The Retirement Disconnect
For the past 25 years, I have worked with our clients creating retirement programs that allow business owners to save money for retirement with tax advantages and give their employees a turnkey way to set some dollars aside. Over this period of time, I have also sat down with all types of employees from blue collar to white collar to no collar (my favorite so I don’t have to wear a suit). The one thing that I can say after all this time, energy, and meetings is, “The financial services industry does a really poor job of helping people plan and save for retirement.” Before you jump on the government run 401(k) bandwagon, they are at the core of the problem and it all started the day we went to kindergarten. (I really hope this is not my Jerry Maguire moment.)

Before I move on to the meat of my argument, I want to tell you a story. My oldest son just turned 26. When he graduated from high school he joined the Air Force and went to basic training in San Antonio, Texas. You would think when the new recruits arrived it would be push-ups and marching for days, but the Air Force surprisingly squeezed in one additional course to start the training. Any guesses what the course was? It was a class on how to balance a check book and manage money. I was shocked! But it made sense, for most recruits this would be their first real paycheck and bank account. That brings me to the first disconnect:
Disconnect #1: The Education System
If we all sit and reflect back to our school days from elementary through college, try to remember any moment where you were taught to be sure you make more than you spend, the value of saving early and often, or any other basic money management skill. I can maybe remember a few times we learned about stocks or how money works but nothing about saving and preparing for the future. But I sure remember learning geometry and making pottery! The point being, we should be requiring 2–3 years of basic financial education in high school, along with some sprinkling of modules in elementary school. Make all students leave k-12 education with a basic level of financial literacy.
Disconnect #2: Employers
As I sit with most of my clients who work in the area of human resource and ask them what their needs are for their employees, we always start talking about online tools, how to make changes to their accounts easier and how to streamline functions related to 401(k) administration. These topics fit right in with advertising we see on social media, online and on television. The financial services industry has done a great job of convincing us that all of these great websites and tools are really needed and work really well. But has anyone ever asked the average individual saving for retirement (i.e. 401(k) participant) if this is what they really want or need? Are these tools easy to understand and effective? When we sit down and have real conversations with these individuals who are struggling to put away $100 per month in a 401(k) any guesses what they say? First of all, the last thing they want to do after work is go home and sit at their computer (or phone) and go through a ten minute retirement assessment. Secondly, most of these tools seem easy to understand by design but can still be complex with the terminology and how people see and learn numbers. Finally, the vast majority say they appreciate having someone sit down and walk through the tools with them, explain the steps, and EDUCATE them on how to use the tools and read the results.
Disconnect #3: The Industry
The entire financial services industry is built on gathering assets (money) because most financial firms make money by using other peoples’ money. I don’t mean this in a negative way, only that the motivation to educate revolves around this one singular goal: Gather assets. The individual person saving for retirement truly wants someone to help them, tell them what to do, reassure them retirement is attainable, and listen to their story. As an industry if we truly want to make a difference, don’t show a warm and fuzzy commercial with a catchy jingle (don’t think of Peyton Manning or that jingle will be stuck in your head all day) but partner with the schools to teach financial literacy. Create a curriculum to help children learn what is right and wrong with money. This is as important to reading and writing. It is essential to us all for survival. The results may not be immediate, but will be lasting.
I truly care about the employees of my clients I have gotten to know over the years. They are the ones doing the work to save, trying to make ends meet, raising a family in some cases, or even trying to reach some form of retirement. It is what motivates us to keep doing what we do and working with our clients. Maybe I should become a teacher and change the financial world one child at a time, I hear they have a great retirement.