John Oliver Retirement Planning

Sometimes, financial planning tips can come from the most unlikely sources. For instance, John Oliver’s retirement advice–which grew out of a humorous sketch about the (surprisingly interesting) 401(k) retirement industry.

The television comedian’s advice is pretty simple: It centers around the fact that there are hidden fees in many retirement plans, that brokers and advisers aren’t necessarily acting in your own financial interest, and that boring index funds and employer-funded 401(k)s are actually pretty awesome.

Oh, and that learning about retirement is way better when it involves comedians Billy Eichner and Kristin Chenoweth. And giant foam dominoes–lots of foam dominoes.

But you’re busy at work! Hopefully! And don’t have time to watch a 20 minute video clip! Here’s a handy write-up of what Oliver discovered:

Anyone Can Be A “Financial Planner”… And They Don’t Have To Work In Your Best Interest

Oliver points out that there’s no formal definition for what a Financial Planner does, exactly… and that there’s no accrediting body which certifies financial planners. Indeed, FINRA–the Financial Industry Regulatory Authority trade group–notes that “financial planners may be regulated in relation to other services they provide.”

That’s a polite way of saying that financial planners aren’t regulated by any authority, and that any Joe Schmoe can label themselves a “financial planner” and go into business. Even more worryingly, Oliver points out that many financial advisors (and regulated professionals like investment advisors) aren’t obligated to give advice that’s in clients’ best financial interest…. And that they often steer them to risky or underperforming investments which net the advisors fat commission fees.

Oliver also points out a report from Senator Elizabeth Warren called “Villas, Castles, And Vacations” which tackles what the senator calls “conflicts of interest in the annuity industry.” These conflicts include villas and castles, apparently, so alright then.

John Oliver on 401k Planning 2


Fiduciaries Are Good

Fiduciaries are a subset of financial advisors who are legally required to act in their clients best interest. You know, like they should.

The Wall Street Journal recommends making sure your financial advisor has a written code of ethics that clearly includes the word “fiduciary” and language that clearly requires the advisor to look after their client’s best interests.

401(K)s Are An Industry

Retirement plans offered by large financial firms (Oliver’s production company worked with John Hancock) come with fees and charges for plan holders. These fees might not be clear, and are sometimes hidden.

In many cases, it may be smart to wade through the fine print and seek assistance from human resources to figure out the fee structure of your 401(k), and to talk with a fiduciary to make sure your investment mix is the best one for you.

Humorously (or depressingly), Oliver alleges his Hancock broker gave his company estimates in a spreadsheet that were off by $10 million due to faulty arithmetic.

Save For Retirement Like A Boss

Oliver’s advice is simple: Rather than picking individual stocks, invest in index funds. These are collections of stocks which cover an entire industry or an entire stock market, and are much less risky than traditional stocks. As to stock picking, it turns out that cats are better at picking stocks than most humans so you shouldn’t put too much stock in that. (Sorry – bad joke. We had to.)

As you get older and inch closer to retirement age, convert more of your stocks into bonds.

And, lastly, watch out for those giant falling foam dominoes. They’ll get you.