All posts by Richard Thripp

UCF student in the Education Ph.D. program. 25-year-old photographer, writer, and pianist.

Distance education and telecommuting can slow climate change

Although the recent IGI Global academic anthology that I am a co-editor of, Handbook of Research on Emerging Practices and Methods for K–12 Online and Blended Learning, does not mention climate change at all, in fact virtual schools can help slow down climate change. Teaching and learning from home, also known as distance education, like working from home, which is referred to as telecommuting, reduces carbon emissions by reducing travel.

As I have written previously, the United States emits over five billion tonnes of CO2 per year, almost a third of which are from transportation. Preventing transportation from occurring, therefore, is an important way to slow down climate change. Although an enormous amount of CO2 is nonetheless being emitted and has already been emitted, this does not mean we should succumb to the “all or nothing” fallacy and concede that it is pointless to do anything offering amelioration.

Research has shown that distance education produces similar academic achievement to in-person education. Florida has pioneered and continues to lead in K–12 distance education with Florida Virtual School, through which students of all grade levels can take some or all of their classes from home. Distance education is not an all-or-nothing proposition; it is perfectly sensible for online learning to involve occasional face-to-face meetings and for a mix of online, face-to-face, and blended courses to be offered.

Although broadband Internet connectivity and computers are widespread, and many workers are now “knowledge” workers rather than doing location-dependent work, the majority of workers and students continue to show up in-person, and are often obliged to. Online work is perennially criticized for stifling valuable in-person interactions, but it is perfectly reasonable for many schools and firms to meet once a week or even biweekly rather than five days a week.

As a student and instructor at University of Central Florida, I have taken and taught the majority of my courses in fully online or blended modalities. Although I did elect to take mixed-mode courses several times, particularly in my Master’s program, even when fully online courses were available, the weekly or occasional meetings allowed me to make friends, ask questions in person, and participate in many educational projects. Commuting from almost 60 miles away in the Daytona Beach area, I was always aware that each round-trip emitted almost 100 lbs. of carbon dioxide, however (2,205 lbs. is a tonne).

Especially in the current strong economy, construction is booming. New housing, commercial buildings, and road expansion projects are happening everywhere. None of this is sustainable and much of it is ill-advised. Cement, concrete’s key ingredient, produces about three tonnes, or 8%, of annual global CO2 emissions. Steel production produces another 5% of CO2 emissions. Buildings, bridges, and roads are often made out of concrete and steel. Distance education and telecommuting can reduce the demand for cement, steel, cars, and fossil fuels.

Particularly in the United States, but throughout the world, most of the costs of driving a car are not assessed to the motorist. Of course, the carbon footprint and damage to the earth is not priced in, but also, the costs of roads and infrastructure are borne collectively by taxpayers but not charged incrementally. If these costs were all priced in, people would be traveling far less and clamoring for distance education and telecommuting. Any competent transportation planner knows of the phenomenon of induced demand, where widening a road results in more motorists miraculously turning out, making trips they wouldn’t have before due to congestion. Although Tesla drivers are helping reduce carbon emissions and increase production of lithium-ion battery cells, driving still requires roads made out of asphalt and concrete, and more driving prompts more expansion and repair of roads. Reducing travel is important.


Picture this: Children going to school one day a week instead of five, while the rest of their learning is done at home. Schools are much smaller in size, because each student has a certain day of the week when they go to school in-person and only about 20% of the student body shows up on any particular day. Children learn 21st-century skills while continuing to get valuable in-person interactions with other students and teachers, which are rendered special and precious due to only occurring once a week. Although parents previously relied on schools for childcare, now many of them are working from home too and only going to the office one day a week or even less. People are getting out for walks, talking with their neighbors, and organizing neighborhood events instead of driving out-of-town for work and socialization.

Going to the cubicle or classroom five days a week was a downer anyway, so people are now feeling happier and more well-adjusted while also emitting far less CO2. In Orlando, a massive freeway expansion project called I-4 Ultimate was just completed, but the 12-lane highway is never used to capacity and the congestion-priced toll lanes are producing little to no revenue. Attorneys for the 40-year public–private partnership to pay for the $2.5 billion project via toll revenues are currently working from home, drafting papers for a bankruptcy filing.


The recent, catastrophic destruction by Hurricane Michael in Mexico Beach, Florida was a call to action on several levels. One of these was to improve the building codes. Although building codes have already gotten far more rigorous in south Florida to withstand higher categories of hurricanes, Central Florida and the panhandle have lagged behind due to strong hurricanes rarely if ever striking. Due to climate change, this has changed. Ironically, building stronger structures emits more carbon dioxide, which turns into a vicious circle. Wood structures are replaced by masonry, and concrete blocks become solid and reinforced with steel. More trees are cleared and structures must be rebuilt from scratch after each disaster, emitting even more CO2, while the oceans reach their CO2 saturation point and polar ice melts releasing fantastic quantities of CO2 and methane. It’s pure madness.

The CO2 situation is dire, and the idea of “slowing” climate change is not unlike saying we cut the U.S. national debt by merely slowing its rate of increase. But, we are not even cutting the rate of increase; in fact, 2018 CO2 emissions increased 3.4% in the United States in 2018. The levels have already been outrageous for decades and continue to go up.

When we are at school or work, our house or apartment, in whole or part, is going unused. When roads are expanded, peak demand is being accommodated at the busiest times of the day, while the roads remain almost unused at night and below capacity during mid-day. When a new concrete mega-church is planted to go unused and locked most of the week, with a massive asphalt parking lot to boot, it is a travesty. There are eight parking spaces for every car in America—a CO2 nightmare—but of course, none of them are ever in the right place at the right time. The time for distance education and telecommuting is now.

I know that schools in Florida are also used as hurricane shelters, but even if we were to stop building and replacing schools due to distance education, churches can pick up some of the slack.


Like many Bay Area workers, my mother lives near Fremont, California and commutes on BART to San Francisco, 4–5 days a week. She works for the San Francisco government in a job that is completely computer-oriented, but only gets to work from home occasionally. Although she fully relies on walking and BART to get to and from work, there are plenty of days when she would prefer not to get up before 7 a.m. and be gone 12 hours due to over two hours of commuting. No one can actually afford to live in San Francisco, so technology workers, teachers, and countless others commute from cheaper areas each day, to do work that could be done from anywhere. Why?

Automattic, Matt Mullenweg’s company that is behind WordPress and many other interesting and useful projects, has about 700 employees, the vast majority of which work remotely. (You are currently reading a WordPress-powered blog by a 27 year old who developed a popular WordPress plugin as a teenager, with over a quarter-million downloads, but then got bored with it and abandoned the project.) Although Automattic’s employees do fly to 1–3 meetups per year, which is horrible for the earth (there are no electric airplanes), in principal this fits with my idea of having occasional face-to-face meetings with most work being by telecommute. If you get lonely, you can always go to the nearest Starbucks, which probably isn’t much of a commute because they are almost everywhere.


I hope you have enjoyed reading my ideas here, many of which were regurgitated from other sources, although I have not seen many suggest distance education and telecommuting as a multi-pronged approach toward reducing CO2 emissions. As further reading, I suggest Losing Earth at the Pulitzer Center’s website.

Capital One 360 Money Market OFFER500 $500 Incentive Bait-and-Switch

Recently I have been in dispute with Capital One regarding a promotional offer for opening and funding a Money Market account. Anyone who has read my website or Google searches my name knows that I am not one to back down when being ripped off by a large corporation. I have gone up against Amazon.com, Bank of America, MetroPCS, and others I can’t even recall, and I rarely lose. It is not that I am seeking being defrauded, but that in America, large corporations basically operate like it is the Wild West, reneging on contractually obligated terms with condescension, glee, and no fear of reprisal or even public opinion. I am seriously considering switching from Republican to Democrat and voting for Elizabeth Warren, as Trump has done nothing but enable the corporate fleecing of individual Americans by gutting the Consumer Financial Protection Bureau (CFPB) and many other laws and regulatory bodies.


I opened a Capital One 360 Money Market account # [redacted] on September 7, 2018 using promotion code OFFER500, and fulfilled the requirements of this offer with cumulative deposits as of October 15, 2018. Although the required 60 days have passed, Capital One contends I am ineligible for the $500 incentive due to not depositing $50,000 all at once. However, the terms of the offer were plainly written and do not require the deposits to be made all at once:

Here’s the full scoop on how to earn your $500 bonus: Open a 360 Money Market account and deposit at least $50,000 between 12:00 a.m. ET on September 1, 2018, and 11:59 p.m. ET on October 31, 2018. When you open your account, enter your promotional code—OFFER500. (Please do not share this code with others.) Deposits must be from another bank (transfers between Capital One accounts will not qualify).

My deposits were in excess of $50,000, came from external banks, and were completed on October 15, 2018. I am writing to request fulfillment of the $500 bonus per the offer terms.

Capital One has been nothing but rude and condescending to me. They say on the phone that I’m mistaken, that the terms haven’t changed and always said cycling is not allowed even though I demonstrated orally and in writing that this is false. They rebutted my CFPB complaint which was summarily closed, and I’ve already written up the small claims filing form and sent it to them two months ago but they told me on the phone to go ahead and try suing them. No offer of a consolation $200 like others got, and no offer to be eligible for another bonus in the future (prior account holders are barred from receiving a promotional incentive, even if they didn’t receive a promotional incentive for their prior account).

I am going to go with the Florida and Delaware attorney general complaints, BBB, et cetera before suing, as suing is a hassle with serving the summons on their registered agent and paying a large filing fee. I stated multiple times in letters and on the phone that I know they paid out the $500 bonus automatically to all customers up until September 21, 2018 who did the same sort of deposits that I did, but they wouldn’t admit to this or even address it.

Their attorney is wrong—they are in violation of laws on deceptive business practices and probably the Uniform Commercial Code too. If it was a business account that charges a fee based on deposit volume and you cycled deposits, they would still charge fees on the full totals of the deposits.

A key part of the terms is that it says $50,000 in “deposits must be from another bank” (plural). Also note that another offer, CELEBRATE (PDF), uses different terms “$500 bonus — you maintained a daily balance of $50,000 or more for the first 90 days following the Initial Funding Period.” But, both OFFER500 (PDF) and OFFER200 (PDF) do not require the 90 days balance nor mention of balance or withdrawals disqualifying one for the incentive. I brought this up on phone calls and in writing and they don’t even respond or address it.

My CFPB complaint was answered by an employee named Jonathan who signed and printed his response letter both with only his first name and would not give his last name on the phone. I then complained by email to Kleber Santos, President, Retail & Direct Bank at Capital One, who referred the issue back to Jonathan. Jonathan called me and was most patronizing and rude in explaining (incorrectly) that I misunderstood the terms and that Capital One will not be paying anything, and he told me to go ahead and try suing them when I brought up the possibility of a small claims lawsuit.

In the CFPB response letter, Jonathan lists all of my deposit and withdrawal activity and states:

As a result of this activity, your 360 Money Market balance didn’t reach at least $50,000.00, the balance requirement necessary for earning the $500.00 bonus. To successfully earn the $500.00 bonus and have it post within 60 days after completion, your 360 Money Market needed to be externally funded and have a total balance of at least $50,000.00 by October 31, 2018, at 11:59 PM ET.

As a result, we will not be honoring the posting of a $500.00 bonus to your 360 Money Market.


At every step in communicating by phone and in writing to Capital One and the CFPB I have explained the mismatch in terms, including attaching a PDF file each time of the terms as displayed when I opened the account which do not contain the language about the balance of the account needing to reach $50,000.00 at any single point in time. As the terms were in actuality written, there is only a requirement that deposits between September 1, 2018 and October 31, 2018 sum to $50,000.00 or more and come from external banks. The terms had no mention of intervening withdrawals not being allowed. Capital One will not address this nor will they address that they were in fact paying out bonuses to all customers up until September 21, 2018, and made no attempt to retroactively debit the bonus from these customers.


Why “Crapital” One is a fitting moniker

Online, Capital One is derogatorily referred to as Crapital One, and this is well deserved. Capital One loves suing its customers in small claims court—they sued more than 500,000 individual customers per year in 2008, 2009, and 2010 for debts much smaller than most credit card issues would sue for. It is no wonder they are not afraid of being sued, as they obviously have an expansive network of attorneys and paralegals to handle suing individual customers en masse. In small claims court, they are almost universally the plantiff rather than the defendant. This is in diametric opposition to common perceptions of small claims court being a venue for consumers to seek financial justice against large corporations. The Center for Responsible Lending has challenged Capital One in an amicus brief to a federal appeals court regarding Capital One’s “misleading overdraft fee practice” to deduct the maximum amount from customers’ deposit accounts. It should not be a surprise that an overdrawn Capital One account, even by just a few dollars, will invariably cascade into hundreds of dollars in overdraft fees that Capital One is happy to sue their customers in small claims court for.

Capital One should be avoided. ING Direct was a fine bank before Capital One acquired them, rebranded as Capital One 360, and changed the modus operandi to ripping customers off rather than helping them. If you, too, are a victim of Capital One, I suggest emailing their executives, and complaining, both publicly and in private, through regulatory agencies, the court, social media, personal websites, et cetera. Not only do they systematically prey on subprime customers in an organized fashion—they brazenly act in bad faith against detail-oriented, rule-following customers like myself.

The simple solution would be for them to honor their terms as written for past customers and adjust the terms for future customers. But no—Capital One continues their bait-and-switch scheme even after the backlash they are experiencing on the OFFER500 debacle. They continue to offer a similar promotion, OFFER200, which substitutes a $200 bonus for $10,000 in deposits with otherwise identical terms:

https://www.capitalone.com/offer200/ (PDF)

Here’s the full scoop on how to earn your $200 bonus: Open a 360 Money Market account and deposit at least $10,000 between 12:00 a.m. ET on between December 12, 2018, and 11:59 p.m. ET on March 31, 2019. When you open your account, enter your promotional code—OFFER200. (Please do not share this code with others.) Deposits must be from another bank (transfers between Capital One accounts will not qualify). If you have or had an open savings product with Capital One after January 1, 2016, you’re ineligible for the bonus. This offer cannot be combined with any other Capital One Bank or Capital One 360 new account opening offer. Bonus is only valid for one account.

When will I actually get my bonus? Capital One will deposit the $200 bonus into your account within 60 days after completing the above conditions. If your account is in default, closed, or suspended, or otherwise not in good standing, you will not receive the bonus.

They could easily stipulate that the account must attain a $10,000 balance during the promotion period. Their employees and executives erroneously purport that the terms say that, which they do not. As written, one who does not have $10,000 on-hand should be able to receive the bonus by making deposits from another bank and withdrawals to another bank (e.g., “cycling”) of smaller amounts which in aggregate sum to $10,000 or more of deposits during the promotion period. Although the terms say “transfers between Capital One accounts will not qualify,” they do not say that transfers between Capital One accounts and external banks do not qualify. Moreover, they were paying out such bonuses programmatically and automatically to customers who cycled deposits up until September 21, 2018, when someone in marketing or loss prevention must have noticed they could be saving quite a bit of money by not doing this. But, where is the requisite change in terms? Nowhere to be found, even in Capital One’s new promotions, which makes this nothing less than a bait-and-switch. Theirs is a deceptive and misleading business practice in violation of contractually obliged terms—terms which Capital One could easily adjust and currently are quite concise and clear—in opposition to their contentions to the contrary. Shameful.

Announcement on IGI Global Handbook of Research on Emerging Practices and Methods for K–12 Online and Blended Learning

Book Cover

I am proud to announce the release of our new Handbook of Research on Emerging Practices and Methods for K–12 Online and Blended Learning published by IGI Global.

Heafner, T. L., Hartshorne, R., & Thripp, R. (Eds.). (2019). Handbook of research on emerging practices and methods of K–12 online and blended learning. https://doi.org/10.4018/978-1-5225-8009-6

My statement on the handbook:
I worked extensively on editing the handbook for writing quality, fact-checking, and APA style. At the same time, I enjoyed learning about virtual schools and blended learning across the country. There is something for everyone in this handbook—teachers, administrators, teacher educators, instructional designers, program and curriculum developers, and more. The researchers and practitioners in this compendium are at the cutting edge of fully online and blended learning pedagogies, practices, and technologies, not only in teaching K–12 students and preservice teachers, but also in offering professional development workshops on moving coursework online, stimulating critical thought, and facilitating deep learning. The handbook is rounded out with chapters with case studies in online pedagogies, tools, and strategies for specific subject areas, such as mathematics, science, and social studies. As K–12 learning is increasingly centered around online technologies and resources, this handbook is both timely and relevant, particularly with respect to the nationwide deficit in K–12 online teaching courses, certificates, programs, and continuing education opportunities.

Autobiographical statement:
Richard Thripp is a doctoral candidate and graduate teaching associate in the College of Community Innovation and Education at the University of Central Florida. He has instructed over 200 students in EME 2040: Introduction to Technology for Educators on the use of Web technologies in K–12 teaching practice. Richard’s primary research interest is in the improvement of individual financial literacy through education and behavioral approaches. He holds an M.A. in Applied Learning and Instruction and a certificate in Advanced Quantitative Methodologies in Educational and Human Sciences from the University of Central Florida.

Climate Change and the All-or-Nothing Fallacy

Learning that concentrations of carbon dioxide (CO2) in the atmosphere have increased 50% since the Industrial Revolution and are the highest they have been in approximately the past million years is what convinced me that human-caused climate change is real, has been occuring, is occuring, and will continue to occur. Even if all humans were to disappear overnight, the earth would continue to warm and CO2 levels would continue to increase for about 40 years. But, 37 billion metric tons of CO2 were emitted in 2018 and this is likely to continue or even increase.

The all-or-nothing fallacy, also known as the false dilemma, is a logical fallacy by which people argue that because climate change is happening anyway, we may as well keep doing what we are doing. It encourages defeatism rather than constructive action. It does not help that we are not psychologically equipped to easily comprehend a threat such as climate change, that is so diffused in time and space.

The world’s population growth compounds not unlike the stock market, with more people alive now than ever before. The global population has doubled since 1970, and of all the humans that have ever lived, about 1 in 15 are alive today.

There are 410 parts per million (ppm) of CO2 in the atmosphere now, or 0.041% by volume. This is compared with about 280 ppm at the start of the Industrial Revolution, and a projected 500 ppm in 2050 and over 600 ppm in 2100. Besides massive increases in natural disasters and malnutrition, this gives going outside to get a breath of fresh air a whole different meaning. Recent research shows people experience declining cognitive function from high CO2 concentrations, and it is not uncommon to see 1,400 ppm indoors due to lack of air circulation. People actually notice a decline in air quality above 600 ppm. If there are 600 ppm of CO2 outdoors, this is a baseline from which only higher concentrations will be seen indoors in 2100, and 600 ppm isn’t even a liberal estimate (some estimates are as high as 1,000 ppm).

Right now, historic ancient forests in Tasmania are burning on a massive scale. We have seen huge fires in California and elsewhere due to climate change, and all of these events release more CO2 while simultaneously reducing the earth’s ability to absorb CO2. Even the color and acidity of the oceans will never be the same again. As climate change continues, it will get far worse like a growing snowball. For example, arctic glaciers are releasing methane, which is far worse than CO2 by volume, and this will only accelerate.

Research by Irakli Loladze shows that when crops get more CO2, they grow faster but have fewer nutrients and more carbohydrates. This effect is separate from declining vitamins, minerals, and protein content in fruits and vegetables from factory farming focused on higher crop yields. CO2 will destroy the planet’s habitats and habitability for humans and it will even impair our cognitive function and nutrition, but no one seems to care.

Economists demonstrate that the true cost of CO2-emitting products are not included in prices. A gallon of gas may cost $2.30 now, but how much will humans of 2100 wish they could pay to go back in time and stop you from burning it? Even adjusting for inflation, $5.00 is not a stretch, and it likely may be $10, $20, or even more. The United States emits over five billion metric tons of CO2 a year, almost a third of which is from transportation. The impact of frivolous travel is enormous.

A large part of our economy and corporate valuations are built on emitting CO2 that will cost us dearly in the future. Although I write about personal finance and investing in the entire stock market to ensure capital gains over the long term and being well-funded in retirement, it is a fact that these gains come at a cost and are not sustainable in the long term. I have suggested in prior writing that rather than trying to pick corporations that are socially responsible, one should buy the whole market and contribute the differential gains to green causes; that is, the additional income one acquired by buying the whole market instead of a Sisyphean attempt to exclude polluting corporations. For several years now, I’ve railed against Amazon for continually stealing customer gift card balances, including my own $451 gift card balance in 2015. Nonetheless, my 403(b) and IRAs still invest in Amazon; it’s not like I have access to a special mutual fund that includes the entire S&P 500 except Amazon. But, with the gravity and enormity of the climate change conundrum, I find myself questioning this wisdom, particularly as my girlfriend and I are expecting a son in less than a month, who I certainly hope will live to the year 2100 and beyond.

Climate change is paradoxically both all-or-nothing and not at the same time. We have produced technological marvels that we could not even imagine 50 years ago, yet at the same time we cannot rely on humanity to miraculously come up with a technological panacea for climate change at some unknown point in the future. The answer is “all of the above.” We must invent, invest, abate, ameliorate, adapt, tax, legislate, regulate, educate, indemnify, chastise, and more. We asked Americans, “is this trip necessary?” during World War II to support the war effort. We took the drastic steps of making cents out of steel and nickels out of silver to set aside copper and nickel for the war effort. We sold $185 billion of war bonds, equivalent to $2.7 trillion today. Climate change is an even bigger threat than World War II. Why are we not investing $2.7 trillion in climate change solutions? Why are we not chastising tourists and jet-setters for their feckless recklessness? Why are Americans not united in protest against the U.S. military for not only consuming an ungodly amount of oil but orienting itself toward “controlling oil-rich regions and defending the key shipping supply routes that carry half the world’s oil” (Buxton, 2015, para. 4)? Talk about propping up fossil fuels. If Americans really comprehended the gravity of climate change, the protests would be larger and more widespread than the Vietnam War and Tiananmen Square protests combined.

I know I’ve stayed silent on the issue of climate change for far too long and done more than my fair share of polluting too (e.g., visiting family in China in 2017 and Yellowstone National Park in 2018), but I will stay silent no longer. My son’s future depends on it.

World War II poster

Combating Investing Profiteers and Their Propaganda Against Low-Cost Investing

No one knew better than Jack Bogle (1929–2019) that the interests of the financial industry are diametrically opposed to the interests of the common person. Low-cost index-tracking funds now comprise about 20% of the market for U.S. stock mutual funds, and this share continues to grow. However, Americans’ financial and investing literacy remains low, and those seeking out information are overwhelmed by propaganda from profiteers, which makes it hard to discern the truth.

John Paulson, a wealthy profiteer in the hedge fund industry, surprisingly shared some truth in a recent Bloomberg Opinion column:

“The other thing I love about this business, when I say why I went into this business, is the fee structure,” he [Paulson] added, detailing how much he could make in charging a 1 per cent management fee and 20 per cent performance fee on different levels of assets.

“The more money you manage, the greater the fees,” he said. “Now ultimately we managed over $30bn, and there were years our returns were well in excess of 20 per cent, so to get to those levels, the fees just pour out of the sky.”

The column author (Matt Levine) continues, elaborating on how Paulson profited even while screwing over his investors:

Also if you start losing money you don’t have to give the fees back: “The 63-year-old money manager said that almost 75 to 80 per cent of the money managed by Paulson & Co was now his own capital, reflecting years of disappointing returns that have driven outside investors away”—though also reflecting earlier years of huge returns and huge fees that allowed him to have billions of dollars of his own money in his fund—and “he would consider turning his firm Paulson & Co into a family office ‘in the next year or two.'”

Hedge funds aren’t even open to the ordinary investor; you must be an accredited investor with at least a $1 million net worth excluding one’s home, or income over $200,000 in the past few years. Supposedly, hedge funds are where “smart money” goes; accredited investors are sometimes referred to as “sophisticated” investors, such as in Australian law. This is ironic, because it is foolish to pay 1% per year of portfolio value plus 20% of gains, when active investors are demonstrably incompetent. Above, we see that Paulson had a few good years early on causing foolish investors to pour into his fund, followed by many years of terrible returns that led them to pull out. All along, he collected about 1% per year in management fees plus about 20% of investors’ gains during good years, while losing nothing in bad years. This is highway robbery.

Vanguard, the company Jack Bogle founded, fought profiteering on multiple fronts. They fought against “load fees,” which are sales commissions for stockbrokers that come as a percentage of invested assets. Up until the 1970s, no-load mutual funds were almost unheard of, and it was common for brokers to get as much as 5% right off the top—if you put in $10,000, only $9,500 got invested and they kept $500, immediately kneecapping your returns. Now, investments with load fees are the abnormality. And, although Vanguard has always offered actively managed funds, they pioneered index-tracking funds with much lower fees. Tracking an index, such as the S&P 500, has shown to be consistently better than active management. Most fund managers produce returns that are lower than an index fund. When you add sky-high fees on top of this, you are guaranteed to lose money. Conway (2014) writes in a Barron’s article:

How hard it is to predict who will do well. This isn’t part of the latest S&P study, but the index maker’s previous work on the subject suggests there’s no statistically significant persistence among funds in the highest-performing groups. There’s no new evidence suggesting that’s changed.

When you look at your 401(k) plan, you will almost certainly see investment options that don’t belong there. There are almost assuredly funds in there that charge fees of 1% per year or more, and sometimes a low-cost index fund, with an annual fee of about 0.05%, isn’t even available. The profiteers’ reach is deep, and it extends even to our teachers who are scammed by 403(b) annuity plans, in cahoots with lawmakers and administrators who partner with profiteering companies to only put bad investment options on the table.

Online, the propaganda against low-cost investing is widespread. The industry reaps massive profits while creating little value, not unlike the tobacco companies. They have a lot to lose. This is why there are daily propoganda pieces in the news saying things like “if everyone invested in index funds, it would be a catastrophe” and stuffing Wikipedia pages with propaganda such as “many investors also find it difficult to beat the performance of the S&P 500 Index due to their lack of experience/skill in investing” and purporting that unsuccessful active managers are actually “closet indexers,” justifying high fees while failing to deliver the product (active management) that purportedly produces profits.

In truth, active management is a nothingburger. You pay high fees and get lower returns than an index fund. It’s sort of like going to a bank and paying $200 to arrange to be mugged in the parking lot.

Even without sales commissions, financial advisors and other financial professionals still have plenty of ways to profiteer. They do this via an annual or quarterly fee assessed against “assets under management” that you have made them custodian of, which is usually around 1% per year. Framing this as 1% per year actually does a disservice to the investor, however. The stock market only returns about 10% per year as a long-term average, before inflation which is roughly 3%. One percent of 10% is actually a 10% fee, and if adjusting for inflation, a 14% fee. Would you pay a real estate agent 14%?

On top of this, the investments financial advisors place you in, even if index funds, likely do not have the 0.05% or even lower annual fees that are offered by Vanguard, Fidelity, Charles Schwab, and others. You might see your money in a fund that is substantially similar yet has a 0.5% annual fee, with your advisor receiving a cut from the affiliated company. If you can expect a long-term average of 7% in real returns before fees, then 1.5% of fund and advisor fees gobbles up 21.4% of these returns. Each and every year.

The FINRA foundation’s recent study of Millennial investors found that Millennials are actually eager to work face-to-face with financial professionals rather than do-it-yourself investing or using a robo-advisor. Also, Millennials had no idea that you need substantial assets to work with a financial advisor, and they expected an advisor to take a whopping 5% of assets under management as a fee each year. Such lack of knowledge is kryptonite to achieving financial independence. Even a high income cannot compensate. “A fool and his money are soon parted,” as the saying goes. In this industry, it is not helpful that wolves masquerade as sheep and sheep do not even notice they are being eaten.

The common American does not have access to a hedge fund or even a financial advisor, yet they still have a 401(k) plan available, chock full of bad investment options. There might only be one low-cost index fund available in their 401(k) fund menu, or even none at all. About half of Americans do not invest in stocks at all, and if they do, they don’t know that buying and holding the whole market is the best strategy. This fact is both counterintuitive and pilloried by propagandists in the financial media. To combat profiteering and propaganda by vested interests in the financial industry, financial education is key, but must be coupled with outlawing and derriding profiteering practices. A good place to start is with 403(b) plans for public school teachers. Teachers lack financial knowledge, shape the next generation’s knowledge, and are besieged with low pay, awful pension plans that no one ever gets a pension from, cringeworthy annuities masquerading as investment options, and sales representatives that stake out school cafeterias to cajole them into financial ruination. Therefore, for my forthcoming Education Ph.D. dissertation at University of Central Florida, An Investigation of Investing and Retirement Knowledge Among Preservice Teachers, I am surveying the next generation of teachers to provide (a) evidence to support reforms both nationally and locally and (b) instructional design recommendations for financial education programs.

This article was also posted on Tippyfi.