They call them “relationships”. That’s what the guy at the bank wanted to build when he asked me to come in for a chat last August. Like a stray cat that’s received food and milk from me before, he just wouldn’t go away. I think there must have been a question about school, but whatever it was that got me started, I was soon telling him all about pesticides and GMOs and rain water and the loss of top soil and CAFOs and super weeds and seed monopolies; those who know me know that it’s not hard to get me going on those subjects. “You know, Mary,” and I admit I didn’t see it coming from him – the “M” word - “… your 401(k)s are likely invested in Monsanto.”
Stunned. Not sure, but my jaw may have been on the floor. How could I have been so dense? I would never, ever invest directly in companies like Monsanto or Dow, Chevron or BP, but it had never occurred to me to scrutinize my 401(k)s. There it was, the ugly reality of our financial world – it’s too convenient and too opaque. I felt like a naive pawn entrenched in the ever increasing control of corporate giants running a corrupt system that seems to be spreading stealthily and steadily throughout our culture.
I knew he was probably right, and that day I immediately started searching for alternatives. I’m the type of person who prefers to leave financial matters in the hands of experts and worry about other things instead. I have no head for money, and the fact that I spent ten years of my life in the trading industry is pretty ironic. I used to tell my colleagues at Getco that the day I would start trading would be the day Getco would go down the tubes. But I loved to make computers talk to each other, and my colleagues tolerated my lack of money savvy for the most part. 401(k) management was something my financial advisor used to help me with, until he retired eight years ago. Since then my 401(k)s have just sat there, except that I continued to contribute to them through paycheck deductions. But now, suddenly, I had a reason to get smart about my two 401(k) accounts, a new mission to fill, a horrible problem to solve.
I learned about SLoFIG (Sustainable Local Food Investment Group), which would have been exactly the kind of thing I would have loved to invest in, but I couldn’t afford it. (Thank heaven for people who can, and do!)
I learned about ethical investment funds, but was having trouble identifying any in the US. Ethical funds include companies that try to improve the environment, maintain fair trade standards, and exclude products that are detrimental to health, such as tobacco and pornography.
It wasn’t long before I received another invitation from my “friend” at the bank. He, too, had been working on my problem; of course he had his eye on my 401(k)s and wanted to give me a reason to let him manage my retirement funds. He had identified three funds that he thought I should take a look at: the Neuberger Berman Socially Responsive Equity Strategy, the Calvert/Atlanta Large Cap SRI Strategy, and ClearBridge Investments Large Cap Growth ESG (Environmental, Social, Governance). As I looked the funds over, I realized that they did not completely hit the spot either, although they were certainly better than what I had.
Then my friend gave me the lowdown on his fees, which came to – not hundreds – but THOUSANDS of dollars. Per year. I felt sick and weak. I had to face a very difficult question: how badly did I not want to invest in Monsanto?
The answer was – very badly. Badly enough to sign the papers to transfer one of my two 401(k) accounts to an IRA at the bank; thinking the other might follow once I became more comfortable with the whole situation. I left the bank feeling huge relief that my money would be more responsibly invested, that I could tick that item off my todo list for now.
Life is full of twists and turns, and sometimes remarkable surprises. The very next day at a Land Connection board meeting, we were brainstorming about the need to find ways to make more land available to small farmers who would transition the land to organic, and one of the other board members casually mentioned that 401(k) plans usually hold enough money to purchase a small farm; owners can roll-over the funds into self-directed IRAs, which allow alternative investments (with certain restrictions), including farmland. The investor partners with a farmer who needs land to get started in farming, and the beauty of the idea is that, by the time the investor is ready to retire and start using the funds, the farmer is established and presumably ready to purchase the land from the investor.
I nearly fell out of my chair. Of course! The perfect investment is one which is completely in line with one’s passions, which for me is not funds, equities or bonds at all, and certainly not Monsanto. My passion is sustainable agriculture and healthy food. The thought that I may be able to use my retirement funds to invest in an independent and responsible farmer, who would steward a small parcel of land in the manner that we both believe is healthy, gave me new purpose.
I am loath to go back on things I’ve agreed on, but the next day I called my friend at the bank to ask what the status was of my 401(k) roll-over. “I’m sorry, Mary,” he apologized. “We’re usually much quicker with these things, but the guy who sets these things up had to go out of town. But we’ll get this done for you in the next couple of days.” Whew! “Uh, what would be my chances of cancelling the transaction,” I asked. A cow could have fallen into the deep silence that followed. “Talk to me, Mary,” he finally said. Relationship managers have lousy days, too, and I hated to make his go sour. But I had to.
Self-directed IRAs (SDIRA) are certainly not as straightforward to set up and manage as 401(k)s, which are made easy because of employer involvement. Doing the research to step out on my own has come with a huge learning curve, but has also been an interesting adventure, like planning a long hike in some exotic place. Since I will be investing in something I believe is very important, my research has taken on meaning and an urgency beyond safeguarding my retirement funds.
My next few blogs will include some of the things I have learned about SDIRAs. These are things I don’t want to forget, and perhaps my notes will help somebody else out there who, like me, may be trying to find a better way to invest their retirement savings.
