03x15 - Retirement plans in the United States

[bunniefuu]

[TV static drones]

[bright tone]

[upbeat rock music]

[cheers and applause]

Welcome, welcome, welcome

to "Last Week Tonight."

I'm John Oliver.

Thank you so much
for joining us,

and let's begin
with a quick recap

of the U.S.
presidential election,

or, as it's now better known,

the fiery two-party pileup

on the hellbound
fuckspressway.

There was big news this week
when Hillary Clinton

became her party's
presumptive nominee.

- Thanks to you,

we've reached a milestone.

The first time--

[cheers and applause]

The first time
in our nation's history

that a woman will be
a major party's nominee

for president
of the United States.

- Now, whatever
you think of her,

that is a truly historic step,

if conspicuously overdue.

It's a bit like celebrating
the fact your 12-year-old

has finally stopped
breast-feeding.

Sure, sure,
it's definitely good news,

but it clearly should have
happened way sooner.

So after three years
of relentless campaigning,

we are left with one candidate
everyone expected

and one that everyone
very much did not,

because one side of this

was a real bracket buster.

It's like if the NCAA finals

ended up being
between Duke University

and a flaming Jet Ski
driven by a dog

dressed like a clown.

And you might've hoped this week

that the level
of political discourse

would finally rise,

but after the president
endorsed Hillary on Thursday,

this happened.

Welker: Trump reacted
to the president's endorsement

this afternoon, tweeting...

Clinton's campaign
responding...

- Now, now, hold--
hold on.

You--you might've
enjoyed that tweet.

Frankly, many did.

It has over
half a million likes,

but I would argue
that getting a lot of likes

does not necessarily mean

you've accomplished
something good.

Incidentally, that is a sentence
anyone under the age of 20

should frame and hang
in their bedroom,

because there is two problems

with telling Donald Trump
to delete his account.

First, he's never
going to do that.

Even when he's been dead
for 50 years,

he'll still somehow be tweeting

from beyond the grave
with "Met God..."

And--and second,

you just moved this fight
onto his turf,

which is a huge mistake.

Hillary was dominating
news coverage this week,

and even those who were
speaking out against her

were talking about
substantive issues

like women's history
and gender equality,

and because Trump
is an ego-goblin

who feasts on verbal filth,

that national conversation,
much like a department store

sold out of gloves
in boys' sizes,

was of no use to him.

But--but as soon as she
engaged with Trump on Twitter,

the fight was back on his turf,

and no one fights better there.

Blitzer: Trump responded,
and I'll read to you

what he said on Twitter,
"How long did it take..."

All right, so she really seemed
to walk into that one.

- Yeah, yeah,
she absolutely did,

and that right there
is the problem.

Hillary, you are not
going to beat

Donald Trump at social media.

His tweets are
the Tom Cruises of tweets:

short and unhinged,

but you kind of can't look away.

And just like that,

Hillary went from a pioneer
and a trailblazer

into a minor player
in an online spat.

Doocy: Hillary demands
Trump delete his account.

- That Twitter w*r a preview

of how ugly the fall fight
could be.

Gibson: The words
"Delete your account"

are fighting words.
- It's just smack talk.

- Yeah, I didn't even know
what that means, but apparently

our producers said
that's what kids use

to, like, say they don't
like you.

- Well, actually--

actually, it's what kids
used to say,

because the minute
it was tweeted

by a 68-year-old
presidential candidate,

I'm pretty sure they moved on
to whatever the new phrase is,

whether it's "Eat a gerbil,"

or "Snap it up, Snoopy,"

or "Not in my taco truck."

But if this is how

the next five months
are going to play out,

Clinton has got a problem.

Trump's mastery on social media
is unprecedented.

He misspells words,
overuses caps,

passes along
un-vetted information

and is overtly r*cist.

He's basically Twitter's id
made manifest;

whereas, for her part,
Hillary Clinton

has been very much
hit-or-miss on social media,

with excruciating mistakes
like posting

"7 things Hillary Clinton
has in common

with your abuela,"

or changing her Twitter avatar
so that Rosa Parks

was sitting at the back
of her logo.

Oh, she took real heat for that,

and yet just a couple
of weeks later,

she changed her logo again,

this time attempting
to honor Kwanzaa like this.

And come on.

At least remove the arrow
in the logo,

because this actually looks
like the campaign is saying,

"Please move away
from the Kwanzaa celebration."

But for true toe-curling
tone deafness,

nothing could beat
one particular attempt she made

to engage young people online.

Nguyen: Hillary Clinton's
attempt to use emoji backfires.

On Twitter,
she asked her followers...

- That's right, three emojis,

because nothing says
"I will seriously listen

to your concerns" like saying,

"Hey, I'm pretty busy.

"Can you just condense
your thoughts into tiny pictures

of ghosts, dolphins,
and sex eggplants?"

Now, the rest of this campaign

is going to be depressing

if the two people
running for president,

a task requiring a grasp
of nuance and complexity,

repeat--repeatedly
stoop to pandering

and flame-throwing online,

and it seems
that we are going to need

a shorthand way to express
our disappointment and disgust,

which is why
we have created this GIF

of a vomiting Abraham Lincoln.

It is on our Twitter feed
right now,

and it is all yours to have,

because whenever Clinton's
campaign tries to #engage us,

or Trump says something awful,

I think it's going to be
pretty useful

in articulating
what we're all wanting to say.

And now this.

- Imagine falling asleep
and hearing glass shatter

but no glass fell

or waking up to a car crash
that didn't happen.

- Imagine coming home
after a long day of work

to find that someone
had broken into your home

and ransacked
all your possessions

and even kidnapped your parrot.

- Imagine, like,
being stuck inside

during a--
like, a barbecue,

and the barbecue being inside.

- Imagine this: you're at a ball
game,

a foul ball is flying
right at you,

and you're carrying a baby.

- Imagine waking up one day
and finding out

your entire life is a lie.

- Imagine being locked
in a windowless steel box

for 17 months by choice.

- Imagine that God purchased

the total NFL package
on DirecTV.

- Imagine your dog
having its own Twitter page.

- Imagine not being able
to use your thumbs.

- Imagine sleeping in a bedroom
the size of a coffin.

- Imagine being asleep
and then being stung by bees.

[applause]

- Moving on.

Moving on.

Our main story tonight
concerns money.

You know, the thing
everyone likes to think

they're good with,
despite the evidence provided

in every episode
of the Suze Orman show.

- Tina, what do you
want to buy?

Tina: Hi, Suze.
Thanks for taking my call.

I'd like to buy
a Mercedes E550.

- It's about $1,400 a month.
That is true.

You are denied.
Woman: Oh.

Woman: I want to get
a Louis Vuitton Tivoli PM bag.

- So denied.

So denied,
it's not even funny.

I'm gonna deny you again.

Woman: I would like to buy
a study abroad in Iceland.

I want to go to the famous
Elf School in Reykjavik

and get a certification
as an elf spotter.

- Here's the thing,
I'm denying you.

- Yeah, of course she is,

'cause no one
should be spending $4,000

to get an elf-spotting
qualification.

In fact, if you go to
lastweektonight.com right now,

you can print out a free

official elf-spotting
certificate,

which I promise you
is every bit as valid

as the most expensive
elf-spotting education.

Now go spot some elves.

Now--now one--

one of the big reasons

that Suze Orman
denies so many people

is because she thinks
we should all be saving

for our retirement,

and before we go any further,

it is important to acknowledge

there are people who just
do not have the money to do that

for systemic reasons

that we've addressed
on this show before

and will doubtless address again

on Johnny O's Sad-tastical
Circus of Misery and Math.

But tonight,

let's talk about those
who can save for retirement,

the target audience
for ads like this.

- We asked people a question.

How much money
do you think you'll need

when you retire?

Then we gave
each person a ribbon

to show how many years
that amount might last.

- I was trying to, like,
pull it a little further,

and I was trying to stretch it
a little bit more.

- Got me to 70 years old.

I'm gonna have
to rethink this thing.

- That's--that's actually
a pretty creepy ad,

'cause it's basically
people walking

toward the date
of their own death.

The only way it could've been
creepier is if,

at the end of their ribbons,

it said exactly how each person
was going to die.

But look, it is true--

it is true that as--
as we all live longer,

you should absolutely
save for retirement

if you can, and many do.

We currently have
around $24 trillion

sitting in retirement assets,

and that figure doesn't even
include the wealth we have

in stockpiled Beanie Babies,

so let's call it
$24 trillion and 32,

and a lot of that money
is in the hands

of financial services companies,

so let's talk a little
about how they work,

which I know sounds boring,

but as a favor
to your future self,

it is worth watching this
for 20 minutes,

because you could easily
make small mistakes

which could seriously
cost you down the line.

So let's start
with financial advisors.

They are the wholesome,
friendly-faced experts

that you see in ads
like this one from Chase.

Female narrator: Through all
life's milestones

our trusted advisors
are with you

every step of the way.
- Congratulations.

- Thanks for helping me
plan for my retirement.

You should come
celebrate with us.

- I'd be honored.

narrator: Plan for your goals

with advisors you know
and trust.

- Wait,
that is a clear example

of deceptive advertising,

because nobody invites
their financial advisor

to a wedding.

If Cousin Barbara finds out
that she didn't get an invite,

but your Chase guy did,

she's gonna flip her shit
on you.

But there is something
you should know

about financial advisors.

Even their name means less
than you might think.

The Financial Industry
Regulatory Authority

warns customers to be aware...

So "financial analyst"
is just a fancy term

that doesn't actually
mean anything,

sort of like "brand ambassador"

or "the John Oliver effect."

Meaningless.
Completely meaningless.

But even many well-credentialed
financial advisors

are paid on commission,

so if they recommend
something for you,

it may be because
they stand to make money.

In fact, sometimes
they're actively incentivized

not to act
in your best interest.

Take annuities.

Now, certain types of those
can be very complicated

investment products
that have high fees

and would only be appropriate
for certain types of portfolios,

but some financial advisors
push them hard.

Just look how Suze Oman reacts

when a caller,
who had just inherited $80,000,

asked for some advice.

Woman: We have talked
to a financial advisor,

and he recommended
that we put it in an annuity.

- I knew it.

I was go--before you said that,

I was gonna say, wait!

Wait.
Let me tell you.

I could tell you
what the financial advisor said.

Did they--did that advisor
also say to you

that if you put that $80,000
in there,

I'm gonna make
about $4,000 of commissions?

Did he or she happen
to tell you that as well?

- Ooh, "he or she."

Thank you, Suze Orman,
for pointing out

disingenuous financial swindlers

can be women too.

And--yeah, why not?

And--and brokers
pushing annuities

may not just be getting money.

Last year, Elizabeth Warren
released a report

on sales perks
in the annuity industry,

ranging from free cruises
to luxury watches to--

and this is true--

this tacky
Super Bowl-style ring,

which is absolutely ghastly,

but I guess at least
it makes it easy

to spot brokers
that you shouldn't work with.

"Uh, hey, nice ring, Irwin,

"but I'm gonna guess
that you didn't get that

playing running back
for the Green Bay Packers."

Now, generally,
it is currently legal

for financial advisors
to put their own interests

ahead of yours, unless--
and this is interesting--

they are what's called
a fiduciary,

because not all
financial advisors

are bound to act
in your best interest,

but fiduciaries are,

which is a bit weird.

It's like finding out that
only some restaurant waiters

are forbidden
from ejaculating in your soup.

"Hey, why is it up to me
to ask you which kind you are?

"I'm sending this chowder back.

"I'm not risking it.

You take it back."

But financial advisors
are just one part of this.

If you are lucky,

your job offers
a 401[k] retirement plan,

and if it does,
you should probably

take advantage of it,
but you should also know

they can be a goldmine
for financial service companies,

and while it's not unreasonable

for them to get paid
for providing a service,

there can be a lot
of different fees.

Kroft: There are...

And the list goes on and on.

- I honestly
wouldn't be surprised

if they also had
an elf-spotting fee,

but remember, thanks
to your new certification,

you no longer have to pay it.

Go spot some elves.

And--and look,
seemingly tiny fees

can really mount up

thanks to something called
"compound interest."

Now, whenever retirement
companies like Prudential

mention that,
it's always as a positive,

that if you start
with a really small investment,

by the time you're ready
to retire,

it will have
substantially grown.

- It's hard to imagine
how something so small

can help with something so big,
but if you start

putting that towards
your retirement every week

and let it grow over time

for 20 to 30 years...

[people cheering]

That retirement challenge...

[cheers and applause]

Might not seem so big after all.

- Holy shit.

Is it just me,
or did that last domino

fall really hard?

That might be the most upsetting
commercial involving dominos

that doesn't involve the phrase
"Cali Chicken Bacon Ranch."

But--but compound interest
works both ways,

meaning, while your money
add ups--adds up,

your fees can really add up too.

Smith: Assume you're invested
in a fund

that is earning a gross
annual return of 7%.

They charge you
a 2% annual fee.

Over 50 years, the difference
between your net of 5%,

the red line,

and what you would have
made without fees,

the green line,
is staggering.

You've lost almost 2/3
of what you would have had.

- 2/3 of what you
would have had is gone.

So think of fees like termites.

They're tiny,
they're barely noticeable,

and they can eat away
your f*cking future.

And one place where your 401[k]
can be full of termites

is the funds themselves.

Generally speaking,
you can choose

between low-fee index funds,
which basically just try

to match the average returns
of the stock market,

or, for a higher fee,

you can get
an "actively managed" fund,

with experts who will
pick and choose stocks for you,

trying to beat the market,

and companies
that sell active funds

really believe in themselves.

male narrator:
At MFS Investment Management,

we believe active management

can protect capital long-term.

Active management
can take calculated risks.

Active management
can seek to outperform,

because active investment
management isn't reactive.

It's active.

- Okay.

That's not so much
a coherent commercial

as it is a drinking game
where you do a shot

every time he says
the word "active."

But the problem
with active management

is that even many
Wall Street experts

find it difficult
to consistently beat the market,

and there is sometimes
embarrassing evidence of this,

like when a group
of professionals

were pitted
in a stock-picking challenge

against a cat named Orlando.

man: Orlando's method?

He throws a toy mouse
at a grid of companies,

very scientific.

Last year, Orlando's picks
returned nearly 11%

while the pros
had gained just 3.5%.

- Oh, my God!

Let's all agree
that "The Wolf of Wall Street"

would have been way better
starring that cat.

Of course--
of course, you know,

instead of dr*gs--
there's a plot hole,

because instead of dr*gs,
his downfall would come

when someone busts out
a laser pointer in a meeting.

But that cat
wasn't a complete anomaly.

There is growing evidence that,
over the long term,

most managed funds do no better,

and often do worse,
than the market.

It's basically the plot

of "Charlie
and the Chocolate Factory."

If you stick around
doing nothing

while everyone around you
fucks up,

you're going to win big.

And the thing is,
this is not a secret.

Even some of the people
charging those fees

know that this is the reality.

- One of the ultimate
dirty secrets

of the fund industry

is that a lot of people
who run other fund companies

own index funds in their--

in their own accounts
and don't talk about it

unless you put
a couple beers in them.

- Wow, "Sometimes I invest
in index funds"

might be the least
interesting secret

anyone has ever divulged
while drunk.

It's right up there
with "My favorite movie

is 'The Constant Gardener,'"

and "One time in college,
I got totally wasted

and read the entire
Wikipedia page for 'rope.'"

So--so--

so don't tell anyone.

Don't tell anyone.

So--so between
financial advisors,

high fees, and underperforming
active management,

the entire
retirement-plan industry

is a potential minefield,

and you need to pay attention.

And the reason that we know
about this is,

earlier this year,

we actually decided
we wanted to set up

a 401[k] for our employees,

and you might want
to learn from our experience,

because here's what happened.

We reached out to the production
company behind this show,

Avalon Television,

and we asked them
to take care of it.

A couple of months later,
they told us,

"We have your plan.
It's provided by John Hancock,"

and we said, "Okay, fine,"
and we went back to work,

by which I mean
we went back to Googling

"teacup pigs eating ice cream."

But--but then--
but then in March,

representatives
came to our office

and gave our staff
presentations on their new plan.

It's the kind of thing
no one in their right mind

wants to sit through.

Honestly, most of us spent it
on our phones,

Googling "teacup pig,
top hat, shopping, beer,"

and boom.
Boom.

We hit the f*cking jackpot.

But--but unfortunately
for John Hancock,

our researchers started
going through the documents

and started
adding up the fees,

which came to a combined 1.69%,

and that was before we paid
a $24 per person per year fee

and the fees on our funds.

So they asked John Hancock

why the fees were that high,

and--and we were told
that it was normal

for a start-up plan
at a new company,

and Hancock gave us
a lower number

that it would come down to
over time,

and we said,
"Okay, okay, that sounds fine,"

and our researchers said,
"Wait, no, that is not fine.

"That number is still higher
than experts have told us

"that we'd want it to be.

"Look, leave this.
We'll figure it out.

"Why don't you all
just go back to Googling

"'teacup pigs in teacups'

or whatever the f*ck it is
that you do all day?"

And we went, "Oh, my God,
is that a thing that exists?"

And yes, it was!

Yes, it was.

That was the rest
of our afternoon right there.

Meanwhile, our researchers
took the Hancock contract

and sent it
to financial experts,

who flagged an
"intermediary fee" to a broker:


and half a percent after that,

and remember,
that could add up.

We did some very rough
estimates, and--

and with 35 employees
contributing just $6,000 a year,

after 30 years,

half a percent could add up to
roughly $1 million dollars.

That number was so high,

you'll never guess
what happened.

Janice in accounting
actually gave a f*ck.

I'm serious.
She's a changed woman now.

She--she bought cupcakes
for the break room yesterday,

and she adopted a kitten.
She named him Tuppence.

So anyway, we asked,

"Who the f*ck is this broker?"

And it turned out, he was a guy
Avalon had agreed to pay

to help them set up
and support our plan,

and we asked him,

"Why didn't you present us
with low-cost,

"low-frills plans
like the one from Vanguard?

And what are we paying you
so much for?"

And he said, well, first of all,

our plan was probably
too complicated for Vanguard

and that he did a lot
of things for us

like acting
as our financial advisor,

although, as we now know,

that term doesn't
necessarily mean much.

In fact, if you go
to our website right now,

you can print out
a free official

financial advisor certificate,
and there you go.

Congratulations,
you are one too.

Well done.
Well done.

And--and although our broker
has other credentials,

when we asked
if he was a fiduciary,

he, unsurprisingly,
said no.

As for his fees,
he said they would come down,

and last night, he sent us
an Excel spreadsheet

showing how they could come down
as our fund assets grew.

Unfortunately,
in that spreadsheet,

he made an error which meant
that our fund's interest

didn't compound correctly,

and when we pointed that
out to him,

he sent a second sheet

showing that his original math
had been off

by more than $10 million,

which does not inspire
confidence in the man who,

as he'd repeatedly reminded us,

was helping us navigate
our very complicated plan.

Now,
our lawyers at this point

say that I have to tell you
that both the broker

and John Hancock claim
their fees would come down,

that they're competitive
within the industry

and worth it
for the services they provide,

although you should know
we decided early on

to pay almost all of the fees
for our employees

'cause we were
so f*cking embarrassed

about the situation
that we'd got them in,

and we're going to be leaving
both Hancock and the broker,

and I'm guessing
after they've seen this show,

they will be happy to let us go.

Just so--just so you know,

we'll be replacing both of them

with that stock-picking cat,

'cause he seems
to really know his shit.

The whole point
of telling you this--

the whole point
of telling you this is,

if you don't pay
close attention,

all of this can really
get away from you,

but here is the good news:

it doesn't actually have to be
that complicated,

and it might be getting simpler.

Back in April,
the Department of Labor

issued a final rule
requiring that all advisors

handling retirement accounts
act as fiduciaries

beginning next year,
and that is great,

because the financial services
industry fought this rule hard.

They even launched
terrible attack ads.

You might've seen
one like this on TV.

- It's these new regulations
they're pushing

in Washington that worry me.
They want to make it really hard

to get advice from our financial
advisor.

- No more help from Anne?

Even with our IRA
and 401[k] savings?

- Well, only if we want
to pay a lot more.

- We'll never get
the information we need.

We're gonna call our senators.

- Okay, okay.

To be honest,
my only takeaway from that ad

is that that guy
is definitely f*cking Anne.

It's so obvious.

It's--you need to leave him,

non-threatening wife character.

Kick him to the curb.

And while the rule
has gone through anyway,

five lawsuits have been filed

by financial services groups
attacking it,

and legislators
in the House and Senate

have passed a resolution trying
to overturn that fiduciary rule,

although,
just a few days ago,

the president did veto it.

And by the way,
that is something I think

we're probably going to be
seeing a lot more of,

because President Obama's
last year in office

seems to be moving
from "bipartisan solution"

to "Bye, Felicia."

And--and look.

I am not saying all of this
is not complicated.

We spent weeks
just trying to understand

our own 401[k] plan,

but for your average person
trying to save for retirement,

it doesn't need to be
this confusing.

The truth is, as long as you
remember a few key things,

you're probably
going to be fine,

and we wanted
to outline them for you,

so whenever you are ready
or able to save for retirement,

please come back
and replay this video

from this exact spot.

Enjoy.

- Hi, I'm Billy Eichner,

and I'm here with a bunch
of f*cking ribbon,

and I'm using it to show people

how much money they needed
to save for retirement.

Aww, look at you.

You're so precocious.

One tiny thing:

these are fees.

That's your record-keeping fee.

That's your wrap fee.

That's your monthly
participation fee.

That's your 12B-1 fee.
That fee goes to some middleman

you don't even know about,
and that's your fee

for "not knowing
about a f*cking fee" fee,

and here's what you've got left
to retire on.

Try ribbon dancing with this.

You look like an idiot.

The problem is that idiots like
Karen here make shitty choices

when it comes to what to do
with their money.

Karen, if you had $4,000,

would you invest it
in your 401[k]

or would you go
to the Elf School in Reykjavik?

- Elf School?
- No.

You put it in your 401[k],
you idiot.

The only elf you should be
studying is Kristin Chenoweth.

She's a delight. Come on
out here, Kristin Chenoweth.

- Hi, Billy.

I love elves,
and who wouldn't want

to go to Reykjavik?

- Okay, it's not
the Tony Awards.

Go.
Shoo, shoo.

That was Kristin Chenoweth.

The point is, the best advice
most experts can give you

is to do five things.

Number one, start saving now.

In fact, start saving
ten years ago.

Invent a time machine.

Use it to go back
and start saving money.

Then...

k*ll baby Hitler.

Next, average people like you--

and let's face it,
you're very, very average--

should probably just invest
in low-cost index funds

and leave it alone.

You should check on it
about as often as you Google

whether or not Gene Hackman
is still alive:

about once a year.

And he is.

He's still alive.

He's writing novels now.

Third thing:
if you have an advisor,

ask if they're a fiduciary.

If they say no, run.

If they say yes,
but they're wearing

a tacky Super Bowl ring, run.

If they say yes, but they're
wearing a class ring, run.

That has nothing to do
with this.

I just think it's very strange
when a grown man

is wearing a class ring.

The f*ck is a fiduciary?

Number four, as you get older,

gradually shift your investments
from stocks to bonds.

Here's a way to remember it:

every time they pick
a new James Bond,

gradually switch
more of your stocks into bonds.

Then go back to wondering

if Daniel Craig
is actually attractive.

What do you think, Doris?

- Oh, he's so handsome.
- No, he's not.

He looks like a blonde
chimpanzee in a tux,

and you know it.
Ugh, I wish this was "Veep."

[upbeat music]

Finally, try to keep your fees
like your milk:

under 1%,

because just like
interest compounds,

so do fees,

and even 1/10 of 1%
can really f*ck you.

Like this.

[applause]

Oh, shit, Kristin.
Watch out.

- What?

[cheers and applause]

[all screaming]

- Oh, that reminds me.

One last tip:
don't forget to die.

- Billy, I'm not dead.

- Aw, Kristin,
you're even shorter now.

- [coughing]

- Ugh, stop coughing.
Disgusting.

- [coughing]
- Excuse me.

male announcer: No Kristin
Chenoweths were harmed

in the filming of this piece.

- That's our show.

Thank you so much for watching.

See you next week.
Good night.

- I love elves, and who wouldn't
want to go to Reykjavik?

- Okay, bye.
Go.

Go do a voice-over somewhere.
Go.

Just give me this.

Give me this.
Take it off.

It's not
"Behind the Candelabra."

[upbeat rock music]

[bright tone]