There I was in the middle of a perfect conversation with a 401(k) participant who obviously knew what he was talking about. His knowledge of investments nearly surpassed that of one of those 24-7 Wall Street wunderkinds. And he was a mere shop worker on a factory floor!
I've spoken to hundreds of people just like this guy. They come from modest means, earned a modest education and live a modest living. In fact, they're background is not that much different than the typical financial professional. The only difference is they don't punch computer keys at some desks, they punch the buttons that drive those mechanical beasties which build much of the world's manufactured goods. In other words, they work the kind of jobs that built America. And they're smarter than their often given credit for – especially when it comes to retirement savings and investing.
That shouldn't surprise you. After all, successful retirement savings and investing requires one thing above all else – discipline. You don't need a PhD. in rocket science to know discipline. You just need guts, self-confidence and good old-fashioned determination. These are traits formed in the playgrounds, sandlot fields and, yes, even the streets of our vast nation.
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I love talking to these people. I grew up with them. I went to high school with them. I played football with and against them. Every chance I get to sit down and listen to folks like this just gives me greater hope on our great country, for surely only in a great country can we find an average citizen of this caliber.
And then….
So, like I said, there I was having a good long chat with this veteran employee. He was saying all the right things, hitting all the right chords until, just after he rose from his seat and started to walk back to the shop, he turned around and said, "you know, I like some things about this plan – the mutual fund options, the ability to change my account on-line, the friendly person I reach whenever I call – there's only one thing I don't like."
Given his heretofore positive disposition, this matter-of-fact comment rattled me. "What's that?" is all I could muster.
"The fees," said the man wearing the gray overalls. "I think we're paying too much," he said with an undeniable degree of certainty. "After all," he continued, "we used to not pay anything at all."
I did all I could to keep my jaw from dropping. I knew what he was paying now and I knew what the plan was being charged before. So did the plan sponsor who was there with us. The plan sponsor calmly explained that, indeed, prior to changing the plan provider, there was no requirement to disclose fees. He then went on to say fee disclosure is relatively new and, in fact, under the old provider fees were twice as high as what they were now.
The old man eyed the plan sponsor cynically, just as you might expect a grizzled blue-collar worker to do when a younger man in a nice shiny suit talks to him. The employee clearly didn't believe he used to pay twice what he was paying now. He just as clearly continued to believe his 401(k) plan used to be free, and now it isn't.
Which brings us to the DOL's proposed "roadmap" guidelines for its 401(k) Fee Disclosure Rule. As many industry professionals state, (see "DOL Proposed 401k Fee Roadmap: Merely Ineffective or A Major Plan Sponsor Sandtrap?" March 25, 2014), there are two major obstacles confronting the DOL's "roadmap." The DOL's proposed "roadmap" implies an easy Sunday drive to obtaining fee disclosure.
Unfortunately, 401(k) fee disclosure today generates enough paper to fill a banker's box. In reality, the DOL's proposal represents a treasure map suggesting where to dig first. But, whether you call it a treasure or a road map, there remains one incredibly unbelievable problem. It's that guy I thought knew so much who, in the ended, makes the most boneheaded comment about the 401(k) being free. It's not just him. It's the millions like him.
Roadmap!? We don't need no stinkin' Roadmap. We need a sledgehammer.
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Christopher Carosa
Chris Carosa has been writing a weekly article and monthly column for BenefitsPRO online and BenefitsPRO Magazine since 2011 and is a nationally recognized award-winning writer, researcher and speaker. He’s written seven books, including From Cradle to Retire: The Child IRA; Hey! What’s My Number? – How to Increase the Odds You Will Retire in Comfort; A Pizza The Action: Everything I Ever Learned About Business I Learned By Working in a Pizza Stand at the Erie County Fair; and the widely acclaimed 401(k) Fiduciary Solutions. Carosa is also Chief Contributing Editor of the authoritative trade journal FiduciaryNews.com and publisher of the Mendon-Honeoye Falls-Lima Sentinel, a weekly community newspaper he founded in 1989. Currently serving as President of the National Society of Newspaper Columnists and with more than 1,000 articles published in various publications, he appears regularly in the national media. A “parallel” entrepreneur, he actively runs a handful of businesses, including a small boutique investment adviser, providing hands-on experience for his writing. A trained astrophysicist, he also holds an MBA and has been designated a Certified Trust and Financial Advisor. Share your thoughts and story ideas with him through Facebook (https://www.facebook.com/christophercarosa/)and Twitter (https://twitter.com/ChrisCarosa).
