Courtesy of Bigger Pie Forum via Jackson Jambalaya, it seems Mississippi’s PERS system is getting reamed in management and investment fees. Here’s a list of how much area states paid in 2018 in PERS management fees:
- $103 million- Mississippi
- $5 million- Alabama
- $27 million- Arkansas
My Take:
Sounds about right.
Read a book or two (Liar’s Poker, books on the 2008 financial crisis, etc.) on how Wall Street investment banks screw their ‘fish’ customers like public pensions. Looking at the list of outside investment managers at the front of the PERS annual financial report, I assumed Mississippi PERS is a ‘mark’ in the pension investment world.
No doubt there is a steady stream of calls and visitors to the PERS investment office selling some ‘great’ investments. The commenters on Jackson Jamabalaya have it right. The investments could be cheaply managed in passive ETFS in-house.
Many broadly diversified ETF’s are so cheap from an expense ratio perspective they are nearly free. And maintaining target allocations is getting easier with companies like Betterment. It’s forcing the Schwab and Vanguards of the world into the poorly named ‘robo-advisory’ business.
I also bet these institutions who we pay an arm and a leg to have sold us some dog-crap investments that they wanted off their books. It’s the Wall Street way.
PERS needs a complete overhaul. Not surprisingly, it’s not a topic on the campaign trail for those running for statewide office.
If you’re looking for an easy way to gain insight into the investing, follow Meb Faber on Twitter and listen to his podcast the Meb Faber Show.