“62% of Americans have been ‘sold’ by the Wall Street sales force to contribute regularly (automatically), without knowledge or expertise, without control or influence, their hard-earned money into exactly this sort of scheme.”
-Kyle J. Christensen
By Kyle J Christensen, Founder, Principles-Based Planner, Unique Advantage
Unique Advantage Monthly Client Email – April 2025
Can you imagine having the ability to sell people on this idea? Get people to work full-time, three full-time weeks of full-time work in the year (nearly 125 hours of work), and instead of getting paid, convince them to put all of what they would have received in earnings into a place (“investment”) where:
1) They have no real knowledge of the “investment.”
2) They get charged fees on that amount every year, regardless of how well or how poorly it performs AND they are not told exactly what those charges are or will be.
3) They receive no current interest or income.
4) The funds contributed fluctuate in value, up and down (typically down significantly on years that they might be needed most – ie during a recession), without control.
5) Their funds will be exposed to a greater tax than they would have if the person received the wages now and paid the tax now (the only way it wouldn’t turn out this way is if the “investment” didn’t perform well over time and the person ended up in a lower tax bracket).
6) They take all of the risk and they could lose what they contribute, while those managing the so-called investment get paid, no matter what.
7) They get penalized 10% if they take their money out of the account prior to 59.5 years of age.
8) The only way to generate “income” is by selling the assets (remember, most people have little to no expertise, so how do you think their timing will be in selling the assets?).
Can you imagine having the ability to convince people to do this? Can you imagine people wanting to do this? This scenario happens ALL THE TIME! The amount of hours worked (and subsequent pay) contributed is equal to 6% of a person’s working year. Wall Street has done an incredible job of convincing people to do exactly this. What’s really amazing to me is that anyone is actually convinced to participate.
Some might say, “Well, this is the normal way that people save to retire.” I’d argue that it’s actually a somewhat recent phenomenon and far from “normal” historically. In fact, in 1929, only 10% of the nation had money invested in the stock market. In 1974, when ERISA was passed and 401(k)’s and IRA’s came into existence, the percentage of Americans investing in the stock market changed only slightly to about 13%. By 1989, 32% of Americans had money invested in the stock market. Today, 62% of Americans have money invested in the stock market, mainly through retirement plans (with money invested in mutual funds and ETFs).
– Are people putting the money they earn now into retirement plans that they can’t touch for decades? Yes.
– Do they have expertise in where the money is being invested? No. In fact, employees are now auto-enrolled into contributing their earnings into their employer’s retirement account (no real informed-consent required). Most people choose “index funds” or “target-dated funds” for their “investments.” That’s in quotes because neither are the actual investments. The investments are the underlying stocks or bonds owned by those funds. How many people do the research to find out exactly where the money is being invested? Statistically, zero.
– Do they have any real knowledge about the fees they are being charged every year, year in and year out, regardless of how well the “investments” perform? No. They don’t ever receive a bill. The funds simply pull the money directly from the account. Can any person that has money invested in retirement accounts actually tell you what they are paying exactly? No.
– Do they have any control over how well the “investments” perform? No. Zero. They have pretend control. They can move the money from one fund to another, but even that is typically very limited (only so many changes per month or quarter). They can move money from one fund that is out of their control to another fund that is out of their control. That’s it.
– Do they get any interest or income? No. Retirement accounts are designed NOT TO PAY income, and they do not earn interest. This comes as a shock to many because they’ve been told their accounts “compound interest” over time. Unfortunately, this is a lie. Mutual funds and stocks don’t pay interest. Bonds do pay interest, but they don’t pay compounding interest. When people want their accounts to pay income, they eventually have to move the funds out of the stock market and into something that actually does produce income (real estate and annuities are examples of investments that produce income). To get “income” (which isn’t really income) from stocks, bonds, and mutual funds, you have to sell the asset. Once the asset is sold, it is no longer there to grow or produce future income. And, by the way, if you want to sell and withdraw your money prior to age 59.5, there’s a 10% penalty added to the tax you would be required to pay (with very few exceptions to this rule).
– Is all of the risk on the person who contributes the money? Yes. There is no guarantee of growth or performance with these funds. The fine print of every mutual fund and ETF says you can lose money and that you should not predict future performance based on past performance. In other words, they can’t be liable if they lose your money. The risk is on you, entirely.
62% of Americans have been “sold” by the Wall Street sales force to contribute regularly (automatically), without knowledge or expertise, without control or influence, their hard-earned money into exactly this sort of scheme. Pretty wild. It’s actually shocking that so many people would so willingly give up their money like that, for a hope and prayer that things will work out well for them, in the face of mountains of statistics that prove otherwise. I’m sure many will scream, “But what about the free employer match?” What about it? If you consider the truth of everything else I just outlined, no match could convince me to participate. I would have to entirely ignore “what else” I could do with the money. I would have to ignore the leverage and income that would be generated from whatever else I could do with it had it remained in my control and use for decades, including, avoidance of unnecessary and unproductive debt, as well as countless other opportunities Wall Street can’t sell me (all of the things that I CAN control and influence).
It’s the biggest sales job in the world and Wall Street has mastered it.
Sincerely,
Kyle J. Christensen
P. S.
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