PUBLIC SCHOOL teachers’ biggest problem isn’t rowdy students. Instead, it’s their retirement plans that should be sent to the dean’s office.
After leaving my job as a foreign currency trader for an international bank, I became a middle school history teacher. My teaching career lasted more than 20 years. One of the worst things I encountered was the state of public school teachers’ non-ERISA 403(b) plans.
Having a front-row seat to the carnage was not pretty. My co-workers knew I had a financial background, so they often came to me with their statements. High-fee variable annuities and loaded mutual funds littered the crime scene.
After speaking with many teachers, more horror stories emerged. The financial salespeople who sold them this garbage also infected many of their other accounts. Whole life insurance policies and egregiously expensive, advisor-sold 529 plans were popular items on this unhealthy menu, along with non-traded real estate investment trusts in taxable accounts. I was aghast. Right then, I knew something had to be done.
Why are these 403(b) plans so horrible?
According to Spectrem Group, 76% of teachers’ assets are invested in some form of annuity product. In other qualified plans, this would be grounds for massive class-action lawsuits.
How can we put an end to this exploitation? Here are five things my wife Dina and I are doing:
In the end, we believe history bends toward justice. This will be no different. Please help us by sharing this blog with any teachers you know. Every little bit counts when so much is at stake.
Tony Isola works at Ritholtz Wealth Management, specializing in helping educators reach their financial goals using a fiduciary model. To learn more, visit his blog, A Teachable Moment, or follow him on Twitter @ATeachMoment.