DON’T BURN MONEY TO INVEST MONEY
websitebuilder • May 22, 2015
The 401(k) opportunity is one of the most powerful long-term investment vehicles any employer can offer its employees. Because employees want 401(k) plans, most employers recognize that they had better offer them if they want to at least be equal to the competition for job candidates. That is why so many employers do exactly that. The U.S. Department of Labor states that 638,390 defined contribution retirement plans exist today out of which, 513,000 are 401(k) plans. Nearly 90% of employers with 500 or more employees offer this benefit ( summarized by the American Benefits Council )
Given the significance of the 401(k) plan, anything at all that degrades its value or undermines its effectiveness is reprehensible. The United States Supreme Court seems to agree. In a recently settled case between Edison International and its employees, Justice Stephen Breyer affirmed that employers have a duty to monitor 401(k) investment options to ensure that excessive fees do not accrue to the employees’ financial harm (Associated Press, The Kansas City Star , “Ruling Opens 401(k) Plans to More Suits” May 19, 2015, p. A7):
“ The continuing duty to review investments includes a duty to remove imprudent investments. ”
I am glad to see some legal limelight brought to bear on these kinds of situations for three reasons:
- Employees should not have to endure exorbitant fees to invest their hard-earned money. Even a fraction of a percentage point in higher fees can add up to tens of thousands of dollars over the lifetime of the average 401(k) account. There is no excuse for that kind of fiduciary mismanagement when we have so many reputable mutual fund companies that provide 401(k) custodian services for extremely minimal expense fees.
- Too many employers have been taken in by supposed “salespersons” who offer to provide 401(k) services when in actuality, they are selling expensive load funds, annuities, and even disguised insurance products with steep commissions. (When this happens, grab your wallet and run!)
- Employers and employees will become more informed about the right ways and the wrong ways to run a 401(k) program. Armed with that knowledge, they will both be able to evade the shark attacks.
Is a college degree still worth the investment? It depends of the path you craft.
You need to give serious thought to taming the tiger before you are in its cage.
My transparent reflection about my five-year post-layoff experience, how I navigated it, learned through it, and identified some wisdom that might inspire others.
The earliest days of this series present fundamentally significant leadership content.
We explore the overuse or inappropriate use of the words "honest," "honesty," and "honestly." Much of the overuse or inappropriate use of these words is in contexts that intrinsically message the audience that the speaker is not trustworthy. I call the overuse or inappropriate use of these words in this context HONESTY VALIDATORS because the speaker believes they validate the truth being spoken. We need a solution to this problem. My solution is to replace these honesty validators with CLARITY VALIDATORS. Instead of trying to be honest, try to be clear. Replacing "honest," "honesty," and "honestly," with "clear," "clarity," and "clearly," produces significantly more benefit to the speaker and to the audience.
What the Boeing 737 Max crashes teach us about training, corporate culture, and communication.
Although anyone can and will criticize higher education, millennials are evidently smart enough to know its value. In spite of the horror stories about student loan debt, academic disasters, and wrong career turns, millennials have boasted one of the highest graduation rates of any generation to date. Generation Z may soon surpass them too as Laura A. Scione, managing editor of eCampus News reports : “ Despite growing questions around the value of college and return on investment in tuition, just 25 percent of Generation Z students say they believe they can have a rewarding career without going to college, compared to 40 percent of millennials. Eighty percent of Generation Z respondents and 74 percent of millennials agree that college either has a fair amount of value, is a good value, or is an excellent value. Only 20 percent of Generation Z students and 26 percent of millennials said college has ‘little value’ or ‘no value at all.’ ” Good for them! The statistics remain on their side—and the side of anyone who pursues higher education. Anthony P. Carnevale is the director of the Georgetown University Center on Education and the Workforce. Based on his research, that trend will only continue (Gillian B. White “Those Savvy Millennials” The Atlantic , May 2015, p. 38): " In 1973, 32% of jobs did not even require a high school diploma, 9% required a bachelor’s degree, and 7% required a master’s degree or higher. It is projected that by 2020, 12% of jobs will not require a high school diploma, 24% will require a bachelor’s degree, and 11% will require a master’s degree or higher. " Derek Newton wrote an article entitled “Please Stop Asking Whether College Is Worth It” in which his opening declaration gets right to the point: “ Colleges and universities are still the best, most direct path to a good career that pays well. ” In addition to those insights, the unemployment figures consistently reveal the enduring value of higher education. The seasonally adjusted July 2019 unemployment rate for persons not having a high school diploma is 5.1% ( Bureau of Labor Statistics ). Having a high school diploma drops that rate to 3.6% and some college or a two-year degree drops it further to 3.2%. Pretty good trending, would you agree? Finally, if we look at people having a four-year degree, a graduate degree, or a doctoral degree, the unemployment rate is a low 2.2%. Higher education’s edge is especially clear when you consider the range of these numbers over the education level. Look at the two ends of the spectrum: less-than-high school (5.1%) versus a four-year degree or higher (2.2%). Consistently, regardless of the measured time, the unemployment rate for a less-than-high-school-educated worker is two to four times larger than for the college-degreed worker. This is why, when people seek my counsel about career planning, higher education remains one of my most significant emphases. Education pays. Degrees still rock. Regardless of how good or bad the economy is, regardless of how many individual academic and career disasters can be cited, and regardless of how loudly the antidegree crowd howls, you are still in a better position having a degree than not having a degree. The good news for the millennials and Generation Z is that they have arrived at the same conclusion and now they will enjoy the benefits.