A boss is in charge. A boss is a coach. And whether bosses like it or not, they are often educators, too.
Eryn Schultz did like it about 10 years ago when, as a supervisor at H-E-B grocery stores, some hourly workers expressed interest in the company’s 401(k) plan and had questions. But as she educated herself during her time with the company in and around Houston, after getting her master of business administration degree, there were some things she found wanting.
The formula for the generous match was complex enough that some of her hourly employees didn’t quite grasp how good the match was. There were not enough educational materials in Spanish, even though it was many workers’ first language. And the fees in the mutual funds for the Texas-based company, which has over 165,000 workers, seemed high.
She took her concerns to the people who made decisions about the retirement plan, and her sense was that they did not agree with most of them. About a year after moving into a store leadership role overseeing perishable products, she quit — retail hours are hard, and the 401(k) frustrations did not help.
Two years later, as her dismay over the retirement plan and the poor state of financial literacy generally continued to gnaw at her, she heard about an H-E-B employee class-action suit over the plan.
Her parents told her not to join. A lawyer friend suggested thinking hard about what it would mean to be associated with a losing legal battle. Suing an employer — even a former one — tends not to be the savviest career enhancement strategy, so there was that to consider.
But she did it anyway, and she still tears up when she thinks about why. There were people at H-E-B making $30,000 per year, she said, and they ate Lunchables because the fresh vegetables were expensive. Even if they got only $5,000 from a lawsuit, it would be a life-changing amount of money.
“I don’t need to work in this industry,” Ms. Schultz, 39, recalled thinking, when I met her for coffee at the Bogleheads money nerd conference in San Antonio last fall. “If I can’t add my name, who can?”
About 20 years ago, lawyers started suing companies over their 401(k) plans, arguing that high fees and subpar investment choices were a violation of employers’ fiduciary duty to act in the best interest of their employees.
There were some victories. But more important, the legal challenges terrified many employers and their advisers. The people in charge started selecting funds for the investment plan menu more carefully and kept a closer watch on costs.
It’s not clear how much attention H-E-B paid to all of this, since it did not agree to an interview on the matter.
“H-E-B is a people company that is committed to doing the right thing for our partners,” a spokesperson said in an emailed statement. “H-E-B has made significant investments to provide our partners robust, best-in-class benefits, including our 401(k) plans, which we are proud of and help our partners build strong financial futures. We care deeply for all our partners, their financial well-being, and retirement goals, and we will continue to vigorously defend against any unfounded claims.”
The suit, which began in 2019, is taking a while.
“These financial/complex civil cases can take years,” said Federal District Judge Fred Biery of the Western District of Texas, who is presiding over the case, in an email. “In the current environment, the workload is exacerbated in this part of the country because of ICE detentions here and the transfer of detainees from other parts of the country to detention centers within our jurisdiction. Consequently, we are inundated with habeas corpus petitions seeking basic due process of the people in deportation proceedings.”
The H-E-B 401(k) plan is flat-out weird. It includes no target-date funds, which include a mix of investments that grow more conservative, automatically, as plan participants age. The vast majority of 401(k) plans have them now.
What the H-E-B plan does have are actively managed funds with different risk profiles. Those funds contain stocks, bonds and many alternative investments, including private equity. Hedge fund investments in certain mutual funds from the 401(k) plan are also part of the lawsuit.
“This is a highly unusual fund lineup,” said Jerry Schlichter, a pioneering lawyer who has sued many employers over their 401(k) plans. The plaintiff’s lawyers in Ms. Schultz’s case (Mr. Schlichter is not involved) take issue with the plan’s fees, its returns and more.
Ms. Schultz had done a few informal employee presentations on the 401(k) plan at H-E-B, but she said that executives up the food chain asked her to stop, lest it appear she was giving out investment advice. So she spoke of the plan only when spoken to by her employees and answered only with facts.
But she didn’t lose the desire to explain this stuff to people. A friend from business school knew of her interest and asked her to give a money talk to a group of students.
It was Harvard, and Harvard hadn’t taught them enough. Afterward, someone sidled up to her and told her about their pile of secret credit card debt. Others needed help understanding the nuances of saving for retirement in a pretax 401(k) account versus a post-tax Roth one, just like many H-E-B employees had.
The pandemic hit, and Ms. Schultz moved to Zoom (and, in 2021, to Austin). Word of mouth spread. She started charging for her classes. And when people began asking her to be their financial adviser, she got her Certified Financial Planner designation and started saying yes.
Ms. Schultz is well aware that telling her legal tale is going to make suing over fees part of her personal brand. So what does she charge for her own advisory work?
Four hundred dollars per hour.
That may seem like a lot, though it’s in line with what lawyers bill and the 50-minute ask from many of the shrinks on both coasts. She does deal in tax law and feelings, often in the same quarter hour. And yes, she acts as a fiduciary, agreeing to act only in her clients’ best interest and accepting no commissions from investment firms.
The hourly fee is purposeful. Like many younger advisers, she doesn’t much care for the industry habit of charging people a percentage of their assets under management.
Many otherwise excellent advisers won’t come near you if you don’t have $500,000 in investments for them to oversee, or $1 million or more. If you’re a doctor or lawyer with $300,000 in student-loan debt or an entrepreneur with limited liquidity, a whole swath of experts will outright shut the door in your face.
Ms. Schultz has about 70 clients, some of whom check in only for a few hours each year. And she still does her seminars — that’s about 25 percent of her time and overall revenue.
So is Ms. Schultz a bellyacher or a superhero? Someday, Judge Biery will make a legal determination, at least.
Meanwhile, she remains a coach and a teacher. I’d pay good money just to soak in the vibe if H-E-B brought her back for a few sessions.
Ron Lieber has been the Your Money columnist since 2008 and has written five books, most recently “The Price You Pay for College.”
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