Nickel adds to Mom’s to do list:

1..  Read your social security statement for you.

2.  Tell you when you are capable of retiring.

3.  Add your social security monthly payment to your 401k monthly income.

4.  Tell you how to find an accountant.

5.  Tell you how to find an estate attorney.

6.  Subject you to senior fraud and Ponzi schemes.

7.  Have access to all your social security earnings information, directly, creating unprecedented potential senior fraud.

Investment News, reported in this article yesterday, “Financial planning platforms target Social Security benefits data for online integration” that workplace advisor, Financial Engines, is trying to strike a deal with the Social Security Administration to get a data feed of your social security benefits directly.  Betterment, a so-called “Robo-Advisor”, who Citibank has invested in, is also working on a similar strategy, as is Morningstar’s Hello Wallet.  What do these three firms have in common?  They all are designed to create a “learned helplessness” and simply offer services that they charge a fee for, that you can determine on your own through ready available information, now all available online.  However, if you are willing to give them a piece of your social security check to have them do it for you, that is your choice, but many in retirement today are faced with watching their pennies closely.

The article stated:

“That’s because Financial Engines, Betterment and HelloWallet have recently struck a partnership with the SSA to develop software to incorporate Social Security data for individuals automatically onto their platforms. It is yet one more of the government’s attempts to assist soon-to-be retirees with their financial planning.”

We caution our Nickel readers, the government, your tax dollars, have already invested significant amounts in informing every American what is available for your social security.  It is all right there at their website and you also get an annual statement telling you exactly how much you will get on a monthly basis, how much your spouse will get and what the maximum is for your every household each year.  If you have any questions call the social security administration or email us here at Nickel.  There are a few alternatives with a two person household in determining how to maximize your benefits, but read one of the great reviews on the strategies.  Remember someone is paying for these tech firms to develop the software integration and these firms are not non-profits, which means you are paying to have them tell you all about your social security benefit, all available at the Social Security Administration.

The costs to society are too great in combatting the potential senior fraud that will ensue through have a salesforce armed with access to American’s social security benefits.

Nothing is free.  Financial Engines, Betterment, Hello Wallet (Morningstar) are all set to take part of your social security check through a fee to tell you when and how to take it.  We reiterate you are capable.  Do not fall prey to their scheme to skim more from your social security check and retirement savings, that the White House Economic Advisor recently reported is costing Americans over $17 billion annually from these conflicted intermediaries, so called “advisors.”

Learned Helplessness and the Financial Advice Industry

Since 401k’s were introduced the financial industry has spent billions of advertising to convince you, that you are incapable of selecting on your own the top US money manager for a simple balanced and growth fund.  It is not complicated if you have the simple tools and benchmarks.  It is the financial advice industry, with conflicted education, that has ensured most Americans feel they are incapable of selecting the top balanced fund in the United States.  They have crafted advertising to ensure you feel dependent on them, to ensure they may receive an intermediary fee. You are very capable, without a salesman, in choosing what is in your best interest.

The latest scheme is to convince the American public that you are incapable of reading a social security statement and determine how to add the income from your retirement plans together with the annual amount from social security.    Yes, there are a few alternatives with two earner families on the timing, but the social security administration is staffed and ready to answer your questions.  Here is where you go online and you can also make an appointment!…for free.

We have warned about this scheme before. Public Radio Shills for Financial Engines.  Don’t fall prey to financial intermediaries seeking ways to take an ever greater piece of your nest egg at retirement.  You can do it!  Here is the Social Security site and email us with any questions


Social Security Adminstration

Social Security Administration:

Social Security Administration Website

Are you giving up growth in your 401K to high fees and poor performance?

Are you giving up growth in your 401K to high fees and poor performance?

A Recent Government Report revealed 401k Participants May Have High Fees and Poor Performance in 401k Managed Accounts

Raise your hand if you know what a QDIA is or a Managed Account.  Wall Street and the Department of Labor have quietly changed the business of 401k investing, without much fanfare from the 4th estate like the New York Times to NPR or MPR Marketplace to your local newspaper. Seems like those personal finance writers/economic editors may just be working for Wall Street.

Whoops, seems like a pretty critical piece of the retirement savings world was not covered for mainstream Americans and after five years of skimming from 401k plans, another study belatedly shows Wall Street has once again duped the retirement investor in their 401k plan.

Qualified Default Investment Alternative (QDIA)

In many companies today, if you do not sign up for a your 401k or “Opt-Out” of making contributions, your Employer will automatically take money from your paycheck, up to 3%- 6%.  And just where do they put your money, without your knowledge?  Typically in a managed account in your 401k.  Why?  It is best for Wall Street, since they do not have to bother with worrying about such a silly thing as audited performance against a benchmark.  That matters to you, not Wall Street.

This new arrangement was approved by the Department of Labor back in 2006.  Wall Street executives, such as Larry Fink of Blackrock, are pushing to take up to 10% of your paycheck on a mandatory basis.  CNBC:  Blackrock’s Fink:  U.S. Needs Retirement Savings Policy.

Mandatory Savings to Fink's ETF's?

Mandatory Savings to Fink’s ETF’s?

What is a Managed Account?

A Managed Account is a fee-based investment management product. They were used for years to manage the tax implications of investment portfolios for high-net-worth investors. Today in 401k’s, managed accounts are often passive investments, like ETF’s, with an additional management fee. Unlike a mutual fund, which is a “registered investment company” under the Investment Company Act of 1940, a managed account does not have to file  their performance with the SEC.

In 2006, Wall Street convinced the Department of Labor to allow Managed Accounts as a new Qualified Default Investment Alternative (QDIA).  Other QDIA’s are Target Date Funds and Balanced Funds.  Managed accounts are the most popular of the three QDIA’s.

Financial Engines is the largest investment advisor providing “Managed Accounts” to retirement accounts, 401k’s.  They do not provide any performance information on their website, nor file it at the SEC.  They equate “their performance” or their “numbers” with how many sales they have made of their services to participants.  This is taken from Financial Engines’s website today:  “Our experience produces results”…

Financial Engines Equates their Sales with "Performance" for Investors

Financial Engines Equates their Sales with “Performance” for Investors

Ironically, they forgot to “prove” their numbers to your employer, as a recent GAO report revealed and appeared to convince your employer on their worth with a fancy pedigree and “advanced technology” over actual performance numbers.

A Recent Government Report Cites Significant Issues with Managed Accounts in 401k Plans

The GAO recently released its findings on significant issues with Managed Accounts in 401k plans.  Here is a link to that report, 401K Plans:  Improvements Can be Made to Better Protect Participants in Managed Accounts.

What are the significant issues, detailed in this report?

  • Your employer failed to ask what the performance of these new “Managed Accounts” are, after all fees!  Or one could say the Managed Accounts providers pulled a fast one on your employer, hyping their economists and fancy “technology.”
  • The Managed Account providers, such as Financial Engines, may be breaching their fiduciary duty on rollovers at retirement or when you leave your employer for a new job, since they make more money if you keep your account managed by them in your old 401k.

Not On My Nickel believes in the old-fashioned way of evaluating and picking a service when significant dollars are involved, such as for a retirement account. Our seven criteria would have eliminated Financial Engines.  Let’s review each criteria:

Financial Engines Evaluated Against Not On My Nickel Seven Criteria

Our strict criteria for selecting a money manager for your retirement nest egg

Our strict criteria for selecting a money manager for your retirement nest egg

(1)  Superior long term results – Failed – Financial Engines is automatically eliminated by NOMN criteria, as they do not publish their performance.  NOMN prefers a minimum of five years of performance that out-performs the relevant benchmark.

(2)  Low management fees – Failed- Their fees are redundant, since in the workplace you already pay a fee for each portfolio manager, so if you pay for Financial Engines’ advice on what mutual fund to select, you are paying twice for investment management selection.  NOMN’s upcoming retirement platform eliminates this redundancy, savings millions for retirement investors.

(3) Low portfolio turnover – Failed.  They do not publish their turnover to employees or publicly.

(4)  Sustainable economic value – Failed.  The Financial Engines model is not sustainable.  About their website reference “advanced portfolio management technology”–appears someone thinks they stole it.  Financial Engines is being sued for patent infringement, Lawsuit Regarding Computer Generated Advice to 401(k) Participants Revs up Against Financial Engines

(5) N/A – Without performance measurement, portfolio turnover and published investment strategy, we have no idea how dedicated their portfolio management team is, since it seems to have a singular focus of an unproven computer model and not experienced investment management team.

(6)  Approved NOMN custodian - N/A

(7)  “Operating philosophy that proves clients come first” – Failed, employees are not given sufficient information from Financial Engines to make an informed decision on whether or not their service is in their best interest.  Without a minimum of five years published performance against other available QDIA’s in their 401k account, an employee cannot make an informed decision.

We all learned in 2008, Wall Street looks out for their interests, not yours.  The recent GAO report on Managed Accounts in your 401k’s without any published performance is your wake-up call.  Where is your paycheck going?  Why are your falling behind?  Financial Engines’ executive compensation grew over 173% from 2012 to 2013, all from taking fees from your retirement nest egg, without even bothering to report their management performance to your Employer, according to the GAO.

Executive Compensation at Financial Engines grew over 173% in one year.  What was your raise in 2013?

Executive Compensation at Financial Engines grew over 173% in one year. What was your raise in 2013?

Time to Not On Your Nickel your retirement savings with our seven criteria and upcoming platform/tools to make sure your nest egg has the best performance and the lowest costs.  Tools and data now readily available help you find the portfolio managers that do act in your best interest and deliver superior performance, without fancy, questionable academic theories and undefined advanced computer modeling. With charts and tools, you can see right through any undefined advanced theories— you have the hard numbers in one chart to make an informed decision.