In 2017, I had lunch with the head of a British school in Thailand. Over his long career, he has mentored a lot of teachers. But during our talk, he put his head in his hands for a moment. “There's one area where I really let teachers down,” he said. “I didn't try hard enough to convince them to save money. I want my teachers to learn from my mistakes.”

Two months earlier, I had spoken to the head of a school in Ethiopia who said much the same thing. He and the head of the British school in Thailand were both in their 60s. Neither will receive a government defined benefit pension when they retire because they worked their entire careers overseas.

But one other thing haunted the head of the school in Thailand. He said, “I didn't properly scrutinize the companies that invested my teachers' money.” Over the years, plenty of financial salespeople had knocked on his office door. They were always articulate. They were always well dressed. They were always charming. Unfortunately, most were selling expensive offshore investment schemes.

They earned big commissions. But the teachers didn't have a chance. In many cases, the salespeople even convinced British teachers to cash in their government defined benefit pension schemes.

Collectively, the leaders of international schools have cost their teachers millions of pounds, dollars, and euros by inviting foxes into henhouses.

Keep the Foxes Out of the Henhouse

James Dalziel was the head of United World College's Tampines campus in Singapore. When he first arrived at the school, he met a financial salesperson who was chummy with the faculty. The salesman gave presentations at the school and bought teachers drinks at faculty social events.

With his charisma, he was easily able to sell expensive offshore schemes, such as those offered by Friends Provident and Zurich International. But in 2008, James Dalziel read Burton Malkiel's book, The Random Walk Guide to Investing. He learned how seemingly small investment fees can have devastating consequences. Malkiel says investments that cost as much as 1.5 percent per year are ridiculously expensive.¹

Dalziel soon formed a different opinion of this charismatic Brit. Investment platforms produced by Alexander Beard, Friends Provident, Zurich International, Royal London (RL) 360, Generali Worldwide, Royal Skandia (Old Mutual), and Aviva charge levels of fees that would make the 85‐year‐old Malkiel do a double back flip.

Dalziel knew this had to stop. He arranged a series of educational talks for his teachers. He also stopped the financial salesman from soliciting his services at United World College.

Simon Kenworthy is doing much the same. He's head of Cranleigh Preparatory School in Abu Dhabi. “I do not believe it is my job to tell any one of my staff what to do with their money,” says Kenworthy. “But I do believe we need to educate them as to some of the pitfalls that are out there, especially here in the Middle East, so that they can make an honest and educated choice about how to save for their future.”²

Alberto Pamias, the 49‐year‐old managing director of Delta Partners Group in Dubai, agrees. “I want my employees to learn from the mistakes we did in the past,” he says. “I want them to learn to save and invest effectively from the very beginning. If they can learn to dodge financial silver tongues, they can build a solid future.”³

Like Dalziel and Kenworthy, Pamias has also initiated financial education for his staff. In many ways, they are following in the footsteps of Google's Jonathan Rosenberg. As Google's senior vice president, Rosenberg decided to educate his staff on the merits of investing with low‐cost index funds. He shut the door on financial advisors who wanted to speak to his staff at work.

He arranged seminars to educate his staff on the self‐serving nature of the financial services industry. He brought in some of the industry's sharpest minds: Vanguard's founder, John Bogle; economics professor Burton Malkiel; and economic Nobel Prize winner William F. Sharpe. Each of them preached the benefits of low‐cost index funds.

When Jonathan Rosenberg finally allowed financial advisors to enter Google, the advisors might have wished they had stayed home to shave their cats. Google's staff clawed at the advisors with really tough questions. They had learned to avoid actively managed mutual funds.⁴

Is Your Devil Big or Small?

Rosenberg's staff at Google, faced a little devil. He wanted to protect his employees from actively managed funds that rarely cost more than 1.5 percent per year.

Offshore pension sellers are much bigger demons. For example, the guy who fleeced the teachers at United World College, blew holes at the bottom of boats. Teachers paid more than 9 percent per year on the money that they added during the first 18 months. After that, they paid fees between 4 and 4.5 percent per year.

Don't Give a Climber a Flaming Rope

Many employers incentivize expatriate employees to save. That's a good thing. But when they hand out flaming ropes, expats get burned. International schoolteachers have plenty of blistered hands. Such is the case with teachers who worked at the Western Academy of Beijing (WAB).

I spoke with one of the school's former superintendents. I'll call him James. A financial salesperson that he met at WAB convinced James to buy a Friends Provident scheme. James is American. It's not the kind of thing an American (especially) should own. Such offshore investments require a different kind of tax declaration. They're heavily taxed by the IRS to discourage Americans from investing offshore. When Americans don't file their income taxes properly (and doing so with an offshore scheme can be time consuming and complicated), they might incur the wrath of the IRS.

But the financial salesperson didn't say any of this to James. He also stuffed James's portfolio with a slew of yesterday's winners. When James showed me his portfolio, it was stuffed with gold, mining, and mineral funds, purchased when gold was near its all‐time high. James's money wasn't diversified. In three short years, his portfolio had plummeted 60 percent.

James had trusted the silver‐tongued gent, who was approved by WAB. If a school's superintendent can get drawn into such a vortex, think about the teachers. Needless to say, the sales representative made a widespread killing on commissions.

Unfortunately, the school's former administrators didn't know how to vet a suitable investment firm. A slick website, an established company—even membership in a respected international school organization—isn't always what it's cracked up to be.

Would You Hire a Guy without a License to Drive Your Retirement?

One school administrator told me, “The investment company we use is approved by COBIS [Council of British International Schools] and FOBISIA [Federation of British International Schools in Asia].”

Michele Jordan (I changed her name to protect her identity) teaches PE at an international school near Dubai. Her school uses an investment company called Teachers' Wealth. I repeatedly asked the director at Teachers' Wealth whether he was legally regulated to do business in the United Arab Emirates (UAE). But he dodged the question every time.

Michele had suspicions. The firm had convinced British teachers (including Michele) to sell their UK government defined benefit pensions. She told her school's administrator. Michele said something wasn't right.

The head of her school pointed to the firm's membership in COBIS and FOBISIA. He felt that such membership legitimized the firm. But do such organizations vet financial firms for legal licensing, low‐cost investment advice, and professional suitability? Unfortunately, no.

I asked Tania Donoghue, FOBISIA's executive officer. She said, “Teachers' Wealth is currently an Affiliate Member of FOBISIA. This category of membership is designated to Educational Organisations or those companies that wish to do business with our School Members. FOBISIA does not endorse any of these organisations.”⁵

I also reached out to Colin Bell, the CEO of COBIS. He echoed Tania Donoghue. “COBIS Supporting Membership does not imply endorsement by COBIS for any service, programme or activity. An organisation may not use COBIS Supporting Membership as an endorsement of its services, products or activities.”⁶

Clearly, anyone who pays COBIS and FOBISEA, can become a member of their group. Teachers' Wealth is one of many unregulated firms doing business in the UAE. To their credit (according to their website) they don't trap expats into 25‐year investment schemes. But the firm's sales representatives aren't Certified Financial Planners or Chartered Financial Planners. Until they earn their credentials and are legally registered to do business in the jurisdictions they operate, schools should not endorse them.

Some schools offer incentives for their teachers to save money. They provide matching contributions, up to a percentage of the teachers' salaries. To date, none of them are cheap. Some firms offer index funds. But they add further administrative charges that can hurt investors' profits.

Fees—How Much Is Too Much?

Many US‐based companies offer employees investment plans, called 401(k)s. Employers often match investors' contributions, up to a certain percentage of their salary. If the plan fees are low and the matching contributions are generous, 401(k)s can be an excellent deal.

Some plans, however, are under fire for charging too much. Experts suggesting fees are too high at a given threshold set a precedent for financially aware, global employers. So what are fair charges for investment services?

Wall Street Journal writer Kelly Greene published “401(k) Fees: How Much Is Too Much?” in October 2013.⁷ She reported that a San Francisco–based company, Personal Capital, has an online 401(k) plan analyzer. It allows Americans to determine whether they're paying too much in annual fees for their corporate‐sponsored retirement plans.

Costs are categorized into zones and include mutual fund expense ratios, commissions, and platform costs. Fees totaling less than 1 percent earn Personal Capital's green zone designation. That's good. Investors paying between 1 percent and 1.99 percent annually are in the yellow zone—much like a moderate forest fire warning. Charges exceeding 2 percent are clearly in the red zone: nobody light a match.⁸

Mike Alfred, a chief executive at Brightscope, a financial information firm in San Diego, was quoted in the Wall Street Journal article suggesting that when total investment costs are 2 percent or more, “it's really going to be hard to accumulate assets.”⁹

Remember the premise about fees, published by Nobel economic sciences laureate William F. Sharpe. In aggregate, professional investors earn the market's return before fees. After fees, they lose in direct proportion to the fees charged.¹⁰ Some funds buck the trend for a while. But when it comes to an entire portfolio, low costs beat high costs.

So What's the Solution for Global Employers?

Global employers should demand more. Offshore schemes offered by Friends Provident, Zurich International, Generali Worldwide, Aviva, RL 360, Alexander Beard, and Royal Skandia (Old Mutual) are poor options, as are any investment platforms costing 2 percent or more.

Better solutions exist.

I'm not yet satisfied with their current fee structures, but international schools looking for options might consider Raymond James and The Investment Center International.

When Employers Offer Carrots

Many international schools provide incentives to save. They might offer a matching contribution, up to a designated percentage of an employee's salary. I would like to see employers match a contribution of a worker's savings regardless of the platform chosen. Proof of investment deposits should be all that's required, whether or not an investor uses a financial advisory firm or invests the money on his or her own.

This might create some administrative hassles for the school. But it would help the teachers who don't want their bicycle tires slashed.

Non‐American Teachers: If You Slash Your Bicycle Tire We'll Reward You With A Push

Investing isn't a sprint. It's like a long bicycle trip. The rider faces mountains, valleys, tailwinds and headwinds. Every rider hates flat tires. But imagine somebody saying, “Hey, I can see that you're riding across Switzerland. If you stick a nail in your tire, and agree not to fix it, we'll give you a strong, single‐handed shove every 400 meters.” No sane cyclist would sign up for that. But that's what happens when schools offer bonuses to non‐American teachers for investing in a portfolio of expensive, actively managed mutual funds.

There is, however, a compromise. If investment fees are aligned with Raymond James' or The Investment Center's, financially literate non‐American teachers could do a bit of blending. They could invest the minimum required in the school's sponsored program (to maximize their school's matching contribution) and invest the rest of their savings in a separate portfolio of low‐cost index funds.

Some schools offer hemorrhaging programs, such as those I profiled in Chapter 4. In such cases, teachers shouldn't invest in these firms, no matter what the financial incentive. They should beg their administrations to make a change for the better.

How School Administrators Could Really Boost Savings

If you're reading this book, you're likely interested in financial education. But many expats aren't. Many put their heads in the sand. They don't save as much as they should. They suffer from Expatitis, an unhealthy spending affliction. Those with full‐blown cases of Expatitis would prefer to think about root canals before their financial futures.

Some school administrators wonder how they can help these people. Fortunately, it's easy—if they use behavioral science.