I had a chance to interview Jack Towarnicky this week (see “Exclusive Interview with Jack Towarnicky: Child IRAs will make ‘Middle Class Millionaires’,” FiduciaryNews.com, August 16, 2016). Jack is full of great ideas and enthusiasm. (Read the article and see what he says is at once the “most important concept” and “most misused/misunderstood aspect” of behavioral finance when it comes to 401(k) plans.) One phrase that he used really stuck in my head. Towarnicky referenced what he termed “middle-class millionaires.” That got me thinking.

Remember all those bank commercials when IRAs first appeared? “If you save $2,000 a year, your money will compound itself exponentially and – voila! – you, too, can become a millionaire!” I remember those ads. They had about as much credibility as those crazy “If I had a million dollars” lottery commercials – as in, they had no credibility whatsoever.

I’m pretty sure a lot of people agreed. Skepticism reigned in an era of a bleak economy with no expectation of improvement. (Sound familiar?) Besides, the newly hatched “IRA” looked great on the chalkboard, but – in real life – well we all know how well chalkboard theories work in the board room.

So, now, fast forward about forty years. We all know those bank pitches ended up being truer than true, albeit not in the manner they expected. Once we released those IRA funds from the revolving Certificate of Deposit dungeon, they found their true potential in the realm of equity-based mutual funds.

That, combined with the amazing growth of an unexpectedly vibrant economy inspired new president (Reagan) that scared the establishment class to death (“He’s so dumb he’s actually going to start a nuclear war!”) but who had his thumb on the pulse of middle-America. IRAs were here to stay. More important, a turbocharged version of the IRA – the 401(k) plan – emerged from deep within the tax code to bring riches to even more workers.

Today, the success stories of the 401(k) plan and IRAs are everywhere to be seen. No one questions the veracity of those early bank commercials. In fact, they’re more than merely pleasantly nostalgic. They’re annoyingly frustrating to many – “frustrating” as in “d’oh! I wish I would have started my IRA back then – just imagine how much money I’d have today!”

Which brings us back to Towarnicky’s “middle-class millionaires.” Jack isn’t pitching anything different than those banks did a couple of generations ago – common sense. Only, this time, we aren’t laughing at the idea. If there’s anything we can’t deny from the experience of the last forty years, it’s that compounding really works. Boy, does it work. And it’s universal in its benefits. You don’t have to be rich to become, well, rich. All you need is discipline and a good eye for budgeting.

Everybody knows this. Nobody denies this. And yet…

We see retirement savings rates that are still far too low. It’s as if there’s a whole generation out there that has failed to learn from history.

And you know what happens when you fail to learn from history – you are doomed to repeat it.

Except this isn’t the millionaire-next-door heyday wrought forth by the entrepreneurial spirit of the 1980s, it’s more like the dependency culture that afflicted so many during our nation’s worst economic eras and in our most blighted areas.

But hope endures. Between this vast abyss of pecuniary indigence and the bright shining hill of financial independence stand those much maligned souls near and dear to our hearts – those professionals who possess the training, the talent, and the tenacity to coach retirement savers to achieve fiscal self-reliance.

The readers of these pages have it within themselves to change the course of the personal history of real people, one at a time. Indeed, the more “middle-class millionaires” we create, the greater the demand for personalized money managers.

With Presidential election polls tightening, we may soon find ourselves on the cusp of a new era of rugged individualism – and that may be good news for financial service providers.

Instant Insights /

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