Norma Walton, Not Your Parents’ Workforce

One of our businesses was growing and we were looking for someone to work 16 hours every weekend. I had been doing the work myself while growing the business, but the business had become busy enough that it could afford to pay someone to do that work.

First I chatted with my friend’s husband. He works during the week and is saving up for an apartment for his young family so was keen on weekend work to supplement what he earned from his regular job. He is 27 years old. He did an excellent job for me for a few weekends then told me that he had decided he could no longer work after 5 pm…ever.

Next, I chatted with a hard working woman with whom I work from time to time and I mentioned that we had this position available. She told me her son Mitch was desperate to make money and that she was sure he would love to do it. Mitch is a nice single 35-year old guy whom I knew and liked. I immediately offered the work to him. He thanked me for thinking of him but explained that he never worked on Friday, Saturday or Sunday.

The third was a 32-year old Uber driver named Nur whom I met when he drove me home. A former fighter pilot, he had emigrated from Afghanistan via America. He told me he needed to make money. He did the work one weekend, collected his money, then he just didn’t show up for work the next weekend. It was obviously beneath him. I haven’t heard from him since.

Fourth time lucky. The fellow who now works with me on the weekends is from Barbados. He emigrated to Canada a year ago because it was impossible to make a good life in Barbados unless you were a member of the police or the military and he didn’t qualify for either. He loves Canada because if you work hard, you can create a decent life for yourself. He came here a year ago. He has found opportunities through keenness. He obtained his forklift truck driver’s license. He then started working for an agency each week while working to upgrade his license. He works with me on the weekend and is saving up to secure his own studio apartment near York University and then to afford a car. He is 27 and so far very reliable.

Back when I was a teenager into my early 20s, I was always interested in making money if I could fit it into my school and sports schedule. I began working when I was 13 years old and secured my license the day I turned 16. I was not unusual among my peer group. We all wanted to make money, play sports, drive cars and get our own place. Leisure time was what you grabbed late at night or over a couple of hours on the weekend, if you were lucky and had finished all your chores at home.

In my (now dinosaur-like) experience, if you wanted to make extra money, you needed to work evenings, weekends, nights, mornings, afternoons – basically, anytime anyone would pay you. You needed to show up for work when you were required. Keenness was critical. Asking for more work was important. Basically, everything else in your life took a back seat to making that extra money you wanted so you could accomplish whatever objective you had at that time.

The type of work was not as relevant as how much you were being paid per hour and how many hours you could secure. Being fulfilled at work was not even a consideration. I remember working three summers in a row on the line at Ford putting hood covers on because 27 years ago they paid $25 an hour. I can still do that specific job in my sleep because I put 60 hood covers on every hour for 48 hours a week for three summers in a row…138,240 hood covers. The job was mind-numbing but that money helped put me through school and paid for my car expenses. Needless to say, I had very little leisure time those summers.

My values are no longer prevalent. In seeking to fill this weekend position, it became apparent to me that the workforce has changed since I was a girl. Work-life balance in your 20s and 30s is now valued far more than money. People say they want to make extra money, but they mean only if it does not inconvenience them in living their best life. Hence a lot of people in their 20s and 30s are living with their parents, with siblings or with roommates. They don’t drive. They value leisure time more than making money.

For better or worse, while trying to hire someone for weekend work, I realized that this is not my or my parents’ workforce.

Dodging the DOL Chainsaw: Small Business Owner Protection

The DOL is Coming!   The DOL is Coming!

As if you weren’t already up to your elbows in rules, regulations, and expenses, the Department of Labor has empowered itself to fine at least half of the Employer/Plan Sponsors it audits… for multiple investment related reasons.

These include, among other things, the cost of the products in your investment menu and the market value performance of those products. As a plan fiduciary (right, you are a plan fiduciary), it’s your job to keep costs below average and performance above average…. and, yes, you are deemed responsible for your employees private investment decisions… no matter how foolish.

Hardly seems fair, does it. You give them money to invest, and you’re too blame when they mess up.

But, true to form within the 401k “space”, no one (other than the plan participants) seems to care about the retirement income benefit that 401k plans should provide to employers and employees alike… not even the DOL, ERISA champions of the interests of employees.

Since roughly half the plans will always be below average, it’s fair to expect that large numbers of plans will be fined….

In fact, 70% of plans audited in 2013 were penalized or forced to make reimbursements. Neither ETF providers nor Mutual Fund promoters share this responsibility with you, and all of this stress is on top of the “top heavy” problems you deal with year, after year, after year…

You may be able to protect yourself from the fines and the “top heavy” audits in one fell swoop by switching your plan to a professionally-managed-by-a-fiduciary, self-directed 401k they call a “Safe Harbor” Plan. In this type of plan, there is no menu of one size fits all products, none of which focus on income purpose investments that support the ultimate benefit of the program.

You see, the goal of the providers is to keep your money in their funds forever, hoping for upward only markets and their ability to convince you that you just can’t do better than 2% income anywhere. That’s the 401k space “end game”, but you can do much better, and considerably safer in a… “Safe Harbor”, managed growth and income program…

In the self directed, private portfolio “space”, you can require the safest equity selections, and growing retirement income, in a flexible asset allocation geared to the age and risk profile of each participating employee. Employees don’t have to participate, but you have to provide an immediately vested matching contribution if they do…. BUT, the top heavy problems disappear, and your contribution levels have no backdated limitations.

Not so long ago, I brought a QDI (Quality, Diversification, and Income) portfolio series to the 401k space. None of the product pushers were even slightly interested in any facet of the program… not even the superior retirement income generation capabilities… the “good ‘ole boys club” just couldn’t be bothered.

With the stock market at the peak of a six year sustained rally, what protections do you have from a correction? In the managed programs I’m describing, equity profits have already been taken, and the income keeps growing… monthly, in most cases. The Target Date Funds 401k providers are in love with are low quality equity, seriously low income time bombs, ready to go… KABOOM!

The Vanguard 2015 Fund, for example, was 50% invested in no less than 5,000 stocks at the end of January 2015; the total portfolio income was just barely 2%. What do you think the 2020 or 2025 portfolio looks like?

Here’s a look at the workings of a professionally managed retirement income program: a high quality, individual security, 30% Equity portfolio, generating three times the Vanguard 2015 TDF income, with a whole lot less risk:

https://www.dropbox.com/s/28ty6z5dkgn5ulu/Retirement%20Income%20Webinar.wmv?dl=0

Hmmmm, Small Business Owners, seems to me that would resolve your fiduciary issues.