401(k) Litigation Deep Dive: Expert Witness Eric Dyson

[0:00] Mark: I think. I think I missed something there. [0:03] JD: Breaking news and top stories from around the world of 401k. That's what we do here. Did you know, people, there's another Target Date lawsuit. Let's see. Let me read this one. Another Target Date Suite draws excessive fee suit. The $5.6 billion Quest diagnostics plan. By the way, I'm a customer. I go there. That's where I get my blood drawn. Is Quest Diagnostics is being sued. The plaintiff, a participant, is being represented by the law firm Eric Wenzel, Fenton Cabasa. I had not heard of them before. Have you heard of this, this plaintiff attorney? [0:54] Eric Dyson: I agree. Not a name that I'm familiar with or we've seen, you know, in some of the other suits. [1:00] JD: Just doesn't shock me. I did further research and I. I found out that another article informed me that, no, this law firm has filed many retirement plan lawsuits, including two late last year against some national freight transporters. I think Dominion and someone else, they were the plaintiff's attorneys there. So anyways, we've got this lawsuit going on. Here's the deal. Here's the deal. Here's why. This one kind of got me fired up. And this is Adam. Well, you see it where it's at? It's right behind me. And big bold letters there. I'm going to give you a quote. This is from the article. And this is from the. The plaintiffs. More than 60% of the plan investments are invested in the Fidelity Freedom Funds Pay share class. That's important here, people. The K share class target date funds. We all know that they're targeted funds which are, on average, this is their complaint, 55 basis points higher than the less expensive Fidelity Freedom Index Fund Institutional Premier class. So if you read this article. Here we go again. And I want to get everyone's brains on this. They're making the threat, the concept that this plan sponsor and the fiduciaries cannot choose, they cannot be prudent fiduciaries. By choosing an actively managed target date fund when there is an index version, a passively managed version available and showing that spread in fees. I'm losing my shit, Chad. [2:45] Chad: That is not what was said in there. It was said that they need to take into consideration. It says that the committee did not take into consideration the other thing, too. That hurt. As I read through that article, jd Is it the whole time. It makes you feel like they're going to compare active to active. At the beginning, part of the conversation was the share class is wrong. The share class wrong. The Share class. And then they go active to passive. Yeah, it's like, I get, I get it, I get it. They're different beliefs. I don't feel that that's really the comparison that needs to take place there. We're going down a dark hole if we start to say active is not appropriate as a default and that it has to be passive. I get the shared class conversation, but I was, I was frustrated that our friends at the national association of Plain Advisors flipped it right in the middle like that. [3:36] JD: You nailed it, Chad. They started by setting the bait like these people were in the wrong share class. They then went on to compare. Go ahead, Eric. [3:45] Eric Dyson: Yeah, I was going to say that I know exactly what you're saying in the article. But, but honestly, to Nevin's credit, two things. That's the way the complaint is written. I saw that this was going to be a topic and I've actually gone through the actual complaint and the way it's laid out in the article is very similar to how the complaint is written. [4:05] JD: Yeah. And Chad, to back up, Eric, you were. When you were going against me, they make comments about their. The average fund in, in the K share suite being 65 basis points and that they could find one in this index. The similar fund in the index version of fidelity funds, the passive version, is eight. I went and researched and saw that it was 12. Like the 2055 goes from 65 to 12. And then I, I'm not an expert in fidelity share classes, but I tried to go see like, okay, they're using a case share, like, what is it? And like, they're like the article says and the lawsuit says is 65 basis points on average. There's no 12B ones. I don't think I drink for that. And I looked around and there was a, there was a Z6 share class that was like 10 basis points cheaper. But so the point is they are, when they talk about dollars lost and a poor performing fund, they're literally like, to Eric's point, they're literally saying, look, not only is the index solution cheaper, they're claiming that it's. Well, they're saying that it has performed better, which has been the case. Now I get even more up in a tizzy hair. Not only are you going to tell me that I can't use actively managed funds, I'd be an improper fiduciary, but now we're going to look back at historical performance and pretend like we all have like magic balls to figure out which one's going to perform. Better over the other one. This is not good. And Eric, you, you live in this space. We're going to talk about that today. Tell me I'm crazy. Tell me I'm wrong. We cannot keep heading down these paths a. [5:52] Eric Dyson: Well, I mean, you have a good point. And, and something, you know, we talked about before. This is we're just looking at the surface. Right. So, and, and also to Nevin's credit, he's got a foot. I make a living out of reading footnotes and disclaimers and pointing them out to people. [6:07] Chad: Right. [6:08] Eric Dyson: But Nevin has. In the footnote, there's two sides to the story. [6:11] JD: Right. On the end of all them. We love Nevin here. We're not ripping on him. [6:14] Eric Dyson: No, no. And I'm saying that as well. But we're only looking at the surface of this. Right. We may find out that the committee has, in some committee meeting where they documented we are intentionally going to choose active management over passive management. And here are the reasons. And right. If they've dotted all their I's and crossed their T's, then that's a different story than, well, how did you pick active management? And geez, we're not sure we let our advisor do that for us. [6:39] JD: Right. [6:39] Eric Dyson: We're going to find out whether there was a process or not, and that's going to be the key. [6:44] JD: I hear you. Process can always save the day and makes you look better from a fiduciary perspective. We totally get that. We'll talk more about that today. But where I'm getting upset, I'm trying to slow down here for a moment is the, it's the accusations. It's like if you're going to create lawsuits and make accusations, then do them intelligently. Don't go after actively managed and say you should have picked passive. Don't go after one fund that performed better and say you should have picked that fund. Why can't you literally go out there and find actual wrongdoings? Like, like Chad was saying, find someone that know why. Find a billion dollar plan that's in an R3 share class when they should be in an R6. Now you've got something to complain about. But this is like, it's a game to me. Like they're trying to fish something out and create a problem. And I don't like it. I think it's bad. Throw it up for our industry. I think it's bad for everything, all the optics around it. I don't, I don't have any feelings or soft spot for fidelity. But I don't think it's fair for Fidelity. I can't believe I just said that. You know, like I, it's like you're not claiming that it's in the wrong share class. [8:00] Mark: Sorry. [8:01] Chad: The hard part too is we have all this fee compression, right? We're trying to, to be more effective, embrace technology, be more efficient. And there's some significant headwind that continues to push back on the record keeping community, on some of the advisor community, on the tpa, dang, the third party administrator community. And it has to do with these lawsuits. I mean you have to be prepared for these. We've heard advisors over the years say that record keepers can charge more on larger plans because they carry more liability regardless of how many phone calls come in. Well, if all these larger plans are going to get sued, they're going to have to start raising their prices in different ways to make up for the settlements that they're doing outside the course. So you ask why J.D. it's money. [8:43] JD: Well, here's the funny. [8:44] Chad: Definitely money. [8:45] JD: Here's the funny thing, Chad. Let's say they are prepared and to Eric's point of like if they have documentation, the plan sponsor, the fiduciaries, you know, because this isn't really at Fidelity at this point, it's at the plan sponsor themselves. Right. But they could very well like, like Eric said, have all their eyes dotted and all their T's cross. It doesn't stop you from doing this lawsuit that splashes all over the headlines and drags people's names through the mud. And so I'd say if you're going to take a shot at that, at least make sure it's an intelligent one. And to me, as someone who's, who's grown up in this industry, these always seem to be the same blueprint kind of thing. [9:26] Chad: Use the same saying again, make sure it's an intelligent one. Are you thinking that you don't think any money is going to come out of this? [9:36] JD: I think they'll settle out of court like so. [9:38] Chad: Why is that not intelligent for? That's what they're chasing, J.D. that's intelligent on the, the attorney's hands. [9:44] JD: Now it's just dirty intelligence. That's shame on you, Chad. The guy who's, who the guy who was condoning it, the guy who was honest about smoking a cigar at his, at his kid's birth is claiming it's okay for them to. It's entirely. [9:58] Chad: I did not say okay. I'm stating why it is happening. [10:02] JD: I didn't finish that sentence and then told the insurance company, when they asked you if you're a smoker, you said, yeah, I smoked one time. [10:11] Chad: They said in the last five years. [10:13] JD: I answered accurately, honestly, yeah, yeah, yeah, I. [10:18] Justin: They offer both options, the institutional and the. The K in there or. [10:23] Chad: No, you mean the index and the act? [10:25] JD: It wasn't even. Yeah, it wasn't even a shared glass saying it was. Do you want the, the index? What version or the active version? [10:32] Mark: Right. [10:32] Justin: I'm asking you, do they offer both as options, the client to the participants in the lineup? Is it part of the lineup? [10:41] JD: Oh, that's fucked up. We don't need to muddy it up with two suites of target date funds. [10:46] Chad: I've seen it. [10:47] Justin: My thought process is that kills this [10:49] Eric Dyson: whole, whole issue then. [10:50] JD: Well, not if we want to get really Frederic on it. Just because you offer one doesn't mean you can offer the other. Eric, what percent if you had a guest and we make up stats on the show, what percent of these four 1K lawsuits end up in some out of court settlement? They don't actually go to judgment of some kind. [11:10] Eric Dyson: So the easy answer is the large majority of them are in some kind of a settlement. Right. Because just without a specific case. Right. I've been to court and I added up on the other side of the courtroom how much defense had in terms of attorneys and lawyers and billable rate and my estimate was it was for five days of trial. Was half a million dollars of legal fees for defense just for trial. Right. [11:43] JD: That's the plan sponsor flipping that bill. Right? [11:46] Eric Dyson: Well, honestly, it's the insurance carrier. Right. The plan sponsor is going to have a retention amount that they have to write a check, but the insurance company still doesn't want to write a big check. So. So the bottom line, the answer to your question is the large majority of them settle when defense. And again, I'm not the attorney, I'm not the expert on that side of it. I want to be clear on that. Right. But when defense thinks they have a viable case, they will take it all the way to trial. Right. But it's a large majority that settle. And the thing about settlement, because it's so expensive, it's so expensive to litigate it all the way and then we really don't learn a good lesson out of that case. We find out that fees were an issue or share cloud, we find out this was an issue and they settled. And maybe the plan sponsor has to, you know, do an RFP for new or something. But there's few lessons Learned out of that specific. [12:38] JD: Because we never actually get some kind of few and far between. Do we get some kind of ruling that's definitive that we can learn from, like, oh, don't need to do that because I remind people every time we talk about these lawsuits, sometimes it's human nature to like jump to the conclusion like, oh, you're not supposed to do this. No, no, these are just allegations. No one's saying you can't have case shares at Fidelity that are actively managed. No one has said that there's been no ruling. It's just someone making an accusation that they don't think it's fair. A judge hasn't said that that's not okay in this, in this case. And so, yeah, we don't learn in that sense. So. So there you go, Chad. It's like the great majority of them, it's such a sad state. It's going to cost them millions of dollars to fight it. The attorneys get together and go, hey man, look, instead of, instead of, you know, 20, 30 million, we don't know where this is going to go. How about we just, you know, settle on 10 right now and just get this thing done? I'm making up numbers there. But. [13:38] Chad: Well, and, and to Eric's point, then we don't really get anything out of it as an industry. We don't further, we just see more people see the headlines and realize they might be able to file a suit too because they've got Fidelity K shares in their plan. Agreed. And Eric, you got rung up, by the way. I don't know what your acro sin was, but Mark. Gotcha. [13:59] Mark: Request for proposal. [14:00] Eric Dyson: Oh, is that, does that mean. [14:03] JD: That's the James. Yeah. [14:04] Eric Dyson: Okay. [14:05] JD: Yeah, that's the Jameson. Okay, let's move on to another headline. Carson Partners with Conflict free vest. Well, on 401k offering, I think what we're looking at here is a dawn of a new age. Maybe I'll have fun with that. Where large financial advisor firms like the Carson Group, which by the way, is not a name that I think Mark, Chad or Justin are really familiar with. I am because I am, because I snoop into that whole kind of wealth management financial planning space. I actually follow Ron Carson on like Instagram and he does these cheesy little video bios about self help and doing well in life. Successful man does really well. But so this is big network of advisors across the country. Think broker, dealer, if you will. That hasn't really been big into retirement plan. But now they're thinking, hey, let's get into this, let's sell some of it. And if we're going to do it, let's have our own product. We will call it the Carson complete 401k. And let's vet out a record keeper who's going to do this. And they vetted them out and Aaron Schum and Veswell have won the partnership. What? First initial thoughts, Mark? Anybody? [15:32] Mark: First off, all I keep hearing is this. The person's name was in the news in the most positive way possible and just exponential growth is Mr. Shum. I mean, everything I read headline wise is that they're just, he's getting out there. I mean that. I don't know if that guy sleeps. I really don't. He's just making deals, doing crazy things, so. [15:55] JD: Well said. Yeah, can't argue with that. [15:58] Mark: It's very, it's, it's, it's good to hear. It's cool that we met him so early on and now this to watch. This has been pretty unique. [16:06] JD: Jamie Hopkins, who is a somewhat newly hired person over at Carson Group, who. Jamie's kind of filtered his way into our industry through different speeches. [16:17] Mark: I like his videos where he holds up the paper. It's really bad handwriting. Yeah, it's pretty good. [16:21] JD: He's like a good dude. So he's with Carson Group now and they asked him why he, he chose Veswell as the record keeper. And he mentioned two major things. First one being the ability to integrate technology. Okay, that's Shum's gig, right? That's their, that's their talk. They're, they're a tech stack. They're not this old coding legacy record keepers that can't build things. So I guess if, if you're Carson Group and you go to say Voya or Empower or principal or Nationwide and say, hey, we really need you to build out some custom shit for us because we want to do A, B, C and D. Maybe they can't do it. I don't know. Don't take my word on that. I'm just making some stuff up. But, but vast. Well, in here in June, because of their tech stack, the way they build their program, they can do all kinds of custom shit. So that was one of the reasons why. And the next one is that they don't have proprietary investments. They're not a, you know, they're an independent record keeper in that sense. Which is telling me, hey, Jamie, you like true open architecture? Like, okay, that exists pretty much everywhere. I feel like for the most part, not everywhere, but a lot of places. Mark, don't give me that little micro market shake of your head. Oh wait, I take it back. No, no, no, no, actually I take it back. You're right. You're shaking the head's right. This is a micro market, small market kind of solution that they're trying to put in place here. So you're right, you're right. But I want to ask you this and I'll go to, I'll go to mark, imagine yourself 10 years ago, 15 years ago in the business. [18:01] Mark: And I wasn't in the business 15 years ago, but go on. [18:04] JD: Hence why I said imagine. And so you're like, when I was doing it and you could go meet with ING advisors where ING was their broker dealer twice. [18:18] Mark: Is it, I don't know, I'm just doing it because it's three letters. [18:22] JD: Let's let people find out. You could go and meet with principal advisors. You know that that was their broker dealer. Right. But they were also a record keeper. [18:34] Mark: Right. [18:34] JD: Was it, was it a strong strategy to go into plan sponsors and pitch your. You're with principal principals on your business card and principals also your 401k. I used to think that would be a negative, not a positive. [18:52] Mark: Well, I, I honestly, I've, I've heard it from both sides and if I want to spin it to the positive side, I think some people also found it odd if you went in with a principal business card and then pitched John Hancock, right. They're like, why don't you believe in the own company you're representing? Until they got over that hump of explaining like, well, you know, like here's some reasons why I wouldn't want to just put all my eggs in one basket. There's, here's how this works. This is what a broker dealer is and, and going that route. But obviously that's, I mean we don't have to beat around the bush. At the same time, folks were getting paid more if they went with their proprietary piece there. But how did I view that at that point in time, 10, 15 years ago? I, I did, I did see it as somewhat of a negative. And most of the advisors I, I did run into, they felt the same way. They were very much like, look, I, I cannot for the life of me do that. [19:47] Chad: This. Let's, let's be truthful here though. That comparison is not fair because the loose, what they're selling is not the company writing their checks. It's an independent record keeper. No, but they're saying your example, they're selling the company that's writing their checks, [20:01] JD: you know that but the guys who are buying it, people are buying it don't know they're buying the Carson complete [20:08] Chad: for cable and pretty easy to explain that. [20:12] JD: Well okay, let me then let me pivot. Would you, would you advise an advisor to sell nothing but vest. [20:20] Chad: Well no, no. [20:22] JD: There you go. And do sell one fucking thing. [20:25] Chad: Are we certain as we've seen many other advisor channels open up their own proprietary solution only to not sell it for that look what it's going to be an abbreviation. So I won't say it but think about the micro market groups that have, have gone within power and built out proprietary solutions for their, for their broker dealer channel and the Merrells that have their. They don't only sell that though. They in fact they've steered the opposite way like Mark's describing often. So you may see advisors of Carson Partners not only selling Carson Partners just because the brass says so you think [21:01] JD: that that's what Jamie Hopkins, Ron Carson and Aaron Schum and the people at Vessel think is going to happen? [21:09] Chad: No, of course not. [21:10] JD: Maybe they do. Maybe they're smart. [21:11] Chad: I also don't think to Sherry's point and others in the chat bar like if it's a, if it's a private wealth firm, they likely have some portfolios. They're excited to shove in all of these plans and build that out with Vessels. Maybe they don't want volume. Maybe they just want, you know, some plans that they can get a proprietary solution in and create another line of revenue. [21:30] JD: I couldn't tell from the article but I feel like maybe Carson's going to be the 338 but I'm not sure. But I did see that Vestwell's offering 316 services on this. So I don't, I don't know what my point is [21:46] Mark: that's good for those on here. [21:49] Chad: Do you know is it a pooled employer plan type setup? [21:52] JD: No. [21:53] Chad: So there you go. You've got another large group. I don't know how large Carson Group is because I don't know them. But you got them creating a solution inside and they chose not to go into the pooled employer plan world. [22:06] JD: The positive thing I like about it is I as a foreign advocate I do love that there's non 401k national broker dealers or even regional broker dealers like I don't care that are deciding they want to get into foreign K. I actually think that's great. I'm sure there's some in the chat bar that think like that, like we don't need all these rookies coming into the business. But I think, I think that's great. What I think it's, you know me, I'm being Mr. Pessimistic here, but when I read these headlines, I just feel like there's this big announcement of like we're partnering with and we have this product. And I'm just kind of thinking like, well, good luck because that doesn't mean you got to go out and sell stuff. And I don't think going and selling your own thing is always the best strategy. Nor do I think to the pivot that Chad brought me on. And Hackler, I'm trying to set Brandon up for that graphic again, but he might just not have it anymore that you should be selling more than one thing. You should be going to your clients and saying, I'm an independent financial advisor. Therefore I brought you Voya, Vestwell and Empower. And these are the reasons why I brought you these solutions. And this is my recommendation and why. Thank you. Let's. Mark, do you want to talk more about Carson Group and this concept of record keepers partnering? No. Okay, let's spin the Wheel of Ice. [23:38] Mark: I'd like to hear from Eric a little bit [23:42] Eric Dyson: on this topic. On. [23:44] Mark: No, just. Dude, I want to hear you. [23:46] Eric Dyson: Your thoughts. [23:46] Mark: Of course it would be me. [23:49] Eric Dyson: Dang it. [23:50] JD: Shut your mouth and drink your smearing off. Oh, good. [23:53] Mark: At least it was. [23:54] JD: All right, Eric, I got something you can chime in on. I got a. I got a few little mini headlines, if you will. It's nothing. We want to pay too much time on here. But let's, let's look at this from a lawsuit standpoint. Maybe. And I'm curious, you haven't. I don't think you've been a. With an expert witness on a cyber thing yet, but it could happen someday. I don't know. Day terror. And I'm breaking news here. I don't think this is really public and I'm not trying to drag day terror through the mud. So anyone out there who's going, oh, JD's not talking about this, is he? Yeah, I am. Because we need to share news with y' all and I think it's important in our industry. [24:35] Mark: Get to the point. [24:36] JD: It's been a little hush hush day terror. Who is a. How can I explain it to everyone out there? They're a. A record keeping and a compliance administration system. The one we use is called Actuarial Services Company Corporation. And so. And data is one of the Competitors. They're a big one. They're one of the top five, you know, that are in this space. They've been hacked. And yes. Program grid. [25:14] Eric Dyson: You didn't say the magic word. [25:17] Mark: Please. [25:18] JD: God damn it. Did you miss? [25:21] Mark: Brandon, you missed the opportunity to put Will Hackler's face on that guy's body. Oh, God. That would been Habs. [25:28] Chad: Come on. [25:29] JD: So they've been hacked. They called it a cyber incident, but it's not as though they've lost. Well, I shouldn't say that. Lost people's information. That's not what this is centered around. They literally were. People were locked out of their system. [25:44] Justin: Access their website right now. [25:46] JD: They can't access it. I messaged someone in the industry before the show to ask for a status on it, and they're like, it's been two weeks. It's still there. Okay, what's my point? I'm not trying to drag day tear through. I'm gonna actually take a look in the mirror of our industry and realize that a lot of our companies might not be the most advanced, evolved, modern companies. And. And by the way, even the modern ones can fall victim to this. I don't know if I've ever told you guys, but we've had one participant get money stolen from them of our clients. And it was with Charles Schwab, and it was all Charles Schwab's fault. We weren't even involved in the distribution. I. I might. If we go deep on this, which know we're not supposed to, I might challenge everyone out there that having a tpa, the right TPA with a. With a vendor, might actually be a more secure setup based on some of my experiences. Let's move on from that. My point is, what can we learn from this? We should all start asking more of ourselves, our partners, the vendors we choose to hire. And we should start asking these tough questions about what they have in place to defend against this stuff. Because I got news for you. We got ways to deal with it. But if, if. Since I'm going to drink, I'll say it. If ASC goes down, it's a pain in our fucking ass to deal with some shit. So anyways, does this scare you? Chad? Eric. Eric. Sorry. [27:22] Chad: Go to Eric. [27:23] Eric Dyson: He's my answer. First of all, I'm not a cybersecurity expert. Why ever testifying against some cyber security [27:30] JD: that you are pretending. [27:31] Eric Dyson: But you know, one thing to remember is, and my number might be off, but it's 80 to 90% of all cybersecurity breaches. Are due to human error. Right. We can set up as many systems and as firewalls as we want. It's when that person opens the email that they thought was from them and [27:48] Mark: say, hey, Brandon's getting so excited right now. [27:51] Eric Dyson: And, and, but that doesn't stop to your point, J.D. that what do. What do these companies have in place in the event that that breach that it happens Right. [28:00] JD: When it happens. [28:01] Eric Dyson: So I'll keep the story quick, but I was doing a site visit at Fidelity and, and I asked, I says, hey, I have a personal question for you. I back up my computer on a regular basis, so if anybody ever came into ransomware for me, why can't I just erase the hard drive and restore it? And laughed. And he said to me, we do that about four times a day on every bit of information we have at Fidelity Investments. [28:24] Justin: Sure. [28:24] Eric Dyson: Which was a little bit shocking, but makes sense though. Yeah. [28:29] Chad: You got to make sure that process is buttoned up too, because you screw that one up, you're in big trouble. [28:33] JD: And I'm not here to wave our own flag. And I don't know, I don't know if a lot of you all listening in know, but like Brandon, our producer, is our guy in that area and him and I have conversations about this all the time and we're always troubleshooting. What if this happens? Like, what if this happens? What if this happens? How are we set up? How can we continue to function with our clients? And that's. You need people like that on your team that are preparing for when something goes wrong as well as, you know, it's funny. Anyways, I'm not going to get deep into this, but Brandon does a phenomenal job on our side for that. He sent out an email today about the day terror issue to our team, letting them know certain things. I'm just saying. And we'll move on. Let's, as a community, start to hold each other accountable. It doesn't mean that we're being dicks or, you know, trying to, you know, you know, drag people through the coals, but we need to start elevating everyone in this industry all the way down to the advisor, the third party administrator. If there's a 338 involved or 316, we should be asking them where their protocols are around these types of things, you know, and it's, it's not as simple as just cybersecurity. It's also like, what. How can you function when the shit hits the fan? Because if you work with data right now you're not happy. Next. Little quick one. Nevin and Fred. Nevin and Fred. Top 10 on 401k wire where they belong. Fred's number six. Nevin is close behind at number seven. Chad, do you know who's number one? [30:15] Chad: Isn't it the president of Fidelity Investments? [30:18] JD: No, she's number two. [30:20] Chad: Oh, it's President Voya. It's Voya. She's number two. Yeah. No. [30:25] JD: Who is it? It's the empower dude. [30:28] Chad: Oh, and power is Ed Murphy. [30:30] JD: Wait, ready? Empower. Everything we talk about. That makes sense to me, bro. [30:38] Chad: Yeah, that does. [30:39] JD: It does. He is the most influential person in 401k, and that scares the out of me. No, I don't know. No, I'm not saying. We need to get him on here. He probably. He's probably heard I've been talking some smack. He won't be here. So that's cool. Nevin and Fred, they belong there. They're awesome. I challenge everyone. Or I remind you, I listened to their most recent podcast today on the treadmill. Phenomenal. By the way, have you seen these guys' logo for their podcast and kind of their brand aesthetic? It's very jazzy. It's very swanky. It's cool. But listen to their podcast. They are talking about, and I. I think I can say secure 2.0. Yeah. Did anyone in the chat bar know what I'm talking about? [31:30] Justin: I didn't know I had a new meaning. [31:32] JD: 2 knows secure 2.0 is not setting every cat up for sexual enhancement. It's not that. It's. It's secure 2.0. I think. [31:45] Chad: Did you. They don't have a name for it. [31:47] JD: We'll see. But anyway, my point was, listen to Nevin and Fred. Please. Please listen to their newest podcast. They do a great job going over this new legislation, and one thing they brought up is what Chad called me today. So let's go deep into design. Fred, Reach says everyone's kind of been falling into a trap as it relates to the automatic enrollment mandates for new plans. Because what, Chad, this shit's not effective [32:19] Chad: till 2025 is the first year. [32:22] JD: There's. If I set up a startup plan tomorrow. Why do I give a shit? [32:27] Chad: Well, because the effective date of the actual bill was 1229 of 2022. So if you write a startup plan today, they do have to comply come 2025. [32:38] JD: Which means why would I leave it out now and then run off to all those clients in 2024 trying to amend their plan and teach them how to run an automatic enrollment plan or [32:51] Chad: at least not have the discussion now. I mean we've talked about on the show we often are designing plans that we know are going to have lower participation and it creates high tax efficiency for the business owners. Well that conversation is going to change what the third party administrator community and the small market community has done for tax efficiency for business owners. The style in which it's been done is going to change. It has to. Conversations have to happen now because you set something up for someone later this year. It's going to be very different come 2025. [33:23] JD: Yeah, it's so I guess the, the Chad's nuggets there is and Fred's nuggets. I never said that before. I kind of like that. No is you got to think this through. I said to Chad on a call today if I was an advisor and I had prospect meetings lined up in the month of January and February and I didn't know my secure 2.0 like front to back I'd be nervous as and I surely would be less, less effective than I need to be because there's so much to this and so many and I don't even. I'm not even talking like the opportunity of sales. I'm just talking like not, not get asked questions that you don't know the answer to. Eric, what were you telling me pre show you teach some class or something and people had a bunch of questions around it. [34:13] Eric Dyson: Yeah, I teach in the CFP prep course at SMU and already some and they're mostly [34:21] JD: finish your thought but you owe us a Jameson. [34:23] Eric Dyson: Okay. There were questions that we all come up with and I explained to them you have to remember Congress passes legislation, then it goes to the Treasury Department and goes to the SEC and they figure out how to interpret it and then the members of the world have to figure out how to implement it. [34:42] JD: Yeah. Oh for sure. And Chad's already had a million questions and there's really smart people that are sitting down with Brian being back to [34:52] Chad: back was just mean JD and his team. [34:54] JD: Huh? Really? [34:56] Eric Dyson: And the specific question was this 2500 emergency account what has to be certified is do we have things like hardships or can they take it out for whatever it wants? Is it going to turn into just a revolving checking account? How is that thing actually going to work? And I said I don't have the answer for that yet. [35:12] JD: And I think the answer for a lot of these questions can be like well we don't know yet. We haven't the think tanks haven't gotten together. Not on that question there because I think it's defined what you can take out of that. And I will tell you too, like I told you earlier, like most of this legislation is built around lessening the responsibility of the plan sponsor. So like they won't have to validate that you did it for that reason. But I do know that Fred and Evan, look at those beautiful graphics in that logo. I do know that they. What did you said that the city. The emergency savings side of it is the longest, the most lengthy legislation in the. Of the. In the retirement plan space of it. So it's got the most pages is on the emergency savings. So lots to learn in that space. Okay, I do want to give a [36:03] Eric Dyson: shout out to Mike Descenzo. This could be Jameson from a birthday gift that he gave me a while ago. Just. [36:08] JD: That's very nice. Whoa, whoa, whoa. Do you want to. Do you want to promote the patch mark? Okay, Justin, this is that time of the show where you do the. The mid trow and you are going to rate just on a scale of 0 to 10 on how he enjoys the cast. And then we're going to talk about some fucking courtroom shit. Yeah. [36:32] Justin: Over a quarter century of experience. He's certainly been around the block a couple times and that's not just in the financial services world, but the general rule as well. He's also a highly decorated nuclear submarine officer who's broken through some polar ice caps in your Santa's workshop. He knows his way around a barbecue and can smoke a brisket. That's second to none. He's touted as one of the most prominent expert witnesses of our industry. But that's just a fancy term for a snitch. Joining us from the safe house at an undisclosed location, the executive director of 90 North Consulting, Mr. Eric Dyson. [37:06] Eric Dyson: Wow. [37:06] JD: Clap, clap, clap. Wow. [37:08] Eric Dyson: All right. There was some, definitely some creative writing [37:11] JD: on that one, Justin. I'm with Sherry Fitz. That's an 11. Your job is very secure. You. What you left out though, Justin, is that he is last week's chat bar champion and we are past our charity week. So he got a nice big bag from Chick. He got. He got two Chick Fil? A. I know it's Chick Fil? A. I like to call it Chick Fil? A. Chicken sandwiches. He got one Mac and cheese. He got one spicy chicken sandwich. One tortilla chicken soup. I hope you like chicken. One filet waffle potato fries. One buddy fruits applesauce. That should be good. Three kids milks. I Don't know. I just don't like, you know, there [38:02] Eric Dyson: are kids milks in there, a little [38:05] JD: something to wash it down, a chocolate chunk cookie, a vanilla milkshake that's probably warmed up and just a sloppy little mess of vanilla soup at this point. And a chocolate fudge brownie. And to clean it all off, you know, little. Little grilled. Grilled nuggets. Because we diabetes, we like nuggets on this show. Just. Just north of 4,000 calories. Just north of 4,000 calories. [38:33] Eric Dyson: Yes. And thank you. That was. I. I got an email. What's your address? And there was a knock at my door a half an hour later. [38:38] Mark: I got quick. [38:41] Eric Dyson: We. [38:42] JD: We expect it all to be finished by tonight. Okay. You are an expert witness. It's in your frickin LinkedIn title. You've done, I want to say, dozen. Over a dozen of these cases or about a dozen of these cases, Maybe what you can clarify for me. [39:00] Eric Dyson: About a dozen is fair. I was just thinking today I need to go actually count. [39:04] JD: Count them up. Okay. That's a lot to be in that environment. I think it's gonna be a lot of fun for us here today too, because that's not an environment I've ever stuck my head into and seen, like, seen it on TV and in the movies and whatnot. But I imagine you up in that little wood, little encased place sitting on a chair, little bead of sweat coming down your head as they ask you tough questions. Let's see. I noticed we talked earlier. You said the great majority of cases don't reach a judgment, but to the dumb surfer. But you're still in there doing your job as an expert witness. So maybe can you explain to me, like, and everyone listening, like, how does this process work? Like someone files a suit. When do you get involved? Do you sit in that little wood box by the judge? Or is it not like that? Like, help us understand how these. The kind of pathway these things go [40:00] Eric Dyson: on, and I'll give you an overview of that. But again, I'm not the attorney. Certainly this is not my expertise. But for this audience, probably give you enough of an overview. All right, so there are people that research 5,500, and they look for a plan that smells expensive, right? By looking at the 5500 data. So. So there's some merit to making sure your auditor is doing their job. And once in an education meeting, Southwest benefits, we had a. We had a session called 5500. It's not just a signature. And we kind of Said how many, how many plan sponsors just get it from the auditor, they get it from the record keeper, they sign it, they file it, and they never look at it. Right. So step one is, is your 5500 actually accurate? Right. Are you disclosing what you should on there? Okay, so people look for that. Right. [40:45] JD: And then if you're a $5 billion plan, I hope so. Sorry, continue. [40:50] Eric Dyson: And no, I mean, in some cases that doesn't happen. Right. So, so the next step is they will literally use LinkedIn and other social media channels to try to find people that are almost exclusively former employees. Right. Because. Right, yeah. Existing employee doesn't want to get involved. Right. And what they're trying to get is a former employee that will provide additional data. Do you still have, still have disclosures? Right. So they, they try to find out is there enough behind what we see at the 5500 to move forward with this. Okay, so let's just skip ahead to they file suits and then the next step typically is defense gets hired and they file a motion to dismiss. Right. Just saying, hey, there's no basis for this lawsuit. Here are all the problems with the [41:39] JD: way you said you're, you said you're not an attorney against disclaimer. This is phenomenal. And keep going. This is great. [41:45] Eric Dyson: Well, and I kind of, but I have know some of the history behind this to eventually do my job. Right. And, and, and just as a sidebar for that, for example, if I'm going through and I say, hey, they've messed up revenue share, I'm just picking a random talk. They've messed up revenue share. And revenue share was never part of the initial discussion. That's off limits. I can't bring that up. Right. So the they, they, they go through that there's typically asked for a motion dismissed. Sometimes they will go right to mediation. Right. Can we just solve this and have somebody mediate it and say, hey, here's a settlements done. Let's not even worry about litigation. Then if it moves on, they go to discovery and discovery is where it gets painful. Right. And that's where it's every single email involving the plan, every plan document they can discover. And just to paint a generic picture once again, I typically don't get involved till maybe a year to a year and a half after the suit was filed. [42:43] JD: Sure. Because all this, all that stuff you talk about takes time. [42:46] Eric Dyson: Right? [42:47] Chad: Right. [42:48] Eric Dyson: So they're collecting documents, discovery, trying to make the go ahead. [42:51] JD: Are you involved in like this is because you've tended to Represent the plaintiff. Right. [42:58] Eric Dyson: Just to be clear, I represented both plaintiffs and defense. [43:01] JD: Okay. [43:02] Eric Dyson: Right. [43:02] JD: So let's assume you're defending the plaintiff. Do you sit down with them and actually get a feel for, like, what do they share, like, their strategy with you and kind of how they're hoping to position you? Or you just show up as an independent expert and, like, answer questions? [43:20] Eric Dyson: You know, I've worked for enough that I'll get referred. So for the most part, I get contacted. Sometimes I'll reach out. But to answer your specific question, I do review the complaints. And if. If I'm not sure and I've been asked, we'll sign a protective order, meaning I'm now under a confidentiality agreement. Right. So I will. I will, for example, see proprietary information of. [43:42] JD: I guess what I want to know is, are you part of their team in a way? Like, are you. [43:46] Eric Dyson: Absolutely not. That's a great question. [43:48] JD: Because if I watch the movie, I'm thinking that I feel like that person's like, they put them up there because they want them to help them. That's why they hired them. [43:57] Chad: And therefore, well, they think they can help them. Yeah, for sure. [44:01] Eric Dyson: So. So let's go to this first step. There have been cases I've looked at and said, yeah, I don't think I want to be part of this case. Because there can be a number of reasons for that. [44:10] JD: The simple is recent fidelity. One, they reached out to you. That one. The. [44:14] Eric Dyson: No, no, no. I'm just saying generically, right. I get a reach out, and I've looked at cases that I say, I don't think this is strong enough. No, I want to do it so Tony's ass never face off with Fred. Fred doesn't litigate. So, no, not gonna happen. [44:30] JD: And you know what? I'd love to. I'd love to see the other side of it. I don't even know who those people are. [44:36] Chad: Who. [44:36] JD: Who are the attorneys that defend the fiduciaries? Like, I don't. Are there famous names that I'm not picking up on? Like, they. There must be, like, some. [44:45] Eric Dyson: I mean, I don't know. They're famous names. But there are certainly law firms that. That's what they specialize in. I mean, it's. It's not. If you go to a litigating firm, they either represent only defense or they only do plaintive work. [44:58] Mark: Okay? [44:58] Eric Dyson: So there obviously could be an exception to that, but nothing I'm aware of. [45:01] JD: You're not part of the team. You're not sitting down, going all Right. I'm going to help these guys win this case. Therefore, when asked this question, I'm going to slant it this way or that way. So you're this neutral expert. In a sense. It really doesn't make jive with all the movies I watch and everything, but. Okay, wow. [45:21] Chad: They're not going to put you on the stand if they don't believe that. That what you're going to say is going to support their argument. [45:28] JD: True. But don't you feel like when you watch the movie, the person's always kind of slant in front of the people they're with a little bit? [45:33] Chad: Well, it's because the questions that are asked of them are designed to get them to answer a certain way, typically. [45:39] Eric Dyson: Now, here's what. Here's what I think you guys are getting at. And just. Just to help out with that. Theoretically. And it will depart from theory a little bit. Right. Theoretically. I'm 100 neutral. Right. [45:49] JD: Who's paying you? [45:52] Eric Dyson: I'm being paid for the law firm. Either defense or. [45:56] JD: Okay. [45:57] Eric Dyson: Or plaintiffs. Okay. And it's. My payment is regardless of the outcome of the case, because I can't be biased. [46:04] JD: Sure. [46:04] Eric Dyson: But there are times. Do you make [46:08] JD: nice, Mark? How much is the attorney? [46:13] Eric Dyson: It pays. Okay. Let me just say that. But there have been times when on both sides, defensive plaintiffs, they say, this is the opinion we would like you to render. And there have been times I say, I'm sorry, I'm not going to give that opinion. And here's the reasons why. [46:31] JD: Accurate. [46:32] Chad: And then they say, get out of here. You're not on the stand for it right now. [46:36] Eric Dyson: Normally it's a finer point. Right. But it ends up being more collaborative. Right. And it's just that, okay, this is what we think. And I say, no, I'm not going to be. [46:45] JD: Let me ask you this. Let me ask you this. We'll take you up the hot seat a little bit here. Okay? So now you've done your research on the case. You're an expert. Like, you know this shit, but do you, like, do you study it and do you kind of, like, freshen up on certain areas and, like, prepare for this specific case? Because you think these are the questions they're going to ask you, and therefore you want to be ready to answer. Like, I don't know, maybe they're going to say to you, like, they chose the Fidelity case share, and it's, what expense ratio is it, Eric? And you say, I don't know. I didn't research that. Like, do you. Do you actually do your homework for that case. [47:27] Eric Dyson: So let me give you two pieces. The answer to that question first is I get, you know, a truckload of documents dumped in my lap. Okay? And there was one case recently that I worked on was 6,500 documents, over 240,000 pages. Okay? Now, does that mean I read every page? No. But I kind of have to at least scan them to see what's in through. [47:48] JD: Yeah, yeah. [47:49] Eric Dyson: And so minor, two parts of my answer to you. So part one is I'm going through this, and I've explained to a couple people. Pick your favorite detective show. Right. A lot of times I can look at the. I can. I can figure out something's not right here, but I can't find it. Right. And I'll read and I'll read, and I'll just get to a dead end in one document. You know, I'll read the participant fee disclosures. It's not there. [48:14] JD: You remind me of Tom Cruise with the baseball bat walking around your office or something. [48:21] Eric Dyson: But then when I find, I'll find. You know, here's the problem. When I finally find it, I can nail in. Here's where there was a problem. Now, when I'm working for defense, it's a little easier because, you know, I can pick out all the things they did. Right. And in fact, working for defense is a little easier because when I want to look something, I get what I asked for. Right. I say to the defense attorney, this is what I need. They go to the plan sponsor, and I get what I need. Working for plaintiffs, you don't necessarily get what you're asking for from the plant hole in. [48:51] Chad: In. Interesting. [48:52] Justin: When you're on the defense side, do you just ignore that or. And just focus on. [48:55] JD: On. [48:56] Eric Dyson: Say that again, Justin. What's the question? [48:58] Justin: What do you see the hole in. In the entire pro problem of that, you know, of the defense's argument. But you have to focus on the one thing that supports their side. Do you just ignore that hole or so that. [49:09] Eric Dyson: So I don't ignore it. And this goes back to the second part of the question that JD answered, right? Do I study? Do I prep? Right. Typically, there's a conference with the attorneys. Right. [49:18] Chad: And. [49:18] Eric Dyson: And I. I don't offer voluntarily opinion, but if I'm asked in deposition. So your question, jd. Am I normally in the box in the stand with the judge? That's happened once. It's definitely happening again a second time. But I'm normally in almost every case deposed by an attorney. Right. I'm under Oath. So, Justin, in answer to your question, let's say that there is this hole that exists, right? And I know about it. If. If the other attorney of the opposing side asked me, I've taken an oath to tell the truth, the whole truth, and nothing but the truth. And I will answer, yes, they did this. And in my opinion, they did what [49:53] Justin: they should have under oath all the time. [49:56] JD: I didn't think about it that way. That's interesting. [49:58] Chad: It's. [49:59] JD: If asked, it's not necessarily just like the expert attorney on the movies, expert attorney, witness on the movies, snitch. It's. It's also like, you're helping these people understand the real world of all this stuff. Like. Like they. Because they don't all know it the way we do. And so you're able to honestly and prudently say, no, no, no, no. Here's what's happened here. This is the deal. This is. This how it works. And this is what's been happening. Because they're not. They're not industry pros like us. They don't get it. I think I told you that in our conversation. Schlichter, pre. The show Schlichter, to me, is learning a lot now. Like, he's a lot smarter now in terms of 401k smartness than he was eight years ago or whatever, but he didn't know shit about shit even four or five years ago. Like, I feel like half the stuff he said on podcasts, I'd be listening, going, like, okay, this guy clearly doesn't understand how this industry is put together and how it works. He's literally just throwing, like, pain at the wall or whatever it's called, you know, like, so they need expert witnesses like you to kind of be their guardrails and help them understand stuff that they're inquiring about is what I just heard there. Well. [51:14] Eric Dyson: And yeah, look at Mike Descens comment. The attorneys still don't understand our business. Okay, that's. That's a little bit of a broad reach. Mike. Mike's known for, you know, not being able to express his opinion very well. [51:24] JD: I just. Hey, I just tried to say that same thing. And Mike did it in six words or seven words. That's like, I totally agree with him. That's what I was trying to say. They don't know what the. [51:35] Eric Dyson: I would. I would not go that far to say it, but they're definitely. Here's the metaphor I always give when you compare attorneys, what we do, right? The person that builds the car isn't necessarily the one you want to teach you how to drive it. Right. So the attorneys understand the legal language, but they're not operators. They're not the ones that are putting the plan. So you ask them about what are the ins and the outs of the investment policy statement and do we look at target date funds different than we look at a large cap value fund? That part they do not understand. Right. So go back to the, you know, TDF suit we just looked at for quest. There are elements in there that, you know, as we would to a single sleeve. Fun. [52:23] JD: Is that Jameson? Yeah, yeah, yeah. I don't know. Okay. All right. What can we learn from these things? You said that when these things don't come to fruition, there's no judgment. It's a little more difficult to learn from these things. We definitely learn the rules that you've already said and I've heard Fred Reiche for decades, which is document, document, document. You know, if you can show, I should say document properly, document intelligently, document strategically, and that you're not pinning yourself in a corner in some way. But if you can show the court that you had cognizantly thought about this and you and you were acting in the best interest of the participants and as the committee made this decision and well, you're, you're pretty well protected in a lot of areas. So of course we can learn that from these things. We all know that to be true. But when I was talking with you earlier, you, you told me something you thought was interesting is like, why wouldn't we as an industry start having fiduciaries, plan sponsors start paying for more of these services. What Chad and I would call like make it a hard dollar cost instead of built into a, a case share [53:36] Mark: or what would you call it, Justin? [53:38] JD: A rap fee. A what cost? [53:42] Mark: I don't know, nothing. [53:45] JD: Write a check for it. You know, a business expense. Given your role as an expert witness, do you think the industry should be doing this more? And are we stupid for not. [53:57] Eric Dyson: And so here's in talks that I will give to an audience of plan sponsors or an audience of advisors, right. I tell them the number one, easiest, simplest way to protect yourself. And let's be clear, most of these plans, 1050, 100 million dollar plans, are not really at risk for litigation for their sides. But the Department of Labor tends to come do audits, right? But number one thing, pay your record keeper, pay your advisor, pay your auditor, and pay your attorney by writing a check, not out of the plan. Okay. [54:28] JD: And pay your pay Your third party administrator with Lambos. [54:32] Eric Dyson: Third party service providers write a check out of the company coffers. Right? Don't use the plan assets. So I asked this, you know, you asked dol examiners questions. Well what about this? Yeah, you know, they will say, you know. Well it depends. I asked the dol examiner once if a company. I got you. I'm key. I got the cat. [54:55] Mark: Keep going, keep going. [54:57] JD: Keep talking. [54:58] Eric Dyson: If a company is paying for record keeper fees by writing a check and they're overpaying, do you care? No examiner looked at me and said no. By definition I do not care. [55:08] JD: Hit him up. Hit him up. He did again. Mark. [55:11] Eric Dyson: Holy smokes. I don't even know the rules yet. [55:17] Chad: You don't know what? [55:17] Mark: You watched the show last week. [55:19] Eric Dyson: Dude, I just saw people getting punished. I don't know what for. [55:24] Mark: Acronyms. Acronyms. Don't say acronyms. [55:26] JD: It's so true. Oh my God. Jd. How do you not tell her? Against the rule. We don't do that anymore. You just gotta, you gotta learn as you go. Chad is so true. If you could sit with a plan sponsor and say like look almost like one of the smartest things you could do as a fiduciary would be to pick up the bill for the plan. And a lot of these companies, it's very reasonable. I would even argue in the micro market because the fees are absolutely smaller. But you go to the mid market credit right now you got. Great point Justin, Excellent point. I might help. There you go. Okay. Hadn't seen this coming. Pivot secure 2.0. Brad is alive. He's alive. Secure 2.0. Could be the fuel. We need the, the grease on the tracks to start moving towards more of a hard dollar cost, write a check for it kind of, kind of vibe. [56:26] Eric Dyson: Well jd to your point that it's reasonable when I'm speaking to audience, I, I go so far to say this, pay for it with the billable invoice and I'm, I, I don't even hesitate to say this number is peanuts compared to what you're paying for healthcare. [56:42] Mark: Hey, doesn't even come close. Yeah, just record that so that I can use that in every, every point [56:47] Eric Dyson: of sale I have. [56:48] JD: All right Mark. All right Mark, close this out here. Why don't they, why, why don't advisors and why are clients not saying I don't want a 50 basis point wrap fee on my 5 million dollar plan. I would rather write a check for 25 grand. Check my math somebody. [57:11] Mark: Why, why aren't they well, first off, it's because it's not being presented to them. Sometimes they don't know they have the option and they don't know how to quantify it. So again, it's up to us as an industry, I'm speaking to everybody, advisors, third parties, record keepers, to begin providing that option and having that conversation and quantifying it for a plan sponsor or business owner. I know when I sit in those meetings and I'm talking about, I'm talking to a 10 person, you know, startup plan and we're looking at an owner who's going to shelter 70 grand. The rest of the employees probably won't put much away. Why not strip out those fees and pay that? Now I know it's different as you have bigger plans, but again, to Eric's point, even that when you think about all the shit that comes with it, if you start paying those fees, you are less and less worried about those other fees that could come that are going to be astronomically higher. So it's just about using our voice and using our platform to be able to put that out there and tell people what it means and how to quantify it. [58:14] Eric Dyson: Here's another dysfunctional decision point too, that I'm going to dip my toe over the line of I'm not an attorney, but I'm going to dip my toe over it. That companies think that, well, we're given 50 cents on the dollar up to 6%. We've got a 3% company contribution, right? So, so what if they're paying for record keeping fees. But when you get down to it legally, and you can find this in dol publications, the amount of a benefit. [58:45] JD: Did you see any of [58:48] Mark: the. [58:49] Justin: Probably start eating some Chick Fil A. You know [58:54] Chad: what I think? [58:54] Mark: Waffle fries. [58:55] Chad: Anyway, Justin's point. Oh, sorry Eric, I thought you were. [58:58] Eric Dyson: No, yeah, let me finish. The amount of a benefit is a settler decision to decide. I'm given a 3% company contribution. That's not a fiduciary decision. A fiduciary act [59:09] JD: treated the same way as pay. You're not, it's not, it's not like you gave them something special. I'm working for you because you have a 4% matching contribution. It's the same as you paying me a salary. You're not doing me a fucking favor, employer. It's, it's part of my agreement with you and so it's not looked at in the same light as picking up those fees. Am I getting that right? Like it's, it's Comp. [59:35] Eric Dyson: I. Yeah, try going into HR and putting it exactly that way. Let me know. [59:41] JD: I might have put a little rougher. But that, that would be the employee benefits attorney's perspective would be like, I'm sorry, like the 400k match is not some kind of like freebie or giving my client that's, that's his pay, that's his or hers benefits they make for working for you. That was the agreed upon contract is my point. [1:00:02] Justin: Mark's gonna request a 482 tomorrow. [1:00:05] JD: Go ahead. [1:00:07] Chad: I was just, I was just gonna say jd, one last point on the credit and these billable fees, I think it's a blessing in disguise and it's one of the reasons why plans don't often go billable in the conversations I'm having is because it's very difficult to go back if you start paying that record keeping fee and then all of a sudden you get in a little bit of trouble or your health benefits go up and you decide, hey, we're not going to pay the record keeping fee and advisor costs anymore. Imagine going to your participants now and saying your costs are going up by 60 basis points next week because in 30 days, because we can no longer cover this expense. I think that people will take advantage of it in the startup space because of the credit and then they will be afraid to go back or go to participant paying that in the future and they're going to end up leaving it. Even though they run out of the credit. [1:00:54] JD: Even though the unfortunate reality is a participant and know the difference between 50 basis point wrap and a 85 base point wrap, it would not even matter to them. You could disclose it to them, tell them about that. It wouldn't. [1:01:09] Chad: Yeah, when they see it, delineated it on their statement, they're gonna know, dude, if they're used to seeing $52 a statement and now, well, that's assuming they look at the statement and now they see dollars, they're gonna know. [1:01:22] Justin: When I was at your place in July, Chad, I got a call from some of my old buddies at bay. Same thing, exact thing happened. Bae decided to shift 11 basis points to them and they were in an uproar and they were calling me. [1:01:34] Eric Dyson: What is this? Is this legal? [1:01:35] Justin: I mean, no one left, they all just. [1:01:38] JD: You want to hear a funny one? I get all the time listen in advisors, if you're tuning in like the. The client will want us to shift the TPA's fee from a billable. We'll go the wrong way, Eric. Go the wrong way. So the client and I'll drink. I got you. Although this cattle has been harsh, the client will say, hey, we want to stop paying you fees and we'd like you to turn it into basis points. And I'll get the email from the advisor saying, can you do this? Is this legal? Like how can you take your fees from the poor participants assets? Like, oh my God, like I can't believe this is legal. And I go advisor. Joe, Sally, how the do you think you get paid? How do you think the record keeper gets paid? How do you think the mutual funds get paid? Like, what the are you talking about? It's so funny. Like when they're like, oh my God, I can't believe that it's happening this way. I'm like, you all are doing it forever. But I'm with, I'm with Eric. I'd love to see it change on all fronts. [1:02:42] Chad: Oh gosh. [1:02:44] Eric Dyson: I've said this, that of all the cases I've worked on, there have been exactly zero where the plan sponsor cut a check for the advisor and record keeping fees. [1:02:54] JD: That's because of all saying something. Of all the plans that are out there across the country, there's probably less than 2% of them that actually do that. And that's. Those are facts. It'd be a lot cooler if you did. Okay, let's. Let's go chop our champion. Am I missing something, Mark? Have I forgot something else I'm supposed to do? [1:03:19] Chad: No other games tonight. [1:03:21] JD: No, this. There's no games. I'm gonna play games here. This is serious 401k talk. Headlines, news, cutting edge stuff. [1:03:31] Eric Dyson: So my nomination is since all the other women are out boycotting this tonight. Sherry Fitz is here. I'd nominate her champions. [1:03:41] JD: That's the first time Sherry's ever gotten a nomination. Sherry Fitz. Okay, Sherry Fitz has a vote. [1:03:51] Eric Dyson: And vote for Mike because he provided the alcohol potentially. But you know, here's the other. [1:03:56] JD: I, I'm actually going to vote. I was gonna go with the new guy, David, and I was gonna nominate him for his honesty as saying like he kind of reached out the chatbot and said, I don't know, I'm. That's why I'm here. I'm trying to learn some stuff. And I appreciate that honesty. Then I thought maybe I should vote for Hackler because he's just been so witty and so awesome and I should go hackler. But I'll go with David. [1:04:21] Chad: I'm going hack. So that works. [1:04:24] JD: Okay. Hackler. David. Sherry, we're gonna need a Tie break from one of the two of you here. [1:04:30] Mark: Sam Samsonite. [1:04:36] Chad: That's the instinct comes out of left field. [1:04:38] JD: It's not a tie break, Justin. All right, Roby. [1:04:43] Mark: Well, we both said that at the same time. [1:04:45] JD: You both said. Yeah, that's why we said, okay, Samson's the winner. Chat bar champion tonight, Jim Sampson. Wow, that's. He's had quite a few. He's definitely up there in the hall of fame at this point. [1:04:57] Chad: Yeah. [1:04:58] Mark: Hang the banners. [1:04:59] JD: Yeah, for sure. For sure. Here's my goal next week. Not to send him chick fil A. Not to send him pizza. I'm gonna find a new app instead of doordash where I can start shopping at, like, Home Depot or Target. So we'll see if that's the case. [1:05:21] Justin: I'm gonna start logging in as a guest under a fictitious name. [1:05:24] JD: That's what we're doing. So we're doing next week. And next week's guest as JD Goes to his calendar is. I'm gonna this all up. It's the people from Stacks. AI s T a X A I. Anybody in the chat bar name I'm talking about. [1:05:45] Chad: Not a clue. [1:05:46] Mark: I'm gonna give you. I'm gonna give you a break on the accuracy in there since the show is technically over. [1:05:50] JD: Actually, I owe one though, too. Sorry. They are doing well. I don't know. We gotta dig into it, but they're claiming to be doing, like, artificial. [1:06:02] Eric Dyson: There's multiple people. [1:06:04] JD: No. [1:06:05] Mark: Are we not on the show next week? [1:06:06] JD: It's like their main dude. It's their main dude. I'm just talking about the company. So Sherry knew who they were. They were David. Different third party administrators and different people. Is it David? I'm not sure that's how bad I am. Yeah, I think so. I think it's David. I don't know. So that'll be next week. That'd be fun. Different. Got an expert witness on this week. Next week we'll be talking to, like, people actually trying to bring artificial intelligence. [1:06:34] Mark: Can we ask Eric one last question? If the retireholics ever needed an expert witness, would you. Would you help us? [1:06:44] Eric Dyson: Sometimes it'll be up to your attorney, but I probably have to deal with it beforehand. [1:06:50] JD: All right. That was an honest. I feel like that was an honest answer. [1:06:53] Mark: It was. So, Mark, [1:06:57] Justin: Tips. [1:06:57] Mark: Yeah, I was gonna say this. It's coming soon, guys. [1:07:01] JD: Let's get ready. I got you, Mark. I got you, Mark. Okay, so, yes, next week. That's what we'll be doing. That'll be fun. Thank you last. [1:07:12] Mark: Hold on. Wait. Last question. Eric, will we see you in the chat bar occasionally? Are you gonna come back? [1:07:17] Eric Dyson: You're gonna join us at least occasionally? Yes. You know, it's it. But for you know, it starts at 6:30 Central Time, so it's pushing my bedtime already. Okay. [1:07:27] Chad: Yeah. [1:07:28] JD: Wow, that's the worst answer you've had all night. I was gonna. Thank you for being a guest tonight, I think. Right all. I'll skip that part. Everybody out there, thank you for tuning in. We appreciate it. Last week I said there was no after show and there was this. [1:07:45] Mark: I told you. Yeah, dude, I just bailed like now you said no after show. [1:07:50] JD: Hey guys, if you haven't figured it out, we're trying new things here. It's. We're getting spooky and weird. Like I tell you, there's no after. [1:07:57] Mark: You know, after show. I'm bouncing every time. [1:08:00] JD: Then there is one tonight. I say maybe there will be an after show and dear, maybe there won't. [1:08:05] Chad: Eric's just. He's in the position to leave already. [1:08:07] JD: What? [1:08:08] Chad: The truth. He's got a pee. Eric's got a pee. He's ready to run. [1:08:11] JD: Eric, if you got to go, you run. [1:08:14] Eric Dyson: No, I can sit for a little longer [1:08:17] Mark: though. [1:08:18] JD: Let's get it over to her. Get over. So with that. Thank you everyone. We'll see you next week. Welcome to 2023. Welcome to the best show on 401K. You know the thing about retireaholics, Mark? [1:08:31] Mark: What? [1:08:32] JD: We just keep getting better every time. Brandon said. [1:08:37] Eric Dyson: Who says that? [1:08:38] JD: I do. Play us some music. I'm gonna run to the bathroom and.