RIA in the last twenty years or so, and it’s time to end the victimization mindset that has become all too prevalent.

In the words of famed investor, Ray Dalio, “It is more important to evaluate people accurately rather than kindly.”  Here are ten “mokitas” or the truths that many are afraid to say out loud.

These are some examples of poor choices I have seen many teachers make regarding their finances. These decisions have nothing to do with sleazy insurance salespeople, surrender fees, or sales charges.

  1. Sending your kids to sleepaway summer camp for $8,000-10,000 annually, when you have little or no money saved for their college education.
  2. Spending $100 a week going out to lunch and professing to have no extra money to contribute to your 403(b) plan.
  3. Driving a car with a $750 a month lease and having no concern that your retirement account has exhibited less growth than Donald Trump’s immigrant fan club.
  4. Watching Vanderpump Rules, Real Housewives of New Jersey, and the Kardashians, but claiming you have no time to “understand” your finances.
  5. Adding a pool, media room or, (fill in the blank) to your home and saying this will be your retirement fund due to your residence’s perceived increased value.
  6. Complaining you have no extra money to save but not using your summer off to add more skills or start a small business.
  7. Saying that investing is “too risky” as you merrily text your way down the road while driving.
  8. Planning on inheriting money without considering the possibility that your older parents may live very long, get very sick or both and deplete all of their funds.
  9. Spending thousands of dollars a year on sports tournaments and athletic trainers thinking this will get your kids “a free ride” to college.
  10. Borrowing money to throw lavish parties for events like Bar-Mitzvahs, First Communions, and Sweet 16 parties when various future retirement needs are being ignored.

I am certainly not perfect. I could make a list of 100 things regarding stupid decisions in my own life. The point is: to truly care about people requires honesty. All of the above listed items I have personally seen and tried to fix.

In the end, it is easy to blame others for our problems, get offended when people tell us the truth and take our ball and run home. To be successful with money, the focus needs to be on things we can control.

Making bad decisions and blaming others fall into this category. Instead of being offended, reflect upon your own behavior. These are things where no legislation or political reforms are needed. Accepting constructive criticism could end up being the most meaningful change you make regarding money.