Wise Information for K‑12 Employees



K12 403(b) Story: A Gangsta’s Paradise x 3

Quiz time. Which one is not like the others, and why?

  • The sordid world of retail brokerage
  • Insane currency trading
  • Public school teacher 403(b) plans

The obvious choice would be the teachers’ 403(b). Sadly, this is not the case.

In my life’s journeys, I have experienced all three. These three experiences, which are weirdly similar, have shaped my investment philosophy and client approach.

Gangsta Life Part 1

At the age of 19, I figured out retail brokerage was not for me. I managed to get a paid college internship at Boston University. This sweet deal also included 4 college credits! All I had to do for this privilege was cold call for Lehman Brothers. What a nightmare! Calling people who were dead and speaking to their surviving spouses, interrupting the work schedules of medical professionals, and generally being a negative force toward humanity was the rule.

In the end, I had to write a paper about my experience.  My professor and classmates loved it and I got an A. I wrote about how I learned how to bother/take advantage of people, and how most of the brokers actually knew very little about the markets and the economy. Basically this model was one big misleading scam.

Gangsta Life Part 2

This did not deter me from my preordained career in finance. I graduated with a major in economics and a minor in history and after a short stint at Morgan Bank went to work at a large foreign bank trading currencies.

This was certainly a much more entertaining environment. Many of the people I worked with were divorced or having affairs; alcohol/ drug dependent; and viciously sleep deprived. Though some made a great deal of money, this whole scene left a bad taste in my mouth.

Short-term thinking was never my idea of a good life philosophy. Neither was having the constant threat of being fired hanging over my head (which, I saw so frequently in this “what have you done for me lately” business).

It dawned on me that if I won the lottery, I would quit my job and become a history teacher. I decided not to wait for this miracle to happen.

Gangsta Life Part 3

I quit trading and enrolled in graduate school to get my masters in secondary education at Hofstra University. I had to help support myself by working in a sporting goods store. This was a far cry from going out with brokers and drinking $400 dollar bottles of Champagne and then taking a cab back to my apartment on the upper east side of Manhattan.

Things took a more dramatic turn. After completing my student teaching and working as a permanent sub for a year, I decided to take a job in a very tough intermediate school located in Far Rockaway, Queens.

My first day, the students were greeted with metal detectors and body wands. I had come from two pretty crazy places, the retail brokerage world and an FX trading desk, but nothing could ever prepare me to what I would experience here.

Some of the more notable highlights were:

  • Parents throwing bottles at the school in protest when the auditorium was filled to capacity for a talent show;
  • Our principal being bitten in the back during graduation rehearsal, and having to go to the hospital for an AIDS test;
  • One teacher arrested for selling drugs; and another for spousal abuse;
  • Too many 12- and 13-year-old pregnant girls;
  • A teacher being assaulted and thrown down the stairs by her students;
  • A student being removed from my class for sodomizing his sibling; and
  • A 31-year old grandfather.

Somehow I survived my first year; and, strangely, I really began to like this place. I realized I just might be the most important person in the world to some of these students. They came from such horrible, depraved conditions that school might just be the one place in their life that could make a real difference.

Once I adjusted to this new life, I decided to try new things and give them experiences they would never have at home.

  • I started a chess club and gave every student their own set;
  • We joined the stock market game and talked about portfolios instead of gangs;
  • We went on every trip humanly possible to expose them to a world outside their drug/gang infested radius;
  • We celebrated everyone’s birthday with a party. Even though they were 13, they loved it and it made a big difference; and
  • I read them books; we had free reading periods and created a class library from books they had at home.

I am no saint but I made an effort to try and help them. Though I was inexperienced, things worked out okay.

After five years, I left but I will never forget that place as long as I live. Oddly enough, this place was much more honest than the retail brokerage world; ethically challenged FX trading desks; and my encounter with the 403(b) landscape, dominated by the large insurers. The supposedly “respectable” parts of society turned out to be “Gangsta’s Paradise”; they just hid it behind nice suits and certificates on the wall. There are many good people that work in these fields, but the culture of these industries is far too big a hurdle to overcome.

I went on to teach in a very good public school in Long Island. This was also a terrific experience and I met a ton of great people and kids. Though these kids had a lot more money, they still responded well to being treated fairly and with respect. I made many lifelong friends and many of them eventually became clients.

While I was working I signed up for the 403(b) plan, I immediately saw Vanguard on the list and filled out the paperwork. Since I had knowledge of finance, this was a no-brainer. I assumed this was what everybody did. Boy, was I wrong!!

 People knew my background and they would come to me for advice on their retirement plan. It turns out pretty much nobody was using Vanguard!

What I saw was shocking: Variable annuities with 3-4% annual fees plus onerous surrender fees. I asked my co-workers, “Why would you purchase such crap?” Most responded that the salesman was “a really nice guy” and EVERYBODY else was using him. I was aghast. After I explained to them what this “friendship” was costing them in high fees and low returns, many quickly had a change of heart.

This gave my wife, Dina, and I an idea:  Why not start our own company to service this neglected market? After about 10 years or so, the business became too big for me to continue teaching and manage $50 million dollars in client assets. Though I still loved teaching, I resigned my position to focus on this issue fulltime.

Ritholtz Wealth Management

About a year letter, I sent an innocent message to the "gang" at Ritholtz Wealth Management. The next thing I knew Dina and I became part of the firm.

I had followed the blogs of owner Barry Ritholtz, and Josh Brown for years. I loved the way they savaged those who took advantage of the common retail investor. We knew this would be a perfect fit. Finally, Dina and I had a large platform to expose this terrible treatment of public school teachers by the financial service industry to the world.

Along with my friends, teacher Dan Otter, who owns the 403(b) education and advocacy website 403bwise.com, and planner and teacher advocate Scott Dauenhauer, CFP (and many others) we are so excited about what is to come in this neglected market.

I will always be a teacher, and understand completely the often impossible job they have, the unfair criticisms they receive, and how hard they work. While I am no longer in front of a middle school classroom, I use many of the same valuable methods I learned while teaching to educate my adult clients. Many adults learn the same way as they did as children. I am very grateful to the education profession for giving me these important skills.

A new day has arrived; and, for once, public school teachers may be getting the financial respect they so richly deserve.

We are honored to play a small part in a day that has been way too long in coming.

403(b) Partnership with Aspire

Ritholtz Wealth Management wishes to be part of the solution now that this decades long injustice has been laid bare for all the world to see. Our firm has partnered with Aspire in order to provide an alternative to high fee annuities and expensive broker sold mutual funds. Aspire can be found in over 3,000 school districts nationwide. Check with your business department to see if they are on your list. If they are we can help you. If they are not let us know and we can work on adding this valuable option to your district. Feel free to reach out to us and let us help liberate you from the shackles of the Fee Monsters.

Photo of author

Tony, a former teacher, works for Ritholtz Wealth Management. He can be reached here. Tony along with his wife, Dina, who is also a planner at RWM, were interviewed on the Teach and Retire Rich podcast episode 36.