Investors of the world, unite! The Motley Fool declares "mayday" on the U.S. stock markets, the most powerful capitalist force on the planet. Individual investors are increasingly important to the vitality of the stock market, yet, in terms of policy and regulation, our voices are a mere whisper compared to the organized lobbying efforts of the business, exchange, and institutional investor constituencies. Events over the last year have highlighted some significant flaws in the way that the U.S. markets are run. This is a direct threat to our economic well-being, for honest markets are certainly part of the reason that the U.S. is the destination of choice for so much capital from overseas.

Well, guess what? The markets need us, individual investors, to help keep it vital. It is our responsibility to demand that they be run in a way that is equitable, transparent, and benevolent, not just for us, but for all constituencies. We are willing to take risks that companies will succeed or fail as businesses; we should not be willing to risk that we are being deceived, or that the information we are provided is not an accurate representation of a company's economic condition.

From May 1 to May 8, The Motley Fool will present its ideas for best practices in the marketplace. We hope that these ideas will stir debate among individual investors. We have set up a discussion board for just that purpose. We will release a new Declaration each day at noon.

Declaration #5:

We believe companies should provide a source of independent advice to employees about their retirement plans. Employees must not be restricted in their ability to move their money among options within a plan.

Problem: As defined-benefit pensions become a thing of the past, the public and corporations are still learning about the new defined-contribution world in which we live. Employees in too many companies are given a menu of choices for their retirements, but not much in the way of guidance. As we have seen with Enron, a heretofore hidden problem arises when companies encourage or cajole employees to hold company stock in their retirement plans, or limit their ability to sell company stock in retirement plans. If 401(k) and 403(b) plans are supposed to be employee directed, let them direct, with assistance from an outside consultant as needed.

We are firm believers in the strength of the tax advantages offered by the 401(k) and 403(b) plans that companies offer their employees. These plans have the benefit of allowing employees to defer taxes on part of their income for decades, and are even further bolstered when companies offer to match a portion of their contributions.

The power of the 401(k) is also in its biggest potential drawback. With traditional pension plans, retirees receive periodic payments that are calculated as a function of their working base salary. But 401(k)s offer employees the right to participate at whatever level they wish, or even to not participate at all. The drawback lies in the absence of unconflicted advice to these employees. Oftentimes, the plan administrator will offer the employee a list of choices but will provide no avenue of guidance for the employee to make a situation-appropriate investment decision.

In less-savory situations, such as that befalling thousands of Enron employees, a company's administrator and management actively promotes to employees the positives of holding company stock in their retirement accounts. Rarely does such advice turn out to be so devastating as it was with Enron, but nonetheless the lack of external, independent counsel is disturbing. That Enron employees were blocked from selling Enron stock in their retirement accounts under most circumstances is appalling. That some form of this practice is widely used by companies shows a lack of concern about employee best interests.

This is not an academic problem. In a 2001 study, the AARP determined that the average net worth of those over 50 who were in the bottom quartile of wage earners was $6,500. This is a large group of people for whom even rudimentary financial advice was overwhelmingly likely to have never been offered, and for whom the chances of providing for their own retirements, or for retiring at all, is extremely dim. In the same way, thousands of people have seen their retirement nest eggs disappear as their 401(k)s, bloated with their employers' stocks, have succumbed to a grim reality of commerce: Companies fail all the time.

Employers must be made to understand that motivated employees are the ones who have the most security, and as such it is in their best interest to take actions to provide employees mechanisms to protect their own futures. This means curbing the use of restricted stock in retirement plans. On the whole, companies have proven unable to distinguish when the stock markets or economic outlooks will shift, so mistakes of aggression during the good times are often magnified when things turn for the worse, which they inevitably do at some point. Employees who work in fear not only for their current job security but also the standing of their retirement accounts are unlikely to be positively motivated.

We have heard legions of stories where employees are expected to make their retirement choices with minimal opportunity to investigate the options. We believe that the overall security of the markets will be enhanced by the additional safety net of 401(k) participants having access to independent retirement planning advice from a planner with no connections to the company. We also believe that it flies in the face of the intention of self-directed plans to force participants to hold company stock for an extended period of time. Employees are charged with the responsibility to self-direct, as such they should have the ability to make the choices that will best serve them in retirement.

What to do now
If you are an employee of a publicly traded company, take some time to ask about the 401(k) program's education offerings and policies regarding restrictions on selling company stock. You may not be in a great position to combat any restrictions from within, but you can always ask. Remember, you are also an owner of the company. Think about having a resolution sponsored in the annual proxy by someone you know who is also an owner but not an employee. Find ways to make an issue of the lack of control you have over your retirement funds. Every shareowner should take the time to ask about the company's 401(k) program. Does the company require a minimum holding period for company stock that seems onerous? Beware, this may mean that the company expects employee retirement money to help prop up the share price.

This is a call to action. We intend to make the opinions of individual investors heard about issues that directly affect their ability to participate in the public markets. Please take a moment to comment on this and other Manifesto declarations, even if just to say, "Hear, hear!" or "I agree and would further say..." or  "I disagree because.... " We will deliver these comments to the SEC, members of Congress, and the exchanges prior to the SEC Investor Summit scheduled for May 10.

What would YOU ask the SEC?
Our own Bill Mann (TMF Otter) will be a panelist at the Summit this Friday. This is your chance to make your voice heard. What would you like to ask the SEC? Submit your questions to and Bill will try to present as many as he can to SEC Chairman Harvey Pitt and the other members of the panel.