For the past twelve years I have been preaching a pending disaster for the 401k system. When President Biden signed off on the SECURE2 Act recently, doing so has started a firestorm of activity in the 401k market that will literally consume your savings within a very short time. I have published almost 400 articles, including multiple articles on the activities involving the Principal Group of Companies and Wells Fargo Bank. For the past several years, Wells Fargo has been the subject of an extensive, and continuing investigation of misdeeds including their abuse of 401k funds deposited on behalf of their employees. In September of 2022, the Feds recovered $131.8 million for Wells Fargo 401k Participants involving an (employee stock ownership plan) ESOP scheme propagated by the company!
The Wells Fargo 401k is among the largest plans in the country. A recent EBSA analysis of 2019 Form 5500 data showed there were more than 600,000 401k plans in 2019, but only 147 of them had 50,000 or more participants. Wells Fargo’s plan had more than 340,000 participants at the end of 2019. This money was essentially stolen from the plans from 2013 through 2018, and averages about $400 per plan participant.
In 2020, the head of Wells Fargo’s wealth and investment-management business announced that Principal has agreed to purchase Wells Fargo’s 401k and pension unit. According to Principal, the deal doubled Principal’s U.S. retirement business and expand its reach with mid-sized employers, giving it 7.5 million retirement customers nationwide. This would mean that at least half, or approximately 3.2 million 401k investors came from the Wells Fargo deal. It makes sense to assume that those individuals got the same deal that Wells Fargo dealt their own employees, meaning that Wells Fargo ripped another $1.2 BILLION from the accounts that were sold to Principal!
Principal would have known this fact when they did the math on the purchase of these accounts, since industry estimates suggest Principal underpaid Wells Fargo about a billion dollars for the accounts. With that said, the account values would have plummeted since the purchase as the economy plummeted during the past couple of years as well. It is estimated that in the past year alone, 401k plans have plummeted in value by THREE TRILLION dollars alone!
It is not likely the Feds will ever investigate this shortfall. Thanks to the Department of Labor, we now have a double standard when it comes to acceptable standards within the 401k industry. The key feature of the Wells Fargo debacle is the fact that they were considered a “Fiduciary.” Fiduciaries are simply not allowed to steal from their own employees, but to steal from their clients is another story. Principle handles the money for 7.5 million retail customers nationwide. If Principal decided to do exactly what Wells Fargo did, they could do so without even a reprimand! Let’s see, 7.5 million at $400 each totals $3 Billion! If they pulled the scheme for the average savings life of their plan participants, perhaps 20 years each, they could steal about $12 Billion!
The SECURE2 Act simply gives more of your money to companies like the Principal, for a longer period of time. A few years ago, the DOL placed their blessings on permitting the sale of proprietary investments to 401k clients, so companies nationwide can pull the same tactics as did Wells Fargo Bank. At this stage, nearing the apocalypse, you will soon be seeing reports of huge 401k losses, and more articles as I have been publishing for the past decade, specifically how to get your money out before you retire. If fact, then it beg an answer for the question… why would you continue depositing your money into a 401k plan that you are being urged to get your money out of
According to a recent study by Fidelity, 47% of plan sponsors considering a new advisor and 48% considering a change of recordkeepers for their 401k plans. Insurance companies like Principal Life are facing future shortfalls if employers begin to realize the harm they have caused their employees. Wells Fargo is simply the tip of the iceberg, and now is the time to convince your employer that a change IS needed to salvage what is left of your 401k savings plan. Convince your employer to seek the advice of a true Fiduciary, and research before making any commitments. Non-fiduciaries are finding ways to make plan sponsors to believe they are fiduciaries… ask them outright, and have your plan administrator or recordkeeper put it in writing.
This interview is simply one of hundreds of articles and videos right now hitting social media. Your goal is to create wealth before you retire. You will soon get the sense that you will fail in that effort. Follow the advice of other investors during this time of crisis. I survived because the few dollars I had left after Principal stole my retirement was invested in real estate. Now, a decade later, I have increased my net worth six-fold because I bought right. Soon, the foreclosure market should explode… try to pay cash and buy right, and hope for the best. At least, if history repeats itself, real estate always increases its value in time, especially following a free fall.
Biden has now made it difficult to get your money because he realizes companies are too big to fail, and to prevent a total collapse of our economy, he wants your money to save the crooks. Think about it. Just a few weeks ago Biden guaranteed the union controlled teamster pension plans, committing thirty-six billion dollars to bail them out in this year alone. The bailout will continue indefinitely. He knows the collapse in pending and he is protecting what he knows will impact the economy. Your job and savings means nothing to the government, and you are on your own. You can read this and weep, or you can take action now to secure your savings. It is your call to make!
