401(k) Mistakes Plan Sponsors Miss | Fiduciary Risk

[0:00] JD: However you feel about these guys, they are definitely changing the retirement plan industry. One beer at a time. [0:06] Chad: And this is where you. Applause. Put your hands together for retire holist. [0:24] JD: Boo. [0:24] Chad: Thank you, Scott. [0:25] JD: Boo. [0:26] Chad: Thank you, Scott. Look at the audience. They're all over here in the corner. [0:32] Jason Roberts: Quickest way to the bar. [0:33] Chad: Come on over here. There's not a splash zone or anything like that. [0:37] Jason Roberts: There might be a one, but we said no so far. [0:41] Chad: Live from the Western Pension and Benefits Council Spring Conference here in Portland, Oregon. Thanks for having us, guys. I didn't think you'd ask us back. [0:55] JD: No. [0:57] Chad: Last year, if you were here, you saw it. If you weren't, I'll describe it for you. We like to do a quiz of death thing, and Chad usually loses the [1:05] Jason Roberts: game and I lose every time. There's never been a time in which I won. [1:09] Chad: We try to hurt him in some way or inflict pain emotionally. We were running out of ideas. And we're here in Portland and we decided, let's fill up a shot glass of the hottest hot sauce we could find and make him, you know, drink it. He did this and we almost. We did reach the limit for retireholics because we know where our line is. I really hope that's not our limit. You want to go past that? [1:37] Jason Roberts: You want to go past that? [1:38] Chad: I'd like to get banned from a couple of. He almost threw up on the stage, almost threw up on the audience. And I personally like to push the envelope, but I just don't think that would have been a good thing. [1:48] Jason Roberts: It was bad. [1:49] Chad: You have to make two very clarifying statements. One he prepped with. With Pepto Bismol. [1:55] Jason Roberts: So I coated my stomach gnarly as [1:57] Chad: far as color secondarily that night. And I want to tell everybody here the person Chad Johansson really is, he did that and almost suffered the consequences. And we go have dinner to celebrate. We had a great time out here. He ordered the habanero shrimp platter. Does that make any sense? [2:16] Jason Roberts: You just pile it on once you go down that tunnel. Let's just say the next 48 hours were rough. [2:23] Chad: Now that's the limit, so buckle up. This could go really bad and we may not be back next year. [2:30] Jason Roberts: So, you know, but we'll take Jason down with us, so it's gonna be worth it. [2:33] Chad: Our guest, who we're very excited to have on the show, by the way, super cool, big time national ERISA attorney Jason Roberts. Get your butt up here. Get in the chair. Welcome, sir. Your career is planned, plummeting right now. [2:53] Jason Roberts: Hey, this couch has been sat on by some very famous people in this industry. So we're just adding to it with you here. [2:59] Chad: You're the most famous. [3:00] JD: I noticed somebody bust my water too, so I guess that's not allowed. [3:04] Chad: You're the most famous person we've ever had. And I want to say personally, you are. It's like a dream to have you on the show because you're my favorite Arista attorney. You're an icon, you're a legend. And honestly, when I first met you, I was fired up because I met you probably don't even remember we met in. There's no way he remembers you. Yeah, right. [3:27] JD: Well, maybe. [3:28] Chad: And you mentioned to me Risa attorney guy. I knew who you were. You were speaking there and you said that you were into. It was either windsurfing or kite boarding at the time. And so I've been surfing my whole life. And I was like, oh man, this is so cool. Marissa attorney. That's serious. [3:43] Jason Roberts: See, I met him and I learned that he lives on a boat or a yacht perhaps, I don't know. But I'm like, this is the coolest Arissa attorney around. [3:51] JD: Not any longer. [3:51] Chad: It's not a yacht, it's a boat. [3:53] Jason Roberts: I'm gonna go with yacht. I never saw it, so I'm just gonna go with yacht. That's what I see it as. [3:57] Chad: I actually thought that was kind of creepy when I heard that. It's kind of like Van down by the river. He was living in the boat. But I do know that he has moved from the boat to a house. And so now you go back and forth, right? [4:08] JD: Exactly. In 2014. [4:11] Jason Roberts: It's been a while. I've been around here too long. [4:14] JD: I remember after we first met, then you called me shortly after that with a referral. Thank you. And you said, hey, this is jd. Before you even said jd, I knew who it was. And you said, I'm that long haired surfer dude. Tpa. [4:27] Jason Roberts: Remember me? [4:28] Chad: Fair description. Like every show, Jason, we have to have the beer of the episode. Okay? And our hosts here at the Oregon Convention center were so cool, they decided to bring us an assorted allotment of whatever they had at their bar. So that's great. That's great. [4:44] Jason Roberts: Hey, we gotta pick. We gotta pick here. [4:46] Chad: So go ahead and grab the beer I think we gave you. I'm not gonna describe them. Yours is down there. Just pick them up at your local supermarke. [4:52] Jason Roberts: I have a full sail, Amber, which I'm fairly excited about. [4:55] JD: That's great. [4:55] Chad: Bring it in for a cheers beer of the episode. Retireholics live from Portland, everybody. Jason, there's another something we like to do on the show. It's this lighted up screen here in the front. We call it the word of the episode. It's been renamed because your buddy Fred Reich decided to call it the prohibitive word of the episode. We thought that was so cute coming from the old ERISA attorney. He kept saying, what's the prohibitive word? What's the prohibitive word? So that's what we call it now. But I'm going to give you a choice. You can choose the prohibitive word of the episode and how this goes. Audience, if any one of us say that word during this 70 minute show. Buckle up. Longest show we've ever done. [5:43] JD: We apologize in advance. [5:46] Chad: It can't be that much worse than a panel on esg. Oh, sorry. So if any of us say that word, we have to take. You don't have to drink the whole thing, Jason. Please don't. Or you can you just take a little comfortable sip from the hard alcohol that we have here. What do we have today, jd? It's a Smirnoff. I know how you like Smirnoff, and it's high end Boston. [6:05] Jason Roberts: It's been some time since I've had lime Smirnoff. [6:08] Chad: You got the orange over there, and [6:09] Jason Roberts: I'm excited about it. [6:10] Chad: We've got the lime over here. So your choice, Jason, is either fiduciary or regulation. And before you answer, I want you to know that we've listened to you on podcasts. We're prepping for tomorrow's show with Jason Roberts, and we wanted to figure out what the great word of the episode would be. So we're trying to, like, ruin him by finding what words he likes. [6:38] Jason Roberts: There are some good ones out there. [6:39] Chad: He has a real liking for regulations, so that's kind of. I don't understand half the things he's saying. [6:45] Jason Roberts: He has said fiduciary. [6:49] Chad: We did our research. We've studied you, and you say both of these words a lot. [6:57] JD: I will choose regulation. [6:58] Chad: Choose regulation. So the word of the episode will be fiduciary. That's what we're gonna go with. And we're gonna talk about three. Yeah, you don't make the rules on this show, buddy. No, you might do that in your regular role, but not here. I say to Jason, hey, you're going to be on the show. What do you want to talk about? And he says, I'm thinking of all these Exciting things we could talk about. And the ERISA attorney says, I want to talk about fiduciary governance. [7:30] Jason Roberts: That's fantastic. [7:31] Chad: Huh? Bore snore. Why are we going to do that? But then he says to me in the email because I say I want to talk about financial wellness and these other things. And he goes, why do you want to talk about these bells and whistles? Or he said, enhancements, when the most important thing is what? [7:53] JD: Land governance. [7:54] Chad: Land governance. You're basically saying to me, and I'm going to give you the mic now to kind of set us up or set the table. That that's great. Financial wellness, retirement readiness, all these kind of tools. That's fine and dandy. But you first got to make sure that your home's in order, things are good, and that you're not facing some type of massive liability or something like that. Right? Is that what you're saying? [8:16] JD: Well, I was just pushing back a little bit on maybe taking Mark's side in terms of financial wellness. Not necessarily that it's a buzzword, but I do think it's difficult to achieve [8:26] Chad: without I'm going to retire tomorrow. [8:28] JD: Difficult to achieve without buy in from the plan sponsor. Not only buy in to implement it, but also buy in to drive utilization. And if we just look at basic sort of human behavior, it's shelter and protection before you get to self actualization, let alone self actualization for your other participants. Right. So if I'm that HR manager or if I'm that CFO or a committee member, also known as a person who makes discretionary decisions on behalf of his [9:06] Chad: plan, it's going to be tough. [9:09] Jason Roberts: He'll slip at some point. [9:10] Chad: I just learned the definition. I swore he was going to do it then. [9:14] JD: If I'm the advisor and I have to convince that plan sponsor to add something, if they're up to their eyeballs in worrying about what they're missing with their own plan, and we continually see there's a great survey that comes out every other year. It used to be the Towers Watson, now it's the Willis Towers Watson. But it's the Plan Governance Survey and what it asks a few questions. And the plans are all across the boards in terms of size, basically what keeps you up at night. And plan sponsors repeatedly put regulatory complexity, other F word decisions that need to be made in the top three. And so I've never seen one that says financial. Well, I'm worried that my participants don't have access to tools to help them be better savers. So again, I'M not downplaying it. I think that's. It's a great feature, and it is the rewarding part of being in this industry is seeing people retire on time. [10:13] Chad: And it's not like you're biased. It's not like you're an ERISA attorney or anything. [10:18] JD: But again, I just. I feel like, you know, putting myself as a plan sponsor, I want to make sure our house is in order. That we don't. That we. We've done everything we can, and then we look at, okay, how can we enhance the experience for the individual? [10:32] Chad: Makes perfect sense. Makes perfect sense. So build that out for us. So what are they concerned about? What do they need to look at? What's the current landscape for us? [10:42] JD: I thought you would never ask. [10:44] Jason Roberts: Yeah, we derailed that as long as we could. [10:46] Chad: I think it's time for you to get to your fight. [10:50] JD: So the way we look at it and just trying different methods over the years, probably eight or nine years ago, came up with a three bucket approach. And in fact, I was sitting in a prospective client's office trying to kind of have them be a redistributor of PRI services. So they were an aggregator of sorts, and we were looking to connect with their RIAs, and this guy wasn't having any of it. He's the chief risk officer. He is the essentially general counsel. And I thought, okay, well, I've flown four hours to get here. I could tell this is a wall. So tell me a little bit about your own plan. Oh, well, we are a well intended but overworked committee. And he goes on and on and on. And so long story short, he had a fiduciary file that was probably. Boom. [11:41] Jason Roberts: He slipped. [11:42] Chad: Boom. Knew it would happen. Yeah. Thank you. [11:45] Jason Roberts: Oh, you're gonna love that. [11:47] Chad: It's all downhill from here, Jason. [11:49] JD: Oh, goodness. So he has this big file of this binder that they're using to manage the plan. And I asked him, do you have an advisor or consultant? And basically said, we're at ABC Financial. We don't need an Advisor. We have three CFAs on the committee, blah, blah, blah. So what I figured out in pretty short order is they were scoring the daylights out of their 10, 15, 20, plain vanilla 401k fund. They had these CFAs just running all kinds of different metrics on these funds. They weren't doing anything in the other areas of plan governance. And so what I did for him and what we've now adopted for practice management tools for advisors, and even in our law firm, we're working with plan sponsors. We use these as to educate them on how to think more holistically about managing their plan. And again, it's all at the plan level. So we're not getting into participant level services. At the this point we look at three buckets of risk and all F word functions come out of one of these three buckets. Right. So committee members are held to that F standard because they're making decisions. [13:00] Chad: Oh, fiduciary. Just say the damn word once in a while. [13:04] Jason Roberts: I think perhaps it's because you're not holding your beer in your hand. [13:07] Chad: Oh my God. [13:07] Jason Roberts: And maybe that's. [13:08] Chad: Go on, turn it up to three buckets. We got it. [13:11] JD: So that's where they're making decisions, they're exercising discretion. That's where they're getting their status. And what we've decided is they all emanate out of one of three buckets. First bucket is obviously investments. Almost all plan sponsors know that, that they have a ultra high duty of care when it comes to selecting and monitoring investments. And they have a process. How many times have you told your clients it's all about a process. You don't have to be perfect, you have to be prudent. And this is really tripping me up being able to say the effort. [13:43] Chad: I hate to say it, but you're doing great. [13:45] JD: So they have a sound system, they have investment policy statements, right? Sure, I. Yet probably 9 out of 10 plans we look at have them. [13:53] Chad: They have scoring rules, they're not perfect, they've got their stuff. [13:55] JD: We can poke some holes in QDIA selection in particular and so forth, but they have it, they have a process. Well, the other bucket is service providers. Another bucket of service providers. Monitoring, reviewing, picking, selecting, selecting and monitoring your service providers. Which I would submit is where 9/10 of the large market litigation comes from. Right. It looks like it's coming from investments, but at the end of the day you strip it back. It's share class. Who's getting paid, how much from what source? Was it a legitimate plan expense? Is there any sort of subsidies to the company? Are they self dealing, et cetera? And was it reasonable? And it was somebody monitoring to make sure it was reasonable in light of the value being provided. So that's another bucket. I would say fairly acute. Right. When you're looking at risk reward of how much time do we spend in these various areas? When's the last time you saw somebody getting sued over investment performance or challenging investment? [14:49] Chad: It's always share class. [14:50] JD: It's always so not to take away from investments, but there's great solutions out there, they're very scalable, at least from advisors perspective. You can run a report red, yellow, green, and obviously not to take anything away from advisors who really get in the weeds on that. But to get a plan sponsor over that hump, it's pretty feasible. Service provider selection, monitoring, if you think about it, you don't have to spend a ton of time on it. You do it up front and if there are no changes, you're monitoring the services, you're monitoring satisfaction, you're monitoring utilization, you're monitoring the fees coming out to pay for those services coming out of the plan. But you're not going through full blown RFPs or benchmarks every year, so certainly not every quarter. [15:29] Chad: You're just trying to document, you're keeping your finger on the pulse. [15:32] JD: Sure about every three years is a [15:35] Jason Roberts: bigger undertaking, which is fair I think, [15:37] Chad: but it's not super easy because unlike funds that have all these things, standard deviation 3 or 5 year, 10 year, it's a little more opaque. [15:46] JD: Oh sure, it's more qualitative for sure. But I guess what I was saying is it's not easy, it's just not as frequent. So as far as being a drag on time and again time freeing up to turn to things like let's enhance the participant experience. Right. So if I'm up to my eyeballs and there's no more time into my committee meeting with the, you know, maybe five precious hours I have annually with my advisor, if I'm lucky, who's driving that conversation. If I'm. If I'm. [16:16] Jason Roberts: Yeah, you almost went there. [16:17] JD: Boardroom governance issues. Then I don't get down to the other one. Yep. So three buckets. Investments, service providers. The third bucket is administration slash reporting. [16:28] Chad: Oh, beer is the third bucket. [16:30] JD: Isn't that what would be in the third bucket? [16:32] Chad: Third bucket, beer. Beer goes in. [16:34] JD: So that third bucket. And so this is right up your guys alley. Administration reporting. That's the one. [16:39] Chad: The sexy stuff. [16:40] JD: You have to be constantly monitoring, double checking, making sure that people know their roles, they know what's in the plan, documents. Somebody's communicating that out of the boardroom with. [16:50] Chad: It might not be where a ton of litigation is, but it's definitely where all the screw ups are. Right. [16:55] JD: And the IRS and dol, that's exactly where they spend most of their time is in that channel. [17:00] Jason Roberts: Well I think you'd say litigation would be investment and in our, in specifically in compliance administration reporting, it tends to not be litigation but it tends to be going through compliance programs to fix errors that have been made. So not necessarily litigation. [17:13] Chad: Dude, he said litigation happens in the service provider because he doesn't. And in share classes and everything he puts in the service provider bucket [17:23] JD: class. And you're looking at revenue sharing. You're looking at who's getting paid, how much, and for what. Right. And again, side note, the NYU case I thought was very refreshing. We don't get to see a lot of long opinions, you know, particularly in the 403B cases. But that judge went out of her way to really hammer home. It's about value. Fees in a vacuum are meaningless. It's about the value being provided in alignment with the needs of the plan and its participants. So that's kind of a sidebar. [17:54] Chad: Cool. Stick with your third bucket. [17:55] JD: Okay. Third bucket, administration and reporting. So when we show all this to plan sponsor. And this was back to my story of sitting with this gentleman that was on the committee. I was connecting all those dots through an advisor or a consultant. So for the TPAs in here, if I'm sure you're like a lot of our TPAs, they tell me, Jason, we have two types of advisors. Those who get it and are doing those boardroom things, and then everybody else who's going in and enrolling and educating participants. And that's about where their knowledge ends. And so for those TPAs, we've actually helped them build in the boardroom consulting services that they can charge an additional fee for. So, you know, not stepping on advisors toes, but giving the advisor the option, do you want to do it, or are we going to do it? Because if nobody does it, plan sponsor's not going to figure it out on their own. [18:39] Chad: Are we calling that a form of 316 or something? No, just education. [18:45] JD: It can be the things that a traditional advisor would do. I shouldn't say traditional. It's a higher touch. Advisor, retirement plan specialist advisor, where they're helping them organize the committee. Who should be on this committee? That's a building block from which everything else is going to either grow or struggle. [19:04] Chad: Sorry, Jason. I'm thinking of new business models for my firm that I never thought of before that you just brought up. Is there any other TPAs here? Raise your hand. Yeah, buddy. We're the cool kids, these guys, or the nerds. Go on. So where are the problems happening in that area? I mean, I'm sure you get asked that all the time. Third bucket. [19:26] JD: So when we have all these materials that are designed so you can take them and give them to plan sponsors and show them these concepts. One of them is a sample fiduciary file. [19:43] Chad: Mark, fill him up. [19:44] JD: He's going to need some more in this file. [19:45] Chad: I'll just give him mine. [19:46] JD: I haven't said it. [19:47] Chad: Okay. [19:48] Jason Roberts: I don't know what it means. [19:49] JD: We represent the three buckets, but we had to expand that middle one, the administration reporting, because there's so much that needs to be in the file that relates to administration reporting. So it's a super wide section. Everything else has to condense. And to answer your question, the number one thing we've seen over the last year, I think hands down would be definition of compensation. [20:10] Chad: Oh sure. [20:10] JD: And auditors, a lot of times it's a first time audit for a plan and the auditor discovers. Well, you said that participants could defer [20:20] Chad: on bonus, but bonuses, gift cards on spot cash bonuses, all kinds of weird stuff. Right. [20:27] JD: So we get a lot of correction work in on that issue. Others are sort of various and sundry. There's no common thread right now. [20:38] Chad: I heard you talk on other shows about like terminated participants with a balance, which maybe doesn't sound that exciting, but it kind of caught my attention because of all the hundreds of clients that we have. I'm always concerned that the plan sponsors are not treating these terminated participants with benefits the way that they should, with notices and requirements. And I know you have some thoughts on that. Yeah, RMD is tripping. You said that. I was like, oh yeah. [21:07] JD: So that's an interesting one. Because the DOL over the last few years started enforcing that more aggressively, at least when I say that meaning the duty to track down these participants who have benefits owed to them. And it didn't really square with, with the rules. I guess is, is a short way of saying it. So whether they could successfully levy a fine based upon that is, is to me a little bit uncertain. [21:41] Chad: Bless you. [21:42] JD: Who wants to pick a fight with the dol, right? So whether you can win or not, most people just want to get in and get out of that investigation. By the way, they do not like to be called auditors. Auditors are the IRS agents. DOL are federal investigators and usually some pretty charismatic people. And one of the best ways to get in and out is. Well, for example, we have clients that will organize their F file in a way that is three file folders, you know, whether it's online or in binders. And they are following a lot of the plan governance process, which by the way, don't use checklists because invariably the, the investigators or auditors will see a checklist in which shows the exact process that should be used except nobody bothered to ever go back to it after the first time they checked it. [22:35] Jason Roberts: Yeah. [22:36] JD: So then you're in this position, which I should have prefaced. I'm a former litigator, defense lawyer for advisors. And what I always hated seeing was somebody walks into the arbitration or into the courtroom and says, here's your written supervisory procedures, here's your process, here's what you did. These two don't match. It's almost worse than not having the process when somebody can see, well, you had the answer right there. You just didn't bother to follow your own process. So we use open ended questions with plan sponsors, very targeted open ended questions to drive a conversation, some debate, hopefully some information gathering and then ultimately they document the basis for their well informed decision. So if they organize it well then. And let's say they forget a question, nobody knows. There's not a glaring checkbox without a check mark in it. [23:27] Chad: Don't paint yourself into a corner. [23:28] JD: And a lot of times there's two different tracks for investigators. One is the red flag track and the other is the routine. So if a participant calls and says, I asked for the summary plan description, I didn't get well, because I asked Joe in hr. Joe's not on the committee. Joe doesn't know the first thing about erisa, Just thought I was being nosy and told me it was none of my business. So even having a good chain of command in terms of letting participants know who to ask questions to about the plan, but if that's the basis upon which an investigator comes in, they already have a red flag. They're going to get more points towards promotion within the organization if they settle that one and get a fine. If it's just a routine and they open up the file and everything appears to be well organized, it didn't ask for a lot of extensions on the document production. They're probably going to say nothing to see here, Let me get my two or three points. Rather than sending it over to Red flag and getting 10 or 15 or criminal and getting 50 points. And so that's one way to see [24:31] Jason Roberts: this point system is a discussion in itself. I'm interested in that. So you're saying these investigators have a point system for promotion within the dol? [24:39] JD: Well, they have to. At one point we were interviewing recently retired DOL investigators just to ask some questions. What are you really doing on rollovers? A lot of the, a lot of my counterparts out there Would have you believe that DOL is out there rigorously enforcing IRA rollovers from retirement plan advisors. And I've never seen a single case. By the time you see rollover abuse, FINRA and the SEC are already in there. I've never seen the DOL say, well, you are a fiduciary. [25:11] Jason Roberts: He did say you needed to pour [25:13] Chad: him a little bit more parky on him. Cause he's empty. I don't think I caught him. Oh, he threw another son. He's good. [25:18] JD: He's good. [25:18] Chad: Oh, my gosh. I'll let him slide. Jason, I do want to make sure you get to your flight, so I want to. Before you leave, I want to pick your brain on target day funds, because I've heard you speak on that and specifically to QDIAs. So talk about the different. What we all thought were great QDIAs and the pros and cons of each of these and what you're seeing in the industry. [25:40] JD: I can't believe I got three. [25:45] Chad: I think the over under was, like, prepared for this. [25:48] JD: When you asked me to designate the prohibitive word, I said wellness. And then. Anyway. [25:53] Chad: Do you think regulation would have been worse? I don't think so. I wish we could go back in time and find out. [25:59] Jason Roberts: Participant. We always say participants the best word. [26:03] JD: So the nutshell version of where I think there could be significant exposure for plan sponsors and advisors, particularly advisors in a 338 capacity because the buck stops with them, is failure to account for the DOL's 2013 tips. And the tips are. You can Google it. DOL tips for ERISA Plan Fiduciaries. It talks about. [26:32] Jason Roberts: Told you you were getting for. Told you you were getting for. [26:36] Chad: Mark, how are they gonna find. Got the orange one. It's good, man. It's good. I'm starting to get happy. [26:41] Jason Roberts: Mark, you're confident that you're not gonna touch that orange? [26:43] Chad: I'm anyway, the more. [26:47] JD: Just in case you get frisky, there's this guidance out there that says, here's what we, the dol, believe to be relevant when it comes to selecting target date funds. And those are the most common QDIAs for a lot of reasons. There's nothing wrong with that at all. But the issue is when you are in a courtroom and you're defending a fiduciary breach claim that's based upon. [27:12] Jason Roberts: So we're at five now. I said seven was the over. [27:16] Chad: No, I knew it was gonna turn eventually. It always does [27:22] JD: when you're defending a claim. Good luck driving your boat. Later failing to act prudently what the judge asks or what the standard is going to be, whether you considered relevant information or that which you should have known to be relevant in order to arrive at a well informed decision. Here's the dol, the primary regulator of F word conduct telling you what they believe to be relevant. So if we have another let's say I'm in a aggressively managed through glide path in a target day fund and the data the DoL says one of the things you should look at is withdrawal patterns. So let's say in this plan 95% of participants roll out at or shortly after the retirement date. Logically that would say they probably shouldn't have a lot of equity exposure at that crucial date because that money is going to be liquidated and they might sell obviously at the bottom. Nothing wrong with a managed through glide path because we could all defend the fact that they need growth during retirement, people are living longer, et cetera. Problem is the tips say one thing and the data says you should be looking at this. Unless there was an aggressive information campaign designed to tell prevention participants hey, we think you need growth during retirement. These default investments are not designed to be liquidated when you retire. Even then because it's a qdia. I think the just my gut tells me we're going to look at these participants as not exercising a lot of judgment or input. Right. They're defaulted for a reason. So long story short, QDIA protection is bulletproof to the extent the QDI was prudently selected and periodically monitored. And that's the part I think is missing when it comes to a lot of plans since 2013 that guidance has been out there. [29:17] Chad: You think in the summary of that is you're like oh well a TDF is a qdia. Sorry for the acronym combo there but so I'm good. Not necessarily true. [29:28] JD: That was true when the regs came out. So PPA of 06 and then 07 implementing regs it just said if it's a TDF it works. If it's a managed account it works well I mean it says it has to be a mix of equity and fixed income exposure so you can't hundreds. The third one was a balanced fund or the risk based approach and that one actually had suitability language in the reg and it said if you choose this option the fiduciary must determine six [29:56] Chad: that that allocation is open your papers tomorrow. It's gonna be like RISA attorney Jason Roberts kicked off airplane. [30:05] Jason Roberts: I want to tie real quickly from selecting of providers And QDIA selection because I feel like those two in the market that we often are spending time in which would be sub 10 million in terms of asset size of a plan. The QDIA and the Target Date Suite are simply chosen by the provider that they're choosing. And often there is a provider selection process but very seldom are they spending time getting into the QDIA selection process. The TDFs, more often than not in that space. [30:33] Chad: In the micro market. [30:34] Jason Roberts: In the micro market. And often it's a proprietary fund which I have no problem with. We've had that episode. I have no problem with it being proprietary so long as it's meeting the criteria and it's a good investment. But I have to imagine as a litigator you see that as an issue. [30:48] JD: I don't litigate it. [30:49] Jason Roberts: Okay. As an ex litigator you see that as an issue. [30:52] Chad: You can't handle my truth. [30:53] JD: Avoid litigation. I think the DOL would say there because another one of their tips was to consider custom or non proprietary alternatives in the 2013. And again this is all worst case scenario. This is. Let's say we have a correction that these, that the glide path I'm talking about people lost what they did in 08.30%. [31:21] Chad: There's no wood for me to knock on Jason. [31:24] JD: So in that scenario, if participants sued, I think what the doo would say, well, if it was a one, if it was a take it or leave it option and if you had have followed our tips, you should have changed record keepers. Wow. I know it's extreme and I know a lot of people will probably take issue with that. But if you read those tips, they're not only saying here's all the things you should be evaluating, but they're also saying compare asset management to asset management and compare record keeping to record keeping. Just because you get a better deal on record keeping using the proprietary option, that's great. If it's kind of like in the ESG conversation day. If it's a tiebreaker. Right. Then take the something needs to be prudent. Yeah, but I barely have a single TDF option. [32:12] Jason Roberts: Yeah, most have pricing is better if [32:14] JD: you include the proprietor. Right. And a lot of times you can justify the proprietor. So I too don't. [32:18] Jason Roberts: And you can screen them and they look fantastic and then it's a prudent decision. [32:22] JD: You need to have that as part of the IPS when it comes to qdia. [32:26] Chad: And specifically you rarely see one option these days. You used to. But the fact of the matter is when they, when they bring in 100 plans, 93 of those plans have that option. And we know that's not through their prudent process and selection. But we don't need to get stuff cheaper, right? [32:44] Jason Roberts: Right. [32:44] Chad: Maybe. Or they just don't care. They're just going with what they're told to go with, which is worse, in a sense. Obviously, it's worse. [32:52] Jason Roberts: I think most. Most record keeper partners are good at putting both options out, and they are choosing it because it's cheaper. Yes. [32:58] Chad: I want to ask you about other things. I want to keep you around for our fee thing, but I also want to see your name on the headlines tomorrow. So I know you got to get to your flight, so we're gonna give you your. What's it called? [33:12] Jason Roberts: Theater time. [33:15] Chad: So get out of here. Get the hell outta here. Give him a round of applause. [33:19] Jason Roberts: You survived only six. I had seven on the over. [33:23] Chad: Take the beer with you. Thanks, buddy. Appreciate it. Appreciate it. I thought everybody else is gonna leave too. [33:31] Jason Roberts: Now. [33:32] Chad: Two or three months. Yeah, Everyone leaves. They're like, we're out here. Jason's done. Let's get out of here. Just so you. I told you a little bit earlier, but we literally last night were listening to him on a podcast, and we're like, hey, what should the prohibitive word be? You know, the episode. So we listen, and Chad's like, fiduciary. Fiduciary. Fiduciary regulation. [33:53] Jason Roberts: We're still in the middle of a show here, by the way. [33:55] Chad: Oh, shit. I stepped right into that one. Awesome. [34:00] JD: Wow. [34:02] Jason Roberts: I had seven in three sentences when we were adding them up last night [34:07] Chad: on that one, we thought he would be toast. Like, I was going, oh, my God, he's gonna be hammered by the end of the show. [34:14] Jason Roberts: I had somebody else text me today when they found out kind of what we were doing and said if someone says F word, that it should be two shots. Once they knew what word we were gonna use as the word of the episode. I'm like, that would have been interesting. [34:29] Chad: I might look like an alcoholic. And, like, I'm not a fan of this kind of stuff. You just look like Bud Light. Coors Light, not vodka. Let's move on to the next subject. [34:43] JD: But we're still going here. [34:45] Chad: Yeah, we got again, dude. Sorry. They booked us. Welcome back to us for 70 minutes. We get paid by the minute. I don't feel worthy of this chair. Got a little bit more time. We're on perfect stuff. Schedule. I like to call this section of our show kind of awkward business moments. And I want you to kick us off with one that you get frustrated about all the time. [35:07] Jason Roberts: That makes me so angry. [35:08] Chad: What makes you angry? [35:09] Jason Roberts: When there is a reply or even if it's an initial email with no signature, there's no email address, there's no phone number to call you back at. There's nothing below there. I get furious at that. I have another one that goes along with that that I got today, which is when the signature is a picture. I can't click on the phone number to call you from my phone. I can't click on the phone. [35:29] Chad: This whole thing's an image. [35:30] Jason Roberts: It's a whole thing as an image. It's not an active link. [35:33] Chad: What Chad is saying is that sometimes in the course of his busy business day, I feel like I should turn my chairs to you guys. Hey, Bonnie, I just have shots. I'm getting loose. But Chad is. He's in mov. [35:48] Jason Roberts: Literally nobody in the middle. [35:50] Chad: This is actually really funny. He's in the middle of his business day and he's like, oh, I gotta call, you know, Tom the advisor. He doesn't have Tom's contact on his phone. So he goes, well, let me go to my outlook. I'll find the last email and I'll call. How are you supposed to be. And he's scrolling on. Where's your signature? You son of a. He can't find it. Or it's. [36:09] Jason Roberts: It's always a response. It's like you'll just have the name at the bottom and then it will say, sent for my iPhone. Like put your signature on your iPhone. Then it's that simple. There needs to be access to find you each time. [36:21] Chad: All right, here's mine. And I hope some of you can relate to this. These days we have a lot of these online meetings, right? So you get the link to the meeting. It's basically a modern day conference call. And below that is your 5 digit or 6 digit password or code to get in or whatever you want to call it. Well, when I have those on my calendar, they usually come up on me pretty quick. Oh, geez, it's in five minutes. Gotta be on that thing. I'm usually using my phone. Maybe I'm out and about and on your surfboard. So I click on the link to join the zoom meeting, the gotomeeting, the whatever, and it calls, or I'm sorry, I click on the 800 number to call in. And then it says, hey, welcome to whatever online meetings. Please enter your 6 digit code. I'm on the phone and I hit the hat, you know, the numeric thing. So now I got to go back to my email to find the code. Yeah, you got to double click and then go. And here's my problem. I can't remember five numbers. No, you're a tpa. So I go back and I'm like, four or five. Shit. I go back to them and I'm like, okay, five, seven. I go back seven, and it goes, please enter, starts over. And I'm like, dang it. So what I end up doing now is I take this beautiful tag and I know. Now I write down the six digit code on a piece of paper. People are nodding their head. I put it to the side. [37:57] Jason Roberts: Almost all of them have a one button, iPhone, Android Push that will do all of that for you. It puts a asterisk in between and then we'll put in the code right now. [38:07] Chad: Beautiful thing. [38:07] Jason Roberts: Look at all of our Zoom meetings that I send you. It has the same thing. [38:10] Chad: Here's the deal, Chad. [38:11] Jason Roberts: See, I may not know social media, but I'm at least tech savvy there. [38:15] Chad: No, you're not gonna say, I will trade you Instagram coaching and you help me out with these online meetings because I suck at it Also helps if [38:23] JD: you're like, a little bit earlier than [38:27] Chad: after the meeting starts and you're freaking out and you're in your car on the beach. If you have time, then you don't have to worry about that being prompt. Dude, I've talked about this one before, but I'm gonna bring it up again. And I don't know if this is a. I didn't know we were doing this. I didn't even have time to prep anything. By the way, I don't like it [38:46] Jason Roberts: when he goes rogue. [38:47] JD: I love it, but I'm like, what do I. [38:49] Chad: What's going on right now? I don't know if this is a male or a female thing or both, but for me, this happens all the time. I have to go to a client meeting, advisor meeting, whatever. I'm in the car for 30 minutes, an hour, hour and a half. I get there and it's like, here we go. Nice time for an inspirational meeting. Meet someone. This new prospect, this new Whatever. And 100% of the time, the first words out of my mouth to the receptionist or whomever is, where's the bathroom? Can I use the bathroom? Does that happen to everybody or just me? [39:24] Jason Roberts: No, most of us drink coffee all day. [39:26] Chad: You're crushing Coors lights all day. Yeah, that's gonna happen a lot when you drink four Coors Lights on the way to the meeting. The worst thing happened to me is the meeting was coming and I took a pee in the parking lot, and the guy's looking down. No, Never happened. [39:41] Jason Roberts: Yeah. [39:41] Chad: We're not coming back. All right, so we're here. You made it. You made it to the end. We're gonna wrap this sucker for you right now. [39:48] Jason Roberts: I'm not gonna drink any hot sauce, and I'm not gonna die on stage. [39:50] JD: I'm just. [39:51] Chad: Time for Whiz of Death. While we're at it, are you all ready for Quiz of Death? [39:55] Jason Roberts: No. [39:55] Chad: No. There's no Quiz of Death. Okay. [39:57] Jason Roberts: Thank God. [39:58] Chad: That was their one request. The committee, they can't do that again. So we're not doing that. It was great to be here at the conference. We are the retireholics. We're changing the retirement plant industry one assorted beer at a time. Little shots. Good. To Jason Roberts. Thank you very much. [40:15] JD: Cheers. [40:17] Chad: Still full. Still full. [40:19] Jason Roberts: Drink it now. Drink it. [40:20] JD: Ok.