My Old Man is a blue collar guy. He works with a lot of other blue collar guys. Some are young, some aren’t, a lot of them have kids, but some don’t. A few years ago my Old Man convinced the majority of them to sign up for the SIMPLE IRA because the company matches 3% of total salary. That’s a great deal! It’s free money! At least that’s what I told my husband. We didn’t have a lot of details then but we’ve slowly figured out that the free money is great, but his plan just isn’t that hot.
I won’t even discuss the returns he’s seen because I’ll infuriate myself. I won’t talk about the adviser who tacks on a 1% fee to the expense ratio because he “doesn’t work for free” (also will infuriate me. Just know that his plan was not doing well.
He started asking his owner of this small business questions and he thought he had some answers but later admitted, “I’m a small engine mechanic. What do I know about retirement?” It was true, he didn’t know a whole lot. So I started sending him some basic links on things like expense ratios and how they hurt your retirement account balance. This is a guy putting in $4,000 a month into various accounts with same adviser and I can only imagine the money slipping away. The owner started to imagine this too.
So he made a decision that he was going to pull all of the money from this adviser and he was going to look for a new, cheaper plan for everyone. Great! This just shows that a little financial education can go a long way. I could have accepted that my husband has a crappy plan with crappy, stupidly high fees, but I didn’t. I pounded away at the adviser over the phone until he admitted the fees were so high because he was charging them and restricting what he could put his money in because otherwise he wouldn’t get the great fees. Sorry, Mr. Financial Adviser, I never liked you and I always thought you were shady, and I’m a big part of the big paycheck you’re about to lose. I also don’t like it when people that are supposed to be working for me question my investing theory (“Because actively managed funds haven’t typically proven to be any better than index funds,” or “Because you withheld his money from the market in a downturn so he didn’t lose any more money and you’re supposed to buy low and sell high and also, just stay the course,” are acceptable reasons for me to question your so called expertise as you push me toward things to make you money.)