One of the best ways to get people’s attention is satire, and for this reason, John Oliver did the American public a great service by comically pointing out the insanity of the retirement plan industry. As of this date, it has nearly 5 million views, so apparently he has reached quite a few people. It felt refreshing to hear someone with such a large audience echo what I have been speaking and writing about for so long: the retirement plan industry is a giant ripoff! I especially like how he shed light on annuities which I have written about in a previous post. I also like the analogy he made with termites, describing as tiny and barely noticeable much like retirement fees that can eat away at your future.
Now maybe people won’t be intimidated to ask basic questions like:
- How do financial advisors get paid?
- What do all the job titles in the retirement industry really mean?
- Should I be paying for services in my retirement plan that I never use?
- How much will all of my service fees cost me over my lifetime?
- And what exactly do all of the service fees in my retirement plan really include?
While John Oliver helped stimulate these kinds of questions (not an easy task when communicating with a mass audience), he could have gone further. For example, he touted the importance of the fiduciary designation, but given the complexity of the fiduciary rule, he could have warned consumers that simply being a fiduciary does not guarantee that advisors will act in the best interests of plan participants as advisors can recommend record keepers like John Hancock – the same provider that Oliver criticized and decided to get rid of because of their service fees – yet still not violate their fiduciary status. Furthermore, advisors acting in a “fiduciary capacity” can still charge based on a percentage of plan assets, often resulting in advisory fees completely disproportionate to the level of services provided that still create conflicts of interest.
And while he does a good job pointing out the fact that actively managed funds sold through brokers do not consistently outperform the market, it would have been more helpful if he focused on industry’s addiction to asset-based fees and the retirement plan service providers’ collective desire to deliberately make plans more complicated than necessary in order to sell unnecessary additional services.
Maybe John Oliver will read this blog and consult me if he does a follow up program!