Retirement Plans: Last Week Tonight with John Oliver (HBO)

money, you know, the thing everyone likes to think they're good at despite the evidence provided in every episode of the Suze Orman show. Tina, what do you want to buy? Hi Suze, thank you for taking my call. I would like to buy a Mercedes s550. about $1,400 a month, that's true, they deny you, oh, I want to escape time to believe p.m. bag so Jenai is not even funny I will deny you again I would like to buy a study abroad in Iceland I want to go to the famous moose school and weigh Kovac and get a certification like Elsa Potter this is who I am Deny you that yes , of course, it's because no one should spend $4,000 to get an elf sighting rating.

In fact, if you go

last

week

this quiet night right now, you can print out a free official elf sighting certificate that I promise is just as valid. As the most expensive elf spotting education, now go spot some elves. One of the main reasons Suze Orman denies so many people is because he believes we should all save for our

retirement

, and before we continue, it's important to acknowledge that. There are people who simply don't have the money to do that for systemic reasons that we have addressed before on this show and will no doubt address again on giannios sad tastic' the circus of misery and mathematics, but

tonight

let's talk about those who can save For

retirement

the target audience for ads like this we asked people how much money you think you'll need when you retire, then we gave each person a tape to show how old that amount is, my

last

one is trying to throw it out there a bit Also, yeah , I was trying to stretch it a little further, it took me to 70 years old.

I'm going to have to rethink this, which is actually a pretty creepy ad because it's basically people walking towards their own death date, the only way to do it. have been creepy is if at the end of their tapes they said exactly how each person was going to die, but look, it's true, it's true that since we're all living longer, you should absolutely say for retirement if you can and many of us currently do. We have about $24 trillion in retirement assets and that figure doesn't even include the wealth we have in cap stocks, so let's call it $24 trillion and $32 and a lot of that money is held by financial services companies, so let's talk a little bit about how they work, which I know sounds boring, but as a favor to your future self, it's worth watching this for 20 minutes because you could easily make small mistakes that could cost you a lot in the future, so let's get started with financial advisors.

They're those healthy, friendly-faced experts you see on apps like this think chase wait that's a clear example of false advertising because no one invites their financial advisor to a wedding if Cousin Barbara finds out she didn't get an invitation except you. Chase Guy, is he going to betray you? But there's something you should know about financial advisors, even their name means less than you might think. The Financial Industry Regulatory Authority advises clients to note that Financial Analysts are financial advisors, financial consultants, financial planners, investment consultants or wealth manager are generic terms or job titles and may be used by financial professionals. investment who may not have any specific credentials, so financial analyst is just a fancy term that doesn't really mean anything like brand ambassador or the completely meaningless, completely meaningless John Oliver effect.

But even many well-credentialed financial advisors are paid a commission, so if they recommend something to you it may be because they can make money; in fact, they are sometimes actively incentivized not to act in their best interests. take annuities now, certain types can be very complicated investment products that have high fees and would only be appropriate for certain types of portfolios, but some financial advisors push them hard. Watch how Suze Orman reacts when a person who just inherited $80,000 asked her for advice. We have spoken with a financial advisor. and he recommended that we put it into an annuity.

He knew it. I left before you said I was going to say wait, wait, let me tell you. I can tell you what the financial advisor said today. Did that advisor also tell you that yes Put that $80,000 there. I will earn around $4,000 in commissions. Did he or she also tell you that by chance? Oh he or she, thanks Susie Orman for pointing out that fake financial scammers can be women too. hashtag female crimes hashtag feminism and brokers Boosting annuities may not just be about getting money last year. Elizabeth Warren published a report on sales benefits in the annuity industry, ranging from free cruises to luxury watches, and this is true, this tacky Super Bowl-style ring that is absolutely hideous, but I guess at least it makes easy to spot running backs you shouldn't be working with, hey, nice ring, I'll win, but I guess you didn't understand that running back game for the Green Bay Packers.

Now, it's generally legal for financial advisors these days. putting their own interests before yours unless, and this is interesting, they are what's called fiduciaries because not all financial advisors are obligated to act in your best interest, but fiduciaries are, which is a little strange , it's like discovering that only some restaurant waiters are. forbidden to ejaculate in your soup why is it up to me to ask you what class you are? I return this soup to you. I'm not taking any chances, you take it back, but financial advisors are just one part of this if you're lucky.

Work offers a 401k retirement plan and if so you should probably take advantage of it, but you should also know that they can be a gold mine for financial services companies and while it's not unreasonable for them to get paid to provide a service, they can't do it. There will be many different fees, there are legal fees, trustee fees, transaction fees, management fees, accounting fees, finders fees and the list goes on and on. Honestly, I wouldn't be surprised if they also had an elf detection fee, but remember, thanks for your new certification, no. I don't have to pay it anymore, go find some elves and I think the seemingly small fees can really add up thanks to something called compound interest.

Now whenever retirement companies like Prudential mention it's always a positive if you start with a really small investment by that time. you are ready to retire, you will have grown substantially, it's hard to imagine how something so small can help with something so big, but if you start putting that towards your retirement every

week

, let it grow over time or 20 to 30 years, that challenge retirement. It may not seem so big after all, holy shit, it's just me or the last domino fell too hard, that might be the most disturbing commercial about dominoes that doesn't include the phrase Kali Chicken Bacon Ranch, but compound interest works both ways That is, while your money adds up, your fees can really add up, by assuming you are invested in a fund that earns a 7% gross annual return, they charge you a 2% annual fee for 50 years, the difference between its 5% net and the red line and what you would have made without fees, the Green Line is amazing, you have lost almost two thirds of what you would have had, two thirds of what you would have had is gone, so think about the fees like termites, are small.

They are barely noticeable and can eat away at your future king and one place where your 401k may be full of termites is the funds themselves, generally speaking you can choose between index funds with low fees that are basically just trying to match the average returns of the stock market. or for a higher fee you can get an actively managed fund with experts who will pick stocks for you trying to beat the market and the companies that sell active funds really believe in themselves in MF investment management we believe active management can protect capital in the long term. term active management can take calculated risks active management can try to outdo itself because active investment management is not reactive, it is active, okay, that is not so much a coherent commercial but a drinking game in which you take a drink every The problem with active management is that even many Wall Street experts find it difficult to consistently beat the market, and sometimes there is embarrassing evidence of this, such as when a group of professionals clashed in a stock-picking challenge to a cat named Orlando.

Orlando's method that he launches. a toy mouse in a network of very scientific companies Last year Orlando's photographs earned almost 11 percent, while the prose gained only 3.5 percent. Oh God, let's all agree that The Wolf of Wall Street would have been much better played by that cat because, you know, instead of drugs. There's a bump because instead of drugs his downfall would come when someone blew up a laser pointer at a meeting, but that cat wasn't a complete anomaly. There is increasing evidence that over the long term most managed funds do not perform better and often perform worse. that the market, it's basically the plot of Charlie and the Chocolate Factory, if you stand by doing nothing while everyone else around you will win big and the thing is, this is not a secret, even some of the people who charge those rates know it.

Here's the reality, one of the fund industry's dirtiest secrets is that many people who run other fund companies have index funds in their own accounts and don't talk about it unless they put a couple of beers in them Wow, Sometimes I invest in index funds. It might be the least interesting secret that someone has died. fake doesn't work it's right up there with my favorite movie is the constant gardener and one time in college i got completely drunk and read the entire wikipedia page for rope, like that, like that, don't tell anyone, don't tell them to anyone, between financial advisors, high fees, and underperforming active management, the entire retirement plan industry is a potential minefield and you need to pay attention and the reason we What we know is that earlier this year we decided We wanted to set up a 401k for our employees and you might want to learn from our experience because this is what happened: We contacted the production company behind this show, Avalon Television, and asked them to take care of it a couple of months later we they said we had your plan, it was provided by John Hancock and we said okay and we went back to work, by which I mean we went back to Googling teacup pigs eating ice cream, but but then but.

Then in March, representatives came to our office and gave our staff presentations on the Nu plan. It's the kind of thing no one in their right mind wants to see. Honestly, most of us spend it on our phones. Sticky cup of tea, pig, eat, top hat, eat, shopping. eat beer and boom boom we hit the jackpot but unfortunately for John Hancock our investigation is starting to review the documents and we started adding up the fees which came to a combined 1.69 percent and that was before we paid a fee of $ 24 per person per year and the fees on our funds so they asked John Hancock why the fees were so high and they told us it was normal for a startup plan and a new business and Hancock gave us a lower number at the end. that would reduce over time when we said okay, okay, that sounds good and our researcher said, wait, no, that's not good, that number is still higher than what the experts have told us we want it to be that way , look, leave this we'll figure it out, why don't you all go back to Googling pigs in teacups or whatever you do all day and we were like, "Oh my God, that's a thing that exists" and yeah, it did, That was the rest of our afternoon there as our investigators took Hancock's contract and sent it off. to the financial experts who pointed to a broker fee for a broker of 1% the first year and a half percent after that and remember that could add up we did some very rough estimates and with 35 employees contributing only six thousand dollars a year after 30 years and a half a percentage could Apter could add up to about a million dollars that number was so high you'll never guess what happened Janice in accounting actually gave us a serious chase Caesar one of them yesterday bought cupcakes for the excellent kitchen and adopted a kitten. he named him tuppence so anyway we asked him who this broker is and it turns out he was an Avalon guy who agreed to pay to help them set up and support our plan and we asked him why he didn't introduce us to low cost low cost services .

plans

like Vanguard's and why we're paying them so much and he said, well, first of all, our plan was probably too complicated for Vanguard and it did a lot of things for us, like acting likeour financial advisor, although as now know that that term does not necessarily mean much;

In fact, if you visit our website right now, you can print a free official financial advisor certificate and that's it, congratulations and although our broker has other credentials, when we asked him if he was a fiduciary, Unsurprisingly, he said no as far as to his fees, he said they would go down and last night he sent us an Excel spreadsheet showing how they could be reduced as our fund assets grew. Unfortunately, on that spreadsheet he made a mistake, which meant no interest on our funds. composed correctly and when we pointed it out to him, he sent a second sheet showing that his original calculations had been off by more than ten million dollars, which does not inspire confidence in the man who, as he repeatedly reminded us, was helping us navigate through our complicated plan now, our lawyers right now say I have to tell you that both the broker and John Hancock stated that their fees would be reduced, that they are competitive within the industry and that they are worthless for the services they provide, although you should know that we decided from the beginning. pay almost all of our employees' fees because we were so embarrassed by the situation we had them in and we're going to leave Hancock and the broker and I guess you've seen this. prove that they will be happy to let us go just so he knows that we will replace both of them with that stock picking cat because he seems to really know every part of him and tell him that this is if he doesn't pay close attention to all of this.

He can really get away from you, but here's the good news: it really doesn't have to be that complicated and it could get easier. In April, the Department of Labor issued a final rule requiring all advisors who handle retirement accounts to act as fiduciaries starting next year, and that's great because the financial services industry fought hard against this rule, even launching Terrible attack ads, you may have seen one like this on TV, it's these new regulations they're pushing in Washington that worry me, they want to make it really difficult. to get advice from a financial advisor no more help from a even with our IRA and 401k savings only if we want to pay a lot more I will never get the information we need we will call our senators ok ok to be honest my only The conclusion of that ad is that that guy is definitely a man, it's so obvious that you have to drop the non-threatening wife persona, kick him to the curb, and although the rule was enforced anyway, five lawsuits have been filed by financial services groups alleging it. attack and Lawmakers in the House and Senate passed a resolution that attempts to repeal that fiduciary rule, although just a few days ago the president vetoed it and, by the way, I think that is something that we will probably see much later because the President The last Obama's year in office seems to be going from a bipartisan solution to goodbye Felisha and look, I'm not saying this whole thing isn't complicated, we spent weeks trying to understand our own 401k plan, but for the average person trying to save for the retirement.

It doesn't have to be so confusing, the truth is that as long as you remember a few key things, you'll probably be fine and we wanted to summarize them for you, so when you're ready or able to save for retirement, come. Come back and play this video from this exact location, enjoy Hi, I'm Billy Eichner and I'm here with a bunch of King tapes and I'm using them to show people how much money they needed to save for retirement, look at you, oh you. you're so precocious one small thing these are fees that's your record keeping fee that's your closing fee that's your monthly participation fee that's your 12b - one fee that fee goes to some brokers you don't even know and that's your fee for not knowing about a fee and this is what you have left to retire, try ribbon dancing with this, you sound like an idiot, the problem is that idiots like Karen here make shitty decisions when it comes to what to do with their money, Karen, yes If you had four thousand dollars, would you invest it in your 401k or go to elf school in Reykjavik outside of school?

No, you plan your furrow. 1k idiot, the only elf you should study is Kristin Chenoweth, she is a delight, come here Kristin Chenoweth, really. I love home and who wouldn't want to go to Reykjavik, okay, it's not the Tony Awards, wow, wow, that was Kristin Chenoweth. The point is that the best advice most experts can give you is to do five things, number one, start saving now, actually start. save 10 years ago invent a time machine use it to go back and start saving money then kill they are Hitler yeah average people like you and let's face it you are very very average you should probably invest in low cost index funds and leave it like that. alone, you should check it as often as you google if Gene Hackman is still alive or not about once a year and if he's still alive he's writing novels now the third thing if you have an advisor ask if he's a fiduciary if they say no run if they say yes, but they wear a tacky Super Bowl ring, if they say yes, what are they wearing, a class ring, which has nothing to do with this.

I just think it's very strange when a grown man wears it. a class ring due to fiduciary number four as you get older gradually switch your investments from stocks to bonds here's a way to remember it every time they pick a new james bond gradually switch more stocks to bonds and then ask yourself again if daniel craig is really attractive, what do you think Doris? Oh, it's so bread no, no, no, it's not, it looks like a blonde chimpanzee and a tuxedo and you know it, oh, I wish this was a bleep, finally try to keep your rates like your milk below 1% because only like compound interest so fees owed and even 1/10th of 1% can really cook you up like that Kristin watch out oh that reminds me of one last piece of advice don't forget to die Billy I'm not dead Kristen now You're even shorter, oh. stop coughing disgusting sorry retirements there are no Christian channels because you were harmed in the filming of this piece