PERS Advice Video by Bill Parish on OHSU

I have been following a gentleman from Portland, Bill Parish, who is very knowledgeable with PERS. As a money manager in Portland, he runs his business the same way I run mine, as an independent advisor focused on fundamentals and logic.

In the video Bill discusses the retirement plan at OHSU, which is very similar to the one at OSU. Within OHSU there are two options: going with the UPP plan (self-directed plan) and defaulting with PERS. His advice is to go with the PERS plan first and then if you so desire switch to the UPP plan because it doesn't work vice-versa. Within the UPP plan there are three options and he only gives praise to the fidelity plan because they have better options and cheaper funds.

Bill always gives words of caution to investing all your assets into equities. He urges you to build a firm foundation first and be aware there is a reason investment firms want people to invest more aggressively in the market: they get more money. At OSU the UPP plan translates into the Optional Retirement Plan (ORP), where you have the same options Bill talks about. If you choose this option remember you can't go back with PERS. Within the ORP plan choose fidelity and be on the look out for Spartan Funds. These are cheaper and better diversified than the more popular options.

Bill is very accurate with his advice. It is the same advice I have been giving to OSU employees for years. ORP is a great program if you want to invest for yourself or have someone helping you invest. The PERS plan is not a bad one, but it does take away any control you might have over you assets.

I can't find many flaws with Bill's talk, but I will say he can't warn PERS employees enough about investment firms and investment advisors. The majority of people are paying too much for funds, retirement plans and advice. The average investor spends 5% a year in fees. Bill and I both charge around 1%.

I find too that many people still have not learned their lesson from the current economy. Many want to put most of their cash back in the market, when that is what got them in trouble in the first place. Being conservative doesn't make you boring; it just makes you more hesitant to invest everything in equities. That is a good thing.

So when you think about what retirement plan to choose at OSU, simply decide if you want control or not, but remember if you choose the ORP plan you can't go back to the PERS plan, but you can go from PERS to ORP. This advice may seem simple, but sometimes simple advice saves you from complicated problems down the road.