Comments at Greensboro's City Council Meeting on NC State's 401(k) plan and ICMA's 457 plan

George Hartzman, 2506 Baytree Drive;

I teach financial ethics and foresaw the 2008 financial crises, after which I became a whistleblower against Wells Fargo, and I have found that the financial industry engages in profit skimming via limited transparency that provides little to no value to investors who pay the fees.

In 2010, Galliard Capital Management, a subsidiary of Wells Fargo, started managing portions of North Carolina's 401(k) and 457 retirement plan's Stable Value Funds, and then hired Wells Fargo to do the same, which appears to mask underlying costs taken from state employees accounts and funneled to Galliard's parent company.

The State Employees Association found that North Carolina's pension doesn't disclose underlying hedge “funds of funds” fees.

In 2013, North Carolina State 401(k) and 457 target date funds, which are also like stable value or fund of funds, replaced two index funds with higher cost alternatives. The fees for the international allocation more than doubled and small cap fund costs about quadrupled.

In the fall of 2013, I analyzed Greensboro's 457 retirement plan to see if the City's employees were being overcharged for administration and investment management.

Greensboro’s 457 plan provider is the Washington DC based “non-profit” International City/County Management Association, or ICMA whose CEO made more $2 million in 2012.

I found that;

North Carolina's 231,000 plan participants pay about $217 each for record-keeping per year in 2012.

Greensboro's 2,781 ICMA 457 participants pay about $266 each for record-keeping per year as of the first quarter of 2014.

But Winston Salem, who rolled over their plan's 457 participant balances to ICMA in 2012, pay about $91 each per year.

I have quotes for Greensboro in the $70 per participant range, meaning local government employees are being dramatically overcharged by an association saying it represents city and county management.

I wrote about Greensboro's plan on April 23, 2014 for Yes Weekly and met again with city staff a couple of months back.

Greensboro's employees are getting fleeced by the state and ICMA and I have mostly received apathy from many whose job it is to act in the best interests of co-workers.

Lowering the costs your employees are paying within these plans can create higher levels of economic impact after retirement, as more money would be available to be spent locally.

A three quarters of a percent fee difference could mean another $100,000 over a worker's lifetime.

I can explain how to lower these costs for Greensboro's employees in about 15 minutes.

Please invite me to a City Council work session to look into increasing the values of our community's retirement accounts.
Presentation begins at the 44 second mark;

On North Carolina State's 401(k) and 457 "GoalMaker" Target Date Funds


North Carolina State 401(k) replaced index funds with higher cost actively managed accounts in 2013


"Investors pay exorbitant [401k] investment fees"


North Carolina State 401(k) plan; Galliard is owned by Wells Fargo


"NC Pension Accused of Pay-to-Play Violations"


A Few Observations on Share Classes and Wells Fargo Stable Return Fund


No comments: