Crypto, Private Equity & Fee Wars: The Real Litigation Risk

[0:04] Carl: Let me up. [0:05] JD: Let me up. We are gonna have a real bad. You're gonna have a really, really bad time, sir. Gonna have a real bad time. Hey, everybody. You're here. You really do love us. You really do love us. You're here. Welcome to another episode of Retireholics. It's an action packed episode like none other before. Nerdy Chad cannot be here today, but nobody really cares about that. We've got Silent J. We've got everybody's favorite retireholic guy. And my name is James Douglas Carlson. I'm coming to you live. This is a truth. I'm not fibbing as I often do. I'm coming to you live from Roswell, New Mexico. But before I explain why, maybe our producer Brandon could play a little clip from the old days to kind of set the stage. Yes. Okay. Are you a retirement plan advisor? I got a secret I need to share with you. It's really, really important that you pay attention to me. If you hear about PEPs Pooled Employer Plans, you need to know that aliens are behind it. Okay? They're trying to control your mind. Let me show you what I'm talking about. Let me show you. I've been working on something here. So it all started when the spaceship landed back in 1967. But John Sullivan was there and he hasn't aged one bit. So it's 2020 now. I don't know how many years that is. My math isn't good, but that's. That's freaky, man. And then there was the regs themselves, which are really just a secret alien message about mind control. That's what they want. The FBI, the CIA, the NSA, the KGB, UFOs, they're all behind PEPs. They're all behind PEPs. And then there was the grassy knoll, November 22, 1963. Well, the grassy knoll has nothing to do with this. Never mind. So you need to watch out. They're going to control your minds. They're going to tell you it's about lower fees. They're going to tell you it's about getting rid of your fiduciary responsibility. And the biggest hoax of all. They're gonna tell you it's about the retirement plan gap. That's not true. They want your millions of dollars. The aliens do watch out. I gotta go. I gotta go. Well, that guy was very. He saw the future. Basically because, yes, aliens were responsible for the creation of pooled employer plans. And as I mentioned, I'm here in Roswell, New Mexico, on an assignment for the New journalistic arm of Retireholics, I'm interviewing people that have seen and discussed pooled employer plans with these aliens. After my research here in Roswell, I will be heading to Area 51 in Nevada and requesting a private tour of the wing that they have dedicated to these pep loving, mind controlling aliens. So stay tuned. I will bring the truth to the entire industry. Justin, we've got a repeat guest. He's got a buddy with him. Not just anybody. An acro sin buddy. Please introduce our guest. [4:13] Carl: Ladies and gentlemen, hold on to your briefs and prepare yourselves for Crazy Carl part D. Heading from the frosty plains of Minnesota, this courtroom cowboy is a plaintiffs class action firm that's got more [4:23] JD: punch than a Minnesota blizzard. [4:25] Carl: Known for roping in over 300 million for retirement plan folks. Carl's a guy who makes corporate giants like Fidelity and Goldman Sachs sweats like horse in church. And we can't forget about his trusty sidekick, A.A. nick. He's a donkey to a Shrek, the meatball to his spaghetti. He's here to take all the acronyms like the champ that he is. Ladies and gents, please welcome Crazy Carl from Inktrom Lee and Nick from I don't know where. [4:50] JD: Crazy Carl, welcome. [4:53] Carl: Thanks so much for having me. [4:56] JD: Remember last time you were on we. We said Schlichter's nickname was the Boogeyman and we were trying what is Carl's nickname? And I remember it was Crazy Carl that we came up with. So I don't know if you've been using that in any marketing materials or anything like that, but I thought it was a good one. [5:10] Carl: I mean, I haven't. It's also been a nickname given to me four times in my life in completely different settings by four different groups of people. So I'll take it. [5:21] JD: Sounds appropriate. [5:23] Carl: Can I give a little professional update here in terms of where from? Nick is also from Angstrom Lee, so. [5:30] JD: Oh, what the. [5:33] Carl: Well, well, well. Six months aft. We couldn't talk about it at the time, but six months after our last appearance. Nick was one of the five lawyers that started Angstrom Lee. He runs our railroad practice which has a DBA of Casey Jones Law. So yeah, we. [5:51] JD: Yeah, so I didn't want it. I didn't want to Jones like Ninja Turtles. [5:56] Carl: Casey Jones like. Like the guy in the Grateful Dead song. [6:01] JD: Oh, okay. [6:02] Carl: Different generation. [6:03] JD: I didn't want to get too. But that was obviously a great story since we love Nick from before. I thought so. Your firm is not just benefits then it can blend into sectors like railroads. [6:17] Carl: So we're, we have two practice groups. One is retirement, you know, is ERISA class actions. And the other is railroad cases, which involves employment cases by railroaders and railroad. And guys who get injured at work or folks who get injured at work. [6:34] JD: Because that was Nick's. Yeah, Nick's specialty. I remember that back in the day. And I think we should also remind the audience, doesn't he have a mixed martial arts background and. Oh, that's right, a big deal. Right on, like legit, like semi pro or whatever. [6:50] Carl: I mean, more like pro, like. I mean, I'll let Nick talk, but I would say, I mean, how many UFC cards did you appear on Nick after a couple fights there for me, for more money. But I was ranked in top 10 in the world, you know, arguably. Arguably top five for, for my weight, to be clear. [7:11] JD: Good thing I'm not. Good thing we're not doing this show live. When I offended him by calling him a minor leaguer. Yeah, I feel like I need him. [7:20] Carl: Yeah, there's. [7:22] JD: Show me why he's not a minor leaguer. Sorry, Carl. [7:25] Carl: Oh, no, there's a, There's a pretty amazing picture of Nick being walked to the ring by Brock Lesnar and Tito Ortiz cornering him. That and Nick's best friend Adam from law school and one of my really good friends too. So anyways, yeah, okay, one last, one last. Very legit. [7:44] JD: Well, this is probably not true, but I'll say one last question for Nick on this. Nick, are your ears all up like those guys you got? You have those crazy ass ears. [7:53] Carl: I did a pretty good job draining them. So if you touch them, they're hard as. [7:57] JD: But they don't, but you don't. They don't look like that. Yeah, I mean they're. [8:01] Carl: I mean they're war. [8:02] JD: Yeah. I always know when I see those ears to, to smile politely at that. [8:08] Carl: That's right. Wait your turn and yeah, ye. Somehow came up with my wife one time who was not around, you know, for. Did not grow up where wrestling was popular or anything like that. And I share like there's some women who, you know, they're sparse, but like, they see the ears and that's a thing for them. Nobody likes your ears. They're deformed. [8:29] JD: I'm like, I'm telling you, that's a not true. That's a badge of courage. I think most humans see those ears and they're like, okay, that's an elite level person there that can take everyone. He's saying is some, some women like gets them going like it turns them off. Ye. [8:45] Carl: So then we're in Iowa one time and this woman, this bar comes up, starts rubbing my ears. Look at my wife like told you you just got to be in Iowa. [8:54] JD: I wanted, I wanted to talk today about some like new executive order pulling player. I think we should just stick on mixed martial arts. It's still about ears. It took 10 years talk about sports. Still an official announcement because team the team Go team go sports. I know Nick does not Nick need these instructions because he was a champ last time and just picked up on it naturally. But we're obviously playing acro sin. But Nick will be drinking for Carl. And so just to remind you Nick, any initialism or acronym but you'll see the little spaceship fly across and then you drink. And you're drinking from what today sir? [9:35] Carl: I'm drinking a 10 milligram THC seltzer. [9:39] JD: So. Okay. Perfect. Perfect. Further clarifying note today for housekeeping. Here is that for Chapar Champion. This week it will be a battle of three challenge. So three finalists will be chosen and that will be Justin, Mark and I will choose those finalists and then they will battle it out in the head to head Roby sentence finishing challenge. And then Carl, you will determine who the winner will be. And if you need to phone a friend for Nick, that's fine too. But that is how Chatbot champion will go down tonight. Make the semis go head to head in a sentence finishing Robey challenge. Okay, it's a lucky day for breaking 401k news. We've got some big shit that's straight out of the oven. So BC I'll drink for that. Set us up for some headlines, please. Wait. Let me wash down my shot of vodka with my orange my screwdriver here. Much better, Much better. The big news. Anyone who knows 401k knows that today was the day we all knew this was coming. That our president Donald Trump signed an executive order, I don't know, dare I say, clearing the path for crypto and private equity in the retirement plan space. I'm sure it's full of some other stuff too, but that's the stuff that we've been talking about for the last few months. I think we all knew that this day was going to come. But now it has come. Carl, this show is so big time that on my way here driving to Roswell, I got an email from Nevin Adams himself and he pulled some text from the executive order which I would like to read to you and then get your general on the spot. Opinion or thoughts or what have you. So bear with me everybody. This is from the executive order. Burdensome lawsuits that seek to challenge reasonable decisions by loyal regulated fiduciaries and stifling Department of Labor guidance issued since my first term. This is Donald talking. However, have denied millions of Americans to benefit from investments in alternative assets. A combination of regulatory overreach. This falls into your space a little bit here, Carl. An encouragement of lawsuits filed by opportunistic trial lawyers. Oh please. That's not our Carl. That's not. [12:27] Carl: Those are the worst kind. [12:29] JD: Those are the worst kind. [12:31] Carl: I can hear you guys. That's not a cool thing. [12:34] JD: Stifled investment innovation and largely re relegated 401k and other defined contribution retirement plan participants to asset classes whose returns lack the very same long term net benefits allowed for and achieved by public pension plans and other institutional investors. My administration will relieve the regulatory burdens and the litigation risks that impede American workers retirement accounts from achieving the competitive returns and asset diversification necessary to secure a dignified, comfortable retirement. What do you say to this, Carl? There's a lot there, [13:19] Carl: I guess. First of all, I am sorry that I kept everyone from enjoying the benefits of private equity and alternative investments. [13:30] JD: Damn you. [13:31] Carl: Now granted, I have gone on a podcast before and proclaimed that if you put private equity in your 401k plan that I will sue you. So I guess maybe, maybe I kind of deserve that blame. But yeah, no, I didn't expect to be catching strays today. But that's definitely, that is definitely what happened in the executive order. We've obviously been waiting for this for some time. I was, you know, I was surprised at how substanceless it is in terms of what's going to be done. It just says deal something about this to make it happen. And the headlines are like private equity being supercharged by Donald Trump. And I'm. The headlines don't seem to match that reality to me. I think that all of this could have happened under the last fiduciary guidance. I don't think that executive order would be. I mean it's not binding in any sense. It doesn't create any kind of like safe harbor or legal path. So in that sense it's. [14:37] JD: You're nailing the next question I want to ask you. I'm starting to learn more and more about this. It's like just because the government steps in and says that this thing is okay in our opinion, or we give it the thumbs up and approval, you can even lean towards even qualified default investment alternatives. An attorney can still come in and sue you for the use of this thing. So just because the government says, hey, we're cool with crypto and we're cool with private equity, that doesn't stop Schlichter the Boogeyman Crazy Carl from still setting their sights on you in the future. Right? [15:13] Carl: That's right. It doesn't have a role. I mean, in fact, the Department of Labor has a store historically been incredibly unhelpful or when it comes to litigation involving 401ks, Jerry Schlichter had to do that on his very own in the mid 2000s with really no support from the Department of Labor. And in fact, if you look at the intellectual underpinnings of the Employee Retirement Income Security act and litigation relating to the duty of prudence. [15:44] JD: Nick, he's saving you. Nick, he's saving you. I was gonna say it was 150, [15:50] Carl: 200 years ago, the judges were saying you can be in United States Treasuries, you can be in a bond that's AAA or above, and that's it. In other words, they were. Would regulate the particular investments that could be used within a trust and that that was the basis for retirement plan, you know, for Employee Retirement Income Security act due to prudence, was that litigation. But in the second restatement, in kind of the 60s, 70s is when they adopted modern portfolio theory and effectively did a 180, realizing courts should not be intervening in terms of determining particular investments that is being per se imprudent, you know, or per se too risky. And of course instead focusing on risk return profile diversity, you know, getting away, getting rid of diversifiable risk. So the idea of the government saying an investment is a good thing or is fine is. [16:53] JD: Well, can I, can I really all that is. [16:55] Carl: Has never been a particularly relevant, [16:59] JD: you [16:59] Carl: know, and until it starts getting into the realm of safe harbors like the qualified default investment alternative, it's. It isn't going. It isn't terribly influential upon litigation. [17:11] JD: So I have two, two kind of follow up questions to. We'll kind of wrap the executive order here, but one, do you think that Voya and Empower. Because I saw, by the way, I saw. [17:24] Carl: Hold on. Is Voya an acronym? [17:27] JD: No. All right. Do you think that Voya and Empower would continue their march towards using private equities in their retirement plan solutions if they didn't get this type of executive order? Because one quick point I saw today on Voya. Today on Voya, today on LinkedIn, Voya posted a kind of a promotion of a partnership with Pomona Capital, which is a private equity specialist firm, they've been doing private equity for 20 years. And I'm like, here we go. The day of the executive order goes through, Voyage starts waving a flag of look what we're doing. We've got, we've got partnerships here. So my question which you heard was, would they still be doing this if this didn't happen? [18:08] Carl: So my perspective is one from the partisan is the participants, which is the past 20 years have been an extraordinary win for participants. The goal of financial services companies has always been to get as much of that retirement plan dollar as humanly possible. The drop in investment fees, the drop in record keeping fees has all been contrary to that and has been extra. You know, not only starting with perhaps, you know, Vanguard, its revolution, et cetera, have all been amazing wins for participants. And this is just the latest effort of financial services companies to grab a bigger share of that money. And for places like Voya and Empower, who, whose margins have gotten incredibly squeezed, I mean Empower started acquiring everybody think they were in this margin business when instead it turned out it was this incredibly thin business with, with terrible margins and no one wanted to own them anymore. So to me it's a cash grab. And private equity has so many opportunities for you to make money at some level or another. Of course they want a taste of that. I don't really see why Voya Empower would be so excited absent that. [19:21] JD: Yeah, so fair enough. I think this money grab is going to be a reoccurring theme tonight. Let's, let's before we leave private equity because I think some of the people in the chat bar would be upset. I saw shit. The person whose name is an acronym which I can't spell out now saying, hey, these things are going into manage accounts. And I think that just for the last kind of put a book in on this, people need to understand that as an industry, I think our goal here is to put this into target date funds as a sleeve or to put this into managed accounts as a sleeve. When I say sleeve, I mean a piece of the pie. That's maybe, I don't know, 3%, 2%, 1%, you know, who knows? And so can I ask you, Carl, why is that so bad and couldn't historically, wasn't it not cool to put technology funds on a core menu or healthcare funds on a core menu or any other kind of specialty sector? I was always like, that's not very prudent to put on a core menu. But if you want to put it in a sleeve at the hands or the disposal of a professional money manager. Why not? So, so are you yay or nay on private equity in those types of vehicles? [20:35] Carl: I'm nay. And the reason you're a. I'm. I mean, so I think back to 20 years ago. Well, well, so I, I heard. Listen to the entirety of last week of two weeks ago episode. Great episode. There are some things that I disagreed with in it and a big one is you said what, 20 times fees. There's no way that's right. Maybe it's five times. I think 20 times is low. I think the fees when you consider when they buy a company and they put themselves on the boards and they pay themselves compensation bonuses within those firms and not to mention the fact that they give themselves 5 to 10% of the fund to start with for no capital, the fees are astronomical within private equity. The issue is that with a lot of asset classes, they are very attractive and perform well when there is low assets under management. That was the case with hedge funds. But there's only so much alpha now. There's, I mean, is it 4 or 5 trillion in funds Currently they are just buying the same companies from each other, moving from one fund to another. Valuations in private companies are almost at the level of public equities, which is insane because there's obviously such incredibly, you know, apparent reasons that they're unattractive to own in terms of liquidity, in terms of, you know, management, in terms of the. They're not being money that they're funneling to themselves in some way or another. [22:00] JD: Transparency. [22:02] Carl: Yeah. Or just synergies. Because I'm going to go buy all of my products are now going to come from this other business that the fund owns. Like, the whole only reason that the people that bought Red Lobster bought it is because they also owned a seafood supplier. And so that there were synergies in terms of those purchases. It's like, that's not like, that's not great returns for you necessarily. Although we all love a good cheddar biscuit. I mean, but that's not. But for the investor, I'm not sold. There's also the. In terms of rates of return are bullshit. [22:32] JD: You would. Yeah, right. They can manipulate that stuff. It's, it's. I've read an article all about just that where I was like, well, if [22:40] Carl: you invest like 50 million, okay, in it, they make you keep it. You have to hold it still. Okay. But you have to keep it in something like Treasuries and then they dip into it as they do deals. Guess what? I'm in treasuries. I'm earning 1 2% or whatever. Except for the last few years, they don't count that in their returns. They count the returns only on the money that they dip that they don't even go through until year five. And so it's like, oh my gosh, our internal rate of return is awesome. It's like, yeah, because you're not counting the 2% when my money sat there for forever and it's only a seven year. [23:13] JD: Okay. I've been, I've been fighting the fight for this alternative asset class because I just like to see like evolution in something new in our industry. But, but I don't do this often. The chat bar will, will back me up on this. You're winning me over. If private equity does not perform and there's no real alpha, there's no real additional performance numbers over the next two, five, ten years. And in spite of that, people are making obscene amounts of money based on these synergies, AKA conflicts of interest that are happening so deep beneath the surface level that none of us will even ever see it on some type of disclosure thing. Then you win. Like I'm wrong that this would be a horrible decision, but it's happening. [24:05] Carl: So I was a financial advisor for five years. I mean very small time in Salem, Oregon. Like, but so I get the appeal of uncorrelated asset classes. There's also some nice appeal of getting able to set, say what the value is of your holdings and therefore not have volatility quarter to quarter. I get the appeal of an alternative asset class. I really do. I think that there, I think that the field of defined contribution plans has been. So these developed. You, you said two weeks ago, jd, are we going to keep giving everyone the same old thing? I was like, please. This has been one of the most amazing. I mean the development of defined contribution plans in the last 20 to 30 years has been one of the most amazing wins for consumers in the US in the past 50 years. I mean please keep giving everyone this low cost equity access to this. I mean the 401k loans in terms of provision of, I mean the target date funds in terms of diversification. Yeah, it's, it's awesome. And, and it is the, it is the devil to financial services companies and oh my gosh, the 404A5 and the. Which is not an acronym. That's the section. I know that. And the disclosures. Yeah, I'm talking too much, Carl. [25:26] JD: Justin and Mark are going to tell you don't tell us how our rules work when it's an act. And no, you do need to talk a lot tonight. I actually rewatched the episode that you came on before the other night and from start to finish. And my one note to myself was, let's let Carl talk more because you do say great thing. Not to kiss your ass, but you say some great things. Let's go on to something that's almost kind of related. And I had not anticipated this. This next headline is from Empower and they did a recent press release because you know Ed Murphy, he loves his press releases these days on their zero fee standard importers 500 fund and the success that it has had. Yeah, thank you. And when this was news several months ago and we talked about it on this show and at the time I was kind of like, oh, this is cool. Like a Sand and Poor's index fund with a zero expense ratio. And I was kind of, dare I say, naive, where some people were chiming in the chat bar saying there's got to be some evil doing here. They're not just going to offer something for free. You know, we're in this to make money. This is a capitalist business. And I was like, no, no, no, I think you're missing the bigger purpose here. Maybe they just want to drive more business to the record keeping thing. Who knows what. And now Ed Murphy goes out on the Internet and says, hey, look at how much we succeeded. I think it was 250 billion or something. I don't. Someone checked on the number 2.5. 2.5 billion, sorry, five by the end of the year. Same thing. And so what that said to me was, oh, wow, they're getting a lot of their current clients either through promoting to the advisors or promoting directly to the plan sponsors. They're getting people to switch and move to this Standard and Poor's 500 index, which. Why wouldn't they? It's marketed as a zero fee. And then I finally, Carl. And this is where I want you to get back on your inspector horse. You were just on like a fee inspector horse. And I thought to myself, 2.5 billion into this fund. Come on, GD is there like administrative fees underneath there that are netted out of performance where they're making money? And then I thought, well, wait a second, netted out performance? This is a Standard Poor's index fund. This was just supposed to track the market. But then I'm thinking, or track the index, sorry, which in this case Is the one of our market indices. And then I thought like what do I know about all these deep dark boardrooms and how much money they make tracking an index and how much sluff they have to spend somewhere else or whatever. But the point is, and I want your expert opinion because you go after these types of things, is 2.5 billion in a fund like this an opportunity for them to generate revenue that I was just not aware of because the expense ratio is zero. [28:30] Carl: Okay, so I first of all should disclose that you're suing them. No, I'm actually weirdly haven't sued in power yet. But like I've seen the 15C reports from a prominent record keeper whose name rhymes with smash melody and like there was no secret behind their zero fee index funds. They were losing a lot of money on them. Maybe it was, I wasn't, I couldn't say because it was more confidential in the litigation. It's just a loss leader. They know that the low fee that the index funds and the expense ratio at one or two basis points is. [29:12] JD: So my conspiracy went too deep. What? My conspiracy went too deep. It's not a money maker for them. Somewhere underneath the hood. Can I intercept for a second? [29:24] Carl: Yeah. [29:25] JD: I have a question. [29:26] Carl: As Carl's business partner, did you just get around a confidentiality order by just using a name that rhymed. That I'll use a word that rhymes with yes. So God bless. But I, well and I was gonna go back and say I think I read it long wrong because there are things not taking account there. So the first thing that they're probably making money on potentially is securities lending. If they are allowing as your lawyer partner, I share with you. You have to say allegedly first. Then say you can say whatever you want. Okay. Okay. So securities lending is profit is a profitable business. And S and P, you know, the securities in the s and P500 leverage. So bring up that. [30:10] JD: Yes. [30:13] Carl: Oh, darn it. Sorry, Nick. So no, I have to get more stones. [30:25] JD: If they get large market share, that is an opportunity for them to make some money. [30:29] Carl: But I, I and I would also say there's also flo, which is that in other words anytime you're sending money out of that, you get to earn money off of that. And now that. [30:37] JD: But they would have gotten float on a regular fund anyways. Yes. [30:40] Carl: I think by and large like this is what's so great about for retirement plans is this is a market that works now. In other words, people are actually trying to compete based on offering a better product at A lower cost, which. I tell you what, that's not happening in health insurance. You know, it's not happening in healthcare. Like, I don't. I mean, I'm sure that there are ways that they can make some assets off of having those, you know, having those monies sitting in their accounts, but probably not. [31:12] JD: You just nailed my crazy thought. I thought maybe they were like, trap. The standard and poor's 500. That's a piece of cake. We got robots and computers to do that. We'll take this 2.5 billion and in the meantime, go make a bunch of money off of it while we go ahead and track the market. But, no, I'm wrong. I don't know what I'm talking about. I've never ran a mutual fund, so. You said it. You said it's a loss leader, and that's great. That's originally what my thought was like, hey, they just want to bring more business. [31:40] Carl: I don't. There are probably ways they are figuring out to make money. There's a lot of instances. It could just. It could also be that they have other funds that, you know, even if it's not securities lending, it's that they're acting as collaterals for other things that their other. That their other investments are involved in. But Empower isn't. I know they own Putnam, but they're not doing a ton of asset management such that they would necessarily have, like, hedge funds that. I think it might just be that. I mean, and really, they are, like, five years behind Fidelity in doing this. [32:14] JD: Yeah, true, true. That existed before. Well, maybe people dig a little deeper. I don't know. [32:18] Carl: Thank you, Kevin. Sorry, I was. I was slow on the Putnam news [32:21] JD: because I have no idea how an index fund is ran and what that really means internally and operationally and whether that creates opportunities. I don't know. But I'll go to you Robi. Do you prefer funds that have a zero expense ratio or ones that have far higher expense ratios? I don't. I don't think I have. [32:46] Carl: What's the net? [32:47] JD: Yeah, I'm looking for performance, buddy. Like, I need to know that it's going to do its job. [32:58] Carl: I'm okay paying a little bit if [32:59] JD: it's gonna return a good amount. Trump's coming out tomorrow with an executive order, and now we're clearing the path for hedge funds in 401k plans. So it's gonna be awesome. That comes out tomorrow. [33:11] Carl: Yeah, I mean, that's. You know, you say, oh, we want to do 3 to 5% I promise you that they are not going to try to limit themselves to 3 to 5%. They're going to try to look like what for example, the motion picture industries 8 billion dollar plan looks like, which is more like 60 alternatives like that. They're going to say you really should be using private equity instead of public because of greed. [33:37] JD: Because of greed we jumped back to private equity. But I love it because I jumped too far. [33:41] Carl: So. And let me by the way, and I can't believe I forgot this, which is that the dividend reinvestment deduction or it's actually a tax credit and it's one of the, the insurance company's favorite things and why they love using annuities as the. Instead of a trust, which is that dividends issued by a fund that they hold as an annuity sub account. And I think a separate account might work the same way that those are the equivalent of. There is a tax rule that basically when you own a subsidiary, they don't want you to have to pay taxes twice. So whatever income your subsidiary makes, since it's assumed that you're paying taxes on that, you get a deduction on that or a tax credit. Well, so. But for some reason they're able to use that same loophole to count the dividends from like an S from a Standard and Poor's 500 fund and deduct that if you look at the 10k of MetLife five years ago, they, they had $80 million in. In tax benefits just from their annuity sub account business. From the dividend reinvestment. Or I'm forgetting the, the exact. The. I know it as an acronym. But anyways, it's also given that Empower is a life insurance company. There's also probably tax benefits associated with this fund. [35:03] JD: There's a favor and do Nick a favor. Just speak freely. Like don't worry about the acronyms. And Nick, the next time you've got someone in a headlock or between your two muscular thighs on the ground, speak some of that attorney language to him. The way you were talking to Carl earlier. Like I be very sophisticated. Like, excuse me, sir, I'm about to stop you from breathing. I don't know how to do that. Okay, let's move on. [35:29] Carl: The reason that Nick's an awesome lawyer is because he doesn't talk that way and doesn't want to. Okay, so that's how he gets. That's how he gets $30 million verdicts against Union Pacific. [35:43] JD: Because he's talking plain English. [35:44] Carl: Allegedly. Because he's that Happen because he's someday. That's not allegedly now because of caps within certain statutes. The client didn't get it. [35:52] JD: But I have thoughts. I have thoughts someday to build like, like a 401k show on YouTube where we don't talk in that way as well, and we just kind of play it loose and easy. But I think, okay, let's, let's, let's do something a little different. And I can be quick about this, but Sherry Fitz, spin the wheel. Sherry Fitz not invited me, asked me to kind of. I consider her a friend. I partook in her very first Sway conference, which was two years ago about. And it was small, it was humble. It was her first one. And I thought to myself, look at this woman who, again I said, is a friend of mine, attempting to create a conference. Like, there's plenty of conferences all over the country. And I almost felt it a fool's mission in a way. Like, I would never stop her from her inspiration and her goals. But I was kind of like, okay, she's going to do another conference. Like, wow, this is going to be very, very difficult to pull off. She goes into year two, now she's in Year three. And can we all just for a moment, share in Sherry's success? I believe she had 150 people or something at Sway. There's some great pictures out there. She can. 123. Thank you. Sherry. I didn't know you were here. 123 people. And they are all. Which would be an attestment to the first two. She runs a very different type of conference, but I won't get into that now. But everyone loved it. They're all obsessed with it. And I'm not here for that. I'm here to say, as a businesswoman, to go three years and get 123 people there, she's fast tracking to be next year, to be bigger the year after that, to be bigger. Before we know it, she's going to be just like wealth at work with a big conference with hundreds of people and tons of sponsors. And I know that that's really not her goal or her vision. I mean, she wants to be big, but she wants to keep it the way she's doing it. So shut up, jd. Congratulations to Sherry for fucking pulling off what I don't think a lot of people could pull off. And based on her current marketing and promotion, I think that thing's just going to get bigger and bigger. Freddie B. Said it better. Napa better watch out. And I'll drink twice. [38:24] Carl: So you're saying there are conferences where people talk about retirement plans. No, I'm kidding. Yeah. The joke I always make in talking about like how we're in the easiest business ever because 99.9% of the country isn't allowed to own a law practice or practice law. I say, can you imagine if we had to go out there and like design an app? Like, are you serious? Like we starting that business? Like, we would be bankrupt in a year. I feel like trying to launch a conference in the 401k retirement plan space would be roughly as difficult. So kudos. [39:00] JD: Yeah, thanks. You get it, you get it, Carl. I think that was a big, lofty dream. And just through hard work and her own kind of personality and skill set, she's proved that a Sheri Fitz can do it. So I say congrats to Sherri Fitz. And I'm not just doing that because I consider her a friend. I honestly was kind of blown away by the success less. Son of a. I gotta kind of clip some of these. I got a lot to talk about. Or we just go Joe Rogan style and just go long. I don't know. Let's go to the next one. Human interest. We've had them on this show and I titled this Gotta Feed the Beast. And what I mean, you gotta feed the beast. I mean human interest. I know nothing about these venture capital backed things, Carl. I'd love to know if they're on your radar. But I always think it's funny. As a small business person, I was about to call myself an entrepreneur, but then I realized that my daddy gave me the keys to the business. So I don't think it's fair for me to call myself an entrepreneur. Nepotism. But I think it's funny that these big firms are constantly in the need of more cash. I need 100 million, I need 200 million, I need. Oh, we're doing great. So I need another 300 million. I think human interest now is up to 750 million at last check. I'm not sure like where their profits were or where that's at, but I don't have much more to say here except for they currently need another 50 million and apparently burn through the 650 or they have a nice coffer and they just got another on the cap they're investing in. [40:39] Carl: Are they going to be the premier record keeping provider for Morgan Stanley now going forward? Like, I mean, what's the position? [40:44] JD: Well, let's also be. Oh no, it's JP Morgan Chase. I'll Drink that's in fesw. Well Carl, I don't have any ask you about the 50 million. What I want to ask you is guideline human interest. I hate to say this because I consider Aaron Schum a friend too but Feswell and Festival is a little different. Let's focus on guideline and human interest. These are fast growing venture capital backed record keepers. Never been in this business before and most of the people that are running the ships there have not and know nothing about you and Schlichter and the history of our industry. Do you think that maybe these people are targets that you might look at and see that they're acting inappropriately? [41:28] Carl: The [41:30] JD: Am I allowed to first of [41:31] Carl: all say that from person? I I mean I, I have to put this in a way that allegedly I hate Guideline in my, in my not making a statement of factor but I think that they suck. That has been our experience thus far and those are not Samson when you need Samsonite. [41:52] JD: Right. [41:52] Carl: So they. I would tend to concur with you can't the so the big by the way their founder. [42:00] JD: Their founder who we've had on this show, Kevin Boost. I'm obsessed with him. I think he's awesome. But continue. [42:07] Carl: It was a very attractive offering and then our fees doubled in year two and, and, and they look some of this was us in terms of our contributions got all messed up. I mean but let's just say that it hasn't been a great fit. So could they be a target? So the big obstacle and the thing that trips up 90% of people that try to get into you know, suing folks under the Employee Retirement Income Security act is fiduciary status which is that is someone a fiduciary and then it's okay, maybe they're a fiduciary or were they being a fiduciary when they did the bad thing? That's what so oh, the managed account provider is a fiduciary so we're going to sue them because the fees are too high. It's like they're not a fiduciary when ah. Rogue guy's son. Cheers. [42:57] JD: Hey everybody. [42:58] Carl: They weren't a fiduciary when they set their price so you know you lose. [43:01] JD: So they're not playing. [43:04] Carl: There's no, there's not going to be a nexus probably and I, I don't know it would be, it would be difficult to discern but I'm not going to rule it out. I mean Schlichter found and like found NFP like In their NFP case was a great example of the fact that if you acquire assets. Yeah. You become a target. [43:22] JD: What? Yeah. [43:24] Carl: Is an acronym. Sorry, that was on purpose, Nick. My bad. [43:27] JD: Sorry, Nick. But, but it was, it was Vince that won that case against Schlichter. So Schlichter ended up losing that case. I mean. [43:36] Carl: Oh, is that right? I missed that. [43:37] JD: Yeah, yeah, yeah. So Slicker didn't, didn't. He struck out on that one, which I thought was very interesting. We talked about on the show. No, no, no. Well said. And people said this in the chat bar, so shame on me for bringing it up. I really was more interested in the 50 million that came to human interest. And then I just made up a question off the top of my head. But you're right, they're just fintech. They're a record keeping thing. They're not involved in investments or trying to get you to invest in their proprietary funds or anything like that. And by most standards of measure, their fees are reasonable. Many times they're even cheaper than current things. So there's less skeletons in the closet with those guys. Fair enough. But can we all just see as a community still f those guys. Okay, let's move on. [44:24] Carl: I think that there's an abundance of capital on the sidelines in both, in both the private equity and the venture capital spaces. And I think that there's also a fear of missing out that can pervade that causes that once they hit a critical mass in terms of assets that it becomes very simple to, to gather a whole lot of assets because there's in general way more money and way more people than there are good ideas is. [44:48] JD: Well, and can we also talk about the feather in their cap? It's been a very short time period. It's been seven years or so since they've really kind of hit the market. And Carl, I don't know if you keep track of these companies, but I mean, they are selling plans by the clip, bro. Like they're, they're in the tens of thousands. I think they're pushing 40,000, 50,000. This is, these are a number of plans that it took legacy record keepers decades to get to. Now mind you, these are all very small plans, you know, so pretty fast. [45:26] Carl: And so, you know, that is the right end of the market to, to target. And they seem to get the good entry points in terms of, you know, whether it's, I don't know, he gravitated towards it very naturally when we were first, you know, getting with our first payroll provider and it looked better in terms of the fee comparison we did. And so I. But I don't know if your numbers take into account the fact that they are on very thin ice with Angstrom Lee llc. That's all I'll say. [45:57] JD: Let's go ahead and spin the wheel. That's not true. [46:01] Carl: It's in our. It's our company name. [46:04] JD: What does it stand for? [46:06] Carl: Anything. It's our company name. [46:09] JD: Limited Liability Corporation. Come on, buddy. [46:12] Carl: I understand that. I understand it. Limited Liability Corporation is statutory acronym. But when I file with the state and I form a company, the letters I use are the letters. Carl. Acronym. Friend. I'm sorry. [46:28] JD: We will be serving you and Nick in the morning on this very subject. We will see reports. If I lose. [46:40] Carl: I love the passion. [46:42] JD: Oh, wow. [46:44] Carl: Oh, it's all of us. [46:46] JD: No, it's Jen. He's not here. You gotta say it again. Let's move on. Okay. Fun. Fun. Type of. The fun time of the show, hopefully. I. I deleted my TikTok. I deleted my Instagram. I deleted my Facebook. It's been probably four or five months. By the way, I apologize to anyone who follows retireholics on Instagram because it's gone dark, right? I haven't posted because I'm just not on there. But I do know that there are a lot of people on those platform. No, Brandon. Oh, Brandon's gonna drink. I thought he was about to come on and tell me. I do not have your social media clips, like, do not promote this section. [47:33] Carl: You know, I've been. I've been SOBER now for 12 years, JD and I gotta say, getting iced is like number 27 on the list of things I miss. [47:43] JD: Yeah, yeah, yeah, it's fun. It's definitely fun. We do it every time here. So where was I? [47:52] Carl: Sorry, you were talking about something. [47:53] JD: No, no, you didn't trail me. I'm too sharp for that. It's called FinTalk. You know, finance on TikTok. I think we might also have an Instagram reel. But the point of this little segment is. Let's see what some of these TikTokies are doing, says Daniela. And. And then we'll just. We'll just chat about it. It's supposed to be the fun part. Nick. Even you can chime in on this one. Brandon. Even me? [48:13] Carl: What's that supposed to mean? I. I had our 30 houses. 30 houses retired with about four or 500,000. [48:21] JD: Oh, that in English. Yeah, the stop is a pause. Sorry, can you put that. Do that again? [48:30] Carl: I think I messed it up. [48:31] JD: Can't hear you. Be can't hear you. Give it another shot. Okay. [48:35] Carl: Carl was talking, so I stopped it. [48:37] JD: Oh, okay. God damn it, Carl. [48:39] Carl: These were, these were sent with like a commentary on the end of them. That's longer. [48:45] JD: Do you want the commentary? I want the one where the guy like, maximizes the shit that goes longer, where he's like, oh, you make an hour a day. I make a second a day, motherfucker. I thought that guy was funny. Did you get that one? All right, this came from our team. Is 6am to noon. And I'm not crazy. You're crazy for thinking it takes 24 hours. Just like some dude in a cave did 300 years ago. My second day starts at noon and goes till 6pm that's day two. And then the next day is 6pm to midnight. What I've done now is I have changed and manipulated time. I now get 21 days a week. Stack that up over a month, I'm gonna kick your butt. Stack it up over a year, you're toast. Yeah, my day. Every minute is a day. So my day starts at 6:00am 6:01am first day. So now what I've done is I've stacked that up and manipulated over time. I've manipulated time. I'm gonna kick your butt. [49:34] Carl: Okay? [49:34] JD: I'm gonna kick your butt, dude. [49:36] Carl: Your butt's gonna get kicked because I'm having a day. [49:38] JD: Every minute. All right? Stack that open for a week. That's thousands of days, you idiot. You're not thinking like me. You're way behind. You're only. You should. Your day. What if every day was a set second? Did you think about that now? [49:50] Carl: Thousands of seconds in a day. I'm having thousands of days, dude. [49:53] JD: I'm kicking your butt. Manipulated time. Manipulated time. My day. How do you guys at Angstrom Lee, a limited liability corporation, deal with time management? You like these guys, are they, they're saying something truthful over there or. [50:14] Carl: Yeah, I don't know what to say other than, like, I would. I feel like I would. I feel like I would bet a honey baked ham that that guy's done ketamine within the past 36 hours. Like, I. This guy finds Joe Rogan too tame. I, I don't know. Like, no, I, I don't know. We have to track our time. We're fortunate because civil, civil litigation is mostly it a tippy tap job, not a yippee yap job. So we don't have to be. Have super intense time management capabilities. Most of the time. I'M working in something on something that's due between two weeks and two months from now. So yeah, I can't relate to any of that. And I. And I made it. And when we started the firm, I was like, no, I'm not going to any meeting that starts before 10. So just so you all know, you can meet. I'm just not going to be there. [51:07] JD: You brought up a great thing. Attorneys are one of the, the last occupations where you're like, oh shit, you're on a time clock. Like when you hire an attorney to do something, you're on their time clock and paying by the hour. We used to do that as third party administrators. I don't think you know that. But like when my dad did it in the 70s and 80s, we worked in a very similar fashion. Hopes we don't today. But Justin, any comments about how you might best maximize your minutes, hours, seconds in a day? I mean, does this resonate with you at all? [51:40] Carl: No. [51:40] JD: I'm on Carl's schedule, man. Come on. Jesus. I learned more and more about the people I pay. Okay, Brandon, we've got another one. Let's throw another one out. [51:50] Carl: Look, let's talk now. I want to hear Nick's. I want to hear Nick's view. [51:53] JD: Because Nick on the next one. [51:56] Carl: I was going to say Nick has more open paces than the four other lawyers in his practice group combined. So his time management skills are insane. [52:05] JD: Well, you know what, Carl? This is not your show. It's mine. [52:10] Carl: Good. I've overstepped again. [52:14] JD: Guys have a brand new hack. They'll make you a millionaire in three days. [52:16] Carl: Step one, have a hundred thousand dollars. [52:18] JD: Now you have hundred thousand dollars. Step two is put it in a bank account. [52:22] Carl: You probably think yourself, what the heck's a bonk account? [52:24] JD: Well, bunk count is where they bonk your money. And every bunk makes it go up, you're bonking it. And after two or three bunks, it will turn into a million dollars. So number three, or draw the money. A thousand dollars out and then a million. And now all of a sudden you're [52:42] Carl: gonna think to yourself, I just made [52:43] JD: a million dollars in three days from a couple bunks from just a few bonks. And you're welcome. So follow me for more advice, guys. And remember, always be growing. And don't be afraid to always listen to yourself when you're being yourself. Nick. Nick. My question for you is, I'm gonna call this guy the youth is with his little stash he's got there. I'm 53 years old now I'm getting old. Do. Should we be listening to the youth about finance here? Does this guy have any points or any of these people, do they even know what they're talking about? I like him. [53:18] Carl: He's got a real Tony Robinson vibe to him. I'm big enough and I mean, [53:27] JD: I [53:28] Carl: don't know how much longer anything we're doing is going to work anymore given both AI and Trump. [53:33] JD: So it, let's, let's, let's bonk some shit up. [53:37] Carl: Dude sounds like he's had about 40 of the drinks that right now Nick [53:43] JD: will drink for his own drink. That's a great point. Artificial intelligence might give us all the strategies we need sometime in the near future. I, I heard it on rumor that maybe chat GPT5 came out today. I don't know if Ton Davis is still in the chat bar to let us know if that is a truth or just something it did. [54:01] Carl: I heard I had a statistic. I don't know if it's true that among Zoomers they use TikTok search more than Google search. [54:09] JD: Oh, Jesus Christ. Yeah, well, we did. I definitely don't want to be searching for my answers. I have a, I, I, I'm ashamed to say that not ashamed. I love my, I love my 27 year old daughter, but I have a daughter who always tells me like, hey, this is, this is happening. This happened in the news or did you see this? And I'm like, where the did you hear that? And it's literally when she's scrolling her phone, I'm like, that's not real. That didn't actually happen. You need to find an actual news source which they're, I feel like at [54:42] Carl: this point media literacy, they need to start teaching in third grade at this point. It's so terrifying in terms of AI and dude, just, just three days ago, [54:53] JD: Chad sent me, Chad sent me something that was for sure artificial intelligence that Phil Collins died, that Paul McCartney came and like sung to him in the hospital or something. And he sent it to me like it was real. You guys sent me that. Rocky 7 was a movie and I clicked. That was Chad. Chad gets duped every time, every day. All right, well, I do want to do an extended show, but we're gonna leave the, the Tick Tocks behind. We'll save them for next time. It looked to me like Robi really enjoyed that segment. So I want to build up say anything, but those are fan I have I, I, yeah, that's good stuff. Those are good. Those are good. What did I have next on the oh, is Freddie B. Still here? This is this final segment. [55:44] Carl: Yeah, so I just saw him post. [55:45] JD: It's basically going to be the Freddie B. Segment. Two great pieces out of him that I think are in classic Freddie B. Vibe. Very controversial or irreverent or you know, he kind of pokes the bear if you will. The first one I'm going to go to is the one that you're very familiar with, Carl, because you were quoted in it several times. I sent it to Brandon kind of late last minute shift audible I call it lawsuits helpful or Harmful. Carl, there was some statements in this I keep hearing from you plaintiff's attorneys that you are somehow responsible for the lowering of 401k fees over the last decade or two. You guys aren't really that big headed, are you? It's not just your lawsuits that are lower these fees. It's all kinds of things. [56:42] Carl: Right. And I think Fred does a nice did a nice job of pointing out that I made clear that we are a factor among other factors. And there's sort of a chicken egg question which is that did 401k litigation lead to, you know, Form 5500 being publicly available? Did they lead to the 408 and 404 A5 regulations, et cetera, which obviously have played likely a larger role than litigation. I think that if you look at what is really happening in a committee meeting and when people are talking about plans and in terms of what consultants advisors are talking about when they try to pitch people on hiring them and when they're in these meetings, a lot of it is risk of litigation. I think it drives a whole lot of the thinking and it leads to while it can lead to some timid conduct, it also can lead to some very thorough and thoughtful conduct related to selecting service providers in terms of analyzing performance, in terms of trying to keep expenses low, that has been very positive. Obviously technology competition, you know, market forces, et cetera have worked really well. With that said fees are dropping within the retirement, you know, within defined contribution plans in a way that in any other sector of the economy. So I'd say yeah, I think fear of litigation and that being a palpable fear, one that in which it is realistic has a really positive. Has had a really positive effect. [58:27] JD: I like that you mentioned that in that part of the major fee reduction was in the mega plans which to me they're the ones that have the fear of lawsuits. I don't know how much of the small micro and mid market has a Real fear of litigation, even if they should. What I think has really empowered the reduction of fees over the last two decades has been the kind of evolution of the role of the financial advisor. I feel like 20 years, 25 years ago, a financial advisor was just kind of a dummy that sold a plan and got a commission. And slowly, over time and methodically over time, they become a very paramount role and a leader, if you will, a quarterback in helping these plan sponsors. And what does an advisor want to do? Wants to be a client advocate, wants to push record keepers to lower their fees, wants to push people like me to lower my fees, wants to go find the lowest investments they can find. And I think they're really been the, the push and all this stuff, not you guys and you're silly lawsuits. [59:35] Carl: Yeah, well, there's a lot more of you than there is of me. I mean, I really mean that. [59:40] JD: I think you're, you know, in terms [59:42] Carl: of a per capita impact. I'll take my numbers, but, but no, look, I'll say when we're looking for cases, if we find a plan without, you know, with 250 million that doesn't have a, that doesn't have an advisor, doesn't have a consultant, they're relying on the record keeper that immediately becomes a litigation target like existence of an independent, you know, of an, you know, an independent of an independent source of advice. It seems to me to be the best indication of a plan that's unlikely to be breaching their fiduciary duties. So I think extremely highly of the financial advisor, financial consultant community. I think the extent to which they've evolved and become experts in this field since I was doing it over 20 years ago is, is incredible. Nothing but impressed. I would also say the amount of, to which people are going to listen to the financial advisor and consultants and care about what they're saying and abide by that will also is also significantly improved by there being a threat of litigation. So I think it can go hand in hand in terms of whether that message is being listened to. I also think a lot of the forces of, for consolidation, you know, within the advisor world could very easily replace those advisors with just people who are driving profits and collecting commissions if there's not as much of a fear of litigation. [1:01:03] JD: Yeah, well, we haven't even got to the pollute employer plans yet, so we can talk a bit more on that with those. Let's jump to Aronowitz and leading the employee benefits and security administration and kind of what his role might be. And this, this Talk of like. And I don't have this legal language. I'm sure you do, like, like a government Department of Labor court or something, like versus the private courts. Is that really something that we know that Aaronowitz wants to do, by the way? He was supposed to be on this show as a guest and had to back out the last minute. Trump told him he couldn't do it. No, I don't know that I. What, what do you say before you say everything hearsay or what do you say? Damn it. [1:01:51] Carl: We just say, but allegedly. [1:01:53] JD: Allegedly. Allegedly, allegedly. I wasn't allowed to share that information. So a Ronowitz may do this. You say this, Mr. Clear. Speak. Mr. Fucking. I don't talk like an attorney. You say, quote, this is from Angstrom. This is a profoundly dumb idea. Any benefit from improved sophistication is massively outweighed by the risk of the judicial capture of the ideologues. [1:02:25] Carl: Yeah. So in other words, here's an example of that. There are certain judicial districts in which there's not. It's not random assignment of cases. There are judges who get really interested in certain areas and are like, ooh, I want the cases assigned to me. And the judges who. One judge in particular who really like getting the cases assigned to him was a very much a. What's the word? I would, I would use sort of a hardcore free market capitalist type. And it's not that we're not capitalists, but, you know, we do believe that fiduciaries should exist and that they should and that they are. That you can't completely just trust individual participants to make decisions. And so he was just sort of trying to determine, to shape the law and to get it to go in a direction that reduced the level of fiduciary responsibility and allowed people to just give big menus to participants. The point being, when you set up specialty courts, you're going to. You're far more likely to get ideologues who have agendas than you are to, like, just get expertise. And judges. Really good job. The fact. [1:03:31] JD: But Carl, Carl, let's go the other side of the coin, though. Because you're a plaintiff's attorney, don't you think it's difficult talking to judges? And if. When juries that don't really understand the game of chess that we're playing here, like, they don't understand the roles and the. And the different things that are happening. Like, I'm constantly frustrated by even our own government, the decisions they make. I can't. I can't. Imagine you being in a court being like, these people don't really understand what I'm trying to fucking talk to them about. So isn't that what a Ronowicz is trying to do is like, wouldn't it be great if we had an actual court that is like actually knew what a record keeper was, actually knew what 12B1 fees were and sub Tas I'll drink. And knew what conflicts of interest exist in our industry, understood the motivations of everything. [1:04:19] Carl: So I would say that the, in the course of a lawsuit, the a court learn can learn a lot. And my job is to help educate them about the issues involved in the case. And we have some very complicated cases where we end up with judges who know nothing, who know an awful lot by the end. I think that they make far better judges. [1:04:41] JD: You can't learn in weeks or months what I've learned in 30 years. [1:04:44] Carl: No, no, of course, I mean J.D. of course not. But you know, the, the what do [1:04:49] JD: you think about what I said? Take me to the mat. You can't, you can't learn that in court. It's too short of a time period. [1:04:55] Carl: That's absolutely right. If you try and learn all the [1:04:58] JD: things you're talking about, however, all, all [1:05:01] Carl: the regulations are based on really simple principles of at the end of the day, right and wrong. Right. And, and there's these. All of these regulations come or at least in theory come from a really basic principles. And so a lot of our job and what Carl does exceptionally well is takes the very complicated things you guys are talking about and explain to them why these regulations exist and why they're important in a way that's not hard to understand. I mean, at the end of the [1:05:28] JD: day, he did good. You said that earlier. He did good. It was great to hear from you, from outsider industry. You kind of put me in my place a little bit. That's the whole point is what do the regular people think about this situation? You know, just normal humans instead of all of us 401k experts you have, [1:05:49] Carl: I mean part of the problem with finances is that the people who know a whole lot are oftentimes ones who are the most wrong. Like it's the one area where if you want to be successful, just let's say an investment in general, you really have to filter out 96% of what gets said. So you know, the professors of finance that get up and defend active management in some of these cases are, who are the supposed expert in these cases are far and away the most like garbage bag useless folks in the entire case. So, like, this idea that in garbage you can know more and therefore make good decisions is. I don't think I agree with. The thing is, with the judges are also presented with a lot of information that lets them use their common sense. In other words, here's an email that was sent. [1:06:39] JD: That's kind of what Nick said. That's kind of what Nick said. He was talking about common sense. I feel like that that was. [1:06:45] Carl: And common sense alone is not going to help you figure it all out. But when you get to see the advisor giving recommendations and I get a chance to point out where they were lying, withholding information, or if they just sound like concerned people who care, the judges can pick up on that very clearly. So looking at the evidence or emails of people who do know what they're talking about, I think the judges do a pretty good job of evaluating that and becoming pretty informed. [1:07:18] JD: All right, well, let me. Let me take this a step further. Let me take this a step further, Carl. On our last show with you, Schlicher was brought up and you said that. You said that he was a leader and the man and that you would even take a knee to Schlichter at that time. And I'm sure that that's built more around his kind of being novel and coming out and doing a lot of this in a big way first. But I have to tell you in the podcast that I've listened to Jerry Schlichter and the writings I've seen from him, the quotes, and he's been on numerous podcasts. He does not even now really entirely understand our industry. And he didn't in the beginning days at all. I considered him a new. When he said shit, it was literally like a beginning surfer coming to the beach. And I'd look at the guy and be like, your leash is on wrong. You're holding your board all wrong. You fucking don't know what you're doing here. And he did not know our industry. Now, he's still done what he's done and kudos to him. But I have to tell you, Carl, you are way better than Schlichter. You know our shit, you know our industry, you come from it, you understand it. So I say to you, Schlichter should be bending a knee to you, not you to him. [1:08:36] Carl: So I'll say this. If you wanted to lose a lot of money, I feel like you could remake Aaron Brockovich but have the story of their. Of their lawsuits. He took on eight figures of debt when he was suing ABB those firms. [1:08:55] JD: So you respect the entrepreneur. You respect the risk taker, the entrepreneur. Don't tell me Schlichter is a 401k genius because he's not. I, [1:09:07] Carl: the people there are very good and they understand their cases pretty well. But I, I, I, I get what you're saying. I don't totally disagree. I will say though that whatever knowledge he lacks, he's still 10 times more knowledgeable than a lot of the people bringing 401k suits these days. [1:09:22] JD: That's a sad statement. That's a very sad statement. Freddie B. He just, he, he knocked me out. That was phenomenal. Nobody knows as much as a third party administrator. Good for you. [1:09:35] Carl: Except Fred has to drink because he used the acronym or is it not, it's, it's not audience related or the [1:09:41] JD: good audience members do. [1:09:43] Carl: Okay. Wow. Oh wow. Throwing shade at Fred now. [1:09:47] JD: All right, let's, let's wrap up this last one which is a big one. The Department of Labor had a I just want to sit for my vodka put out an RFI and a request for information and Fred did a great job in an article that he posted about pooled and pull airplanes being the wild wild west. But I would really like to focus and everyone if you haven't read that go out and read this article wealth management.com the letters for retirement plan advisor. I don't want to go back to the vodka. Kudos to Fred. This is a phenomenal article. But what I would like to focus on is the Department of Labor and the Employee Benefit Security Administration's request for information. And I thought it was very telling in that they want to they're concerned that these things have not taken off the way they should. Carl. Like they we pitch to them. I say we our industry pitched to them. Hey we got this great idea. We're going to build a really lower cost for small employers and it's going to be phenomenal. It's called pooled employer plan Help us get this thing through. And they did it. And the fact of the matter is that pooled employer plans really aren't cheaper than standalone plans which I think has been a huge headwind for their adoption amongst small plans. I think in Fred's article he goes on to talk about how currently they're like less than half of half a percent of total defined contribution assets. And I would just like to state for the record if you take a on and paychecks and pull them out of the mix which are to me just left pocket, right Pocket deals like those are just opportunities that. Go ahead, Carl. [1:11:39] Carl: And aren't those just maps that became [1:11:42] JD: a fair amount of them, but it's [1:11:44] Carl: also their new player plans. Ah, sorry Nick. Someone who doesn't drink and that's been doing really well. [1:11:50] JD: I'll show you sure have a high, high count. [1:11:53] Carl: I know. That's because I've been doing a lot of talking too. [1:11:57] JD: I saw a lot of me, I saw a lot of pro pet people saying that what they were all excited about, at least what they put on social media was that oh, there might be this safe harbor for the 338 fiduciary thing. And I kind of, I just want for a moment to let everyone know, like really haven't pooled employer plans been basically selling based on outsourcing your fiduciary responsibility through A338 since they started these things? Do you really think it's going to make a difference if there's some type of safe harbor that goes further? Carl, you look like that you have a thought to go. Well. [1:12:40] Carl: Yeah, the decision to delegate to a338 is makes you just as susceptible to litigation as doing it yourself and doing a bad job. And in some ways it makes you more vulnerable because if they're self dealing and you just hang the keys of the car over to them, you're probably as liable as they are. So I don't think it reduce your liability. I'll say. You know, you properly scorned me three years ago for saying something pro pooled employer plan when I didn't really wasn't really informed. I was sort of speaking. I don't. First of all, I don't think anyone should be held accountable for what they say in the last 20 minutes of any podcast. All right, in the podcast. [1:13:22] JD: But we're there now. We're there now, Carl. [1:13:24] Carl: So let it rip. I didn't know anything. So like I, I don't take any responsibility for my pro pooled employment employer plan comment. I refused to. At the same time, I'll admit I was probably wrong as soon as I saw Aon's name in that article. It's like, man, I knew I was wrong at the time. I could tell that JD knew a lot more about this than I did it. Kind of hated it. Kind of sucks to be proven wrong that quickly. [1:13:51] JD: Sorry, I apologize. I have a deeper question here on this though. So you answered the 330, the 338 version. And I'm guessing you probably didn't read a lot of the Requests for information. But it also appears that the Department of Labor is very interested in conflicts of interest. They want to know like why these things haven't been adopted. And they also want to know if there's conflict of interest between the pooled plan providers and the investment structure. And so I'm going to take this one moment because I don't have enough time. There's not enough hours in the fucking month for me to talk about pooled employer plans. But I want to put this in front of you plaintiff attorney and see what you think about this. And then we'll go to chap our champion pooled plan providers. It was the government's idea with this new legislation for the pep, damn it. When it came up, we're supposed to be this independent new role that would basically keep care of all of this, make all the important decisions about who would be the record keeper, who might be the financial advisor, who might be the 338, who might do the administration and this pooled plan provider would take on that responsibility. Now there are a few in our industry that are independent. But Carl, our industry is littered with press releases of record keepers and financial advisors coming out to the world and saying we are financial advisor, you know, USA across the country. We are partnering with record keeper XYZ and record keeper XYZ is going to open a PEP with us. I'll drink. And they're going to be the pooled plan provider and the record keeper and we are going to be the financial advisor and maybe even the 338. Oh and by the way, the pool plan provider slash record keeper will also be the slash administrator. What upside down universe am I living in? How is this even okay? Why are we advertising it to the world? And don't you think that you and your buddy the boogeyman are going to want to put their sights on these things when they become $1 billion? To like this seems ludicrous to me. [1:16:12] Carl: Right? I mean to the extent they're getting away so far it would be twofold. One is that it's only been three years since it started, right? Three, three and a half. So we have a six year statute of limitations and we want all six years worth of damages. Okay, so we need, we need six years of operation generally before we're going to go ahead and hit them up. I mean and also, yeah, the assets in the mass and it depends on the nature of the wrongdoing. Right. So in 401k world a plan needs to be. Now we like we recently have been Targeting smaller plans because we think that's where the sort of leftover wrongdoing is or that there's more actual wrongdoing. So 200 to 250 million has been, has been quite fruitful in terms of litigation potentially. But if you're just self dealing and using your own vehicles. Fred talked about them using their own collective investment trusts within their. I'm not even going to try to get the acronyms right then, hey, when you start talking about investment mismanagement, you're not talking about a few BIPS basis points. [1:17:21] JD: Carl, Carl. [1:17:22] Carl: Okay, we may not seem super smart, [1:17:24] JD: but we know what that is. Okay. [1:17:26] Carl: No, I meant it because it's an acronym. [1:17:29] JD: It's not an acronym. [1:17:30] Carl: Okay, good, good, good. I hate. That's awesome. Where there's real wrongdoing, we can, we can sue a plan that's, you know, a $30 million plan. Especially if you're in like employee stock ownership plan world. So you know, if you has. No one's taken a super close look at it yet. Very few of the players right now in the 401k litigation world are. [1:17:57] JD: Great answer, great answer. I want, the more, I want the more general term from you though, the more general thought which is, isn't that so weird that, that, that the government said. So here's what I think is going to happen with the, the request for information. I think it's possible everyone's going to laugh at me now in the chat bar, but I think it's possible that the Department of Labor and the Employee Benefit Security Administration, through this request for information are about to discover that the pooled plan provider role that they had intended is not what is playing in the market. And instead, because there's a lot of questions there around this and instead there's a lot of conflict of interest. And here's my final kind of close on this. If you were to prudently, which I think the government should do, make the pooled plan provider be an independent, you know, company. Something that's not related to the record keeper, not related to the advisor. I think peps, I'll Drink, Crash and Burn, they go away. We'll rarely hear of them again. Because the only reason they've had, I won't even say success, the only reason they've moved the needle to the miniscule amount they've moved it is through distribution and the distribution has been motivated through greed and that's through selling proprietary things. And to your point, Carl, they had lost all these record keepers and financial institutions had lost the profit margins they had from 20 years ago. And they saw this as an opportunity to grab some of it back. And I think the sun may be setting on this whole concept. Robe guy and silent J and I will be the last fucking laughing when the shit implodes and they fucking tailspin over their own head. I hope you're right. So. [1:19:45] Carl: But I don't think we had some litigation multi employer plans. I think maybe two or three lawsuits and they went very well because there are. There's rife for potential conflicts. And in general where you see conflicts and use of proprietary investments, you quite often see decisions not being made in the best interest of participant. It's just kind of obvious. I mean to me again this is the like the positive trend in lowering of fees and improving outcomes for participants has been like fighting gravity. That there are these constant forces that are trying to find ways to profiteer and to raise the fees and to hide them. And that's why did you know Fidelity has one of the like 15 biggest 401ks in the country, which is really weird. And a lot of that is because before like the 2005 era, they were making so much money hand over fist through exactly that type of conduct that you know that they were able to grow so large and why they own half of downtown Boston. So yeah, I mean do. I don't know the. You know this area better than I do. But I would say like them trying to leverage those to is basically them trying to restore gravity or what they see is gravity to this world, which is fine. Which is like keeping more for themselves. [1:21:11] JD: So what I would like for you to make a note of now is that whenever that six years goes up or whatever's happening, you and I need to have a conversation and I need to let you know about all these conflicts of interest that are happening because compared to the 401k plans you go after right now, and I'm not trying to like make this a grandstand here or something, but I'm telling you right now, truthfully, honestly, compared to what you go after right now, this would be like shooting fish in a barrel. This is literally. They're breaking every conflict of interest rule that there is and they're doing it out in the broad open. And you could literally walk into a courtroom and show them their press releases on this which don't add up and make no sense. So they've literally lost their mind in this greed moment of trying to capture this. And I'm claiming it's all about to implode. On itself. But we'll move in, we'll move on. [1:22:06] Carl: I didn't know John Sullivan reads it, watches this show. I'm not trying to make any press. [1:22:11] JD: The heck he, he loves the word fantastic. Okay, do you have our edit? No. [1:22:19] Carl: Yeah, well, I don't like the word specialist. [1:22:24] JD: John. Brandon's wearing a John Sullivan T shirt. Carl, do it again. Brandon. [1:22:30] Carl: Fantastic. [1:22:35] JD: We did an edit of him. Carl and Nick, just so you know. Oh, the rolled up sleeves. [1:22:41] Carl: I know that picture. How many times does he put himself [1:22:44] JD: on the COVID He uses the word fantastic. And like he used to do all these one on one interviews and he'd do it all the time. So we're drunk idiots. We made a one minute montage of him just saying the word fantastic and put it out on the Internet. That's when the retire. Alex used to be cool. When we were just drunk off our ass doing crazy. We've, we've, we've matured. It's unfortunate. Okay, let's play chat bar champion. Justin, remember, you vote for a semi finalist and then don't go out there. [1:23:18] Carl: Wasn't a lot of zingers tonight. [1:23:20] JD: I don't know. [1:23:22] Carl: I love the activity and it's good to see him back. Mr. Gray Greenfield gets my vote tonight. [1:23:28] JD: Okay, that's an oldie but a goodie, Roby. [1:23:32] Carl: So we are not allowed to pick [1:23:34] JD: the same person is what you're saying. I'd like three to go head to head. Yeah, yeah. You know, I'm gonna toss into this ring Mr. William Hackler. That's a great call and probably a good, A good potential candidate to win this. I was about to vote for Sherri Fitz just to like kiss her ass for her great conference. And then I thought to myself, Sherry can't win this head to head, like with the. Like, she's not rude enough. I feel like rude's gonna win this, so. And Sherry's sitting there right now at home going, jd, why you doubt me? You doubt me on conferences and now you doubt me on chat bar champion? I'm gonna go with David Donaldson. [1:24:17] Carl: Good. He was my second choice. [1:24:19] JD: Yes. And by the way, Michelle says hello, by the way. Oh, nice little secret. I actually love David Donaldson. I think of him many times when I'm lying in bed at night and I can't sleep. Wow. Oh, wow. Wow. Okay, so rogue guy, hold on a second. [1:24:38] Carl: No honorable mentions, even. [1:24:40] JD: No, no, you're gonna pick the winner, Carl. But yeah, go ahead. [1:24:42] Carl: I get that. I was, I was just gonna say I think Freddie B. Gets an honorable mention. [1:24:46] JD: That's not how this works. This is our show. [1:24:49] Carl: Sorry if I gave him clue. And most of all, honorable mention to Nevin Adams, who was too. Who was too afraid to show up. [1:24:56] JD: Typical lawyers. What a kiss ass. Okay, I want you guys to know [1:25:03] Carl: that at meetings I'm gonna use this. When Carl's talking too long, I'll be like, not your show, Carl. [1:25:08] JD: Not your show. Carl, you should really have it. You should have a show. [1:25:14] Carl: Like I've never seen anyone be able to manage the show and actually run the show over J.D. that is probably. [1:25:21] JD: Hey Justin, wait till Carl is trying to close on a big case in like four years and the, the attorneys that's against him isn't go. Are you gonna listen to this guy who was on this show on YouTube. We have some clips of him right now saying this. No, I'm kidding. [1:25:42] Carl: Nick's bit is that at his meetings when I attend Casey Jones, he actually just mutes me anytime I start doing bits. [1:25:49] JD: Nice. I like that. [1:25:50] Carl: Brings me so much joy. [1:25:53] JD: Okay, so here's what I. I love Nick and Carl. Here's my thing to you. This has nothing to do with Roby and Justin or nerdy Chad. First of all, I would be a phenomenal expert witness. I mean, as long as they don't dig into my skeletons in my closet and my history, I think I know 401k better than anyone on this fucking planet. Put me in that courtroom to help you out. I'm kidding. And then secondly, I want to go come hang out in your office and just chill out with you guys. You guys are so awesome. So when it's time to sue the pets, I'm going to be there soon. I'll drink. I'm driving to Minnesota right now. Well, you're in New Mexico. Oh, sorry. Wait, I'm going to Minnesota. These guys are. [1:26:38] Carl: But didn't you leave like a week ago? How, what do you. [1:26:41] JD: How slow are you driving? There's a lot of nice, nice golf courses I have to play along the way. [1:26:49] Carl: Mexico? I don't think you're taking a very direct route. [1:26:52] JD: Well, no, I got to go through Texas because I wish Chad was here. I'm looking at buying a 20 acre ranch as my second home over there. I'm gonna, I'm gonna pretend to be like a hardcore rancher guy. So do they allow lambos in Texas or no? What? [1:27:09] Carl: Do they allow Lambos in Texas or no? [1:27:11] JD: I will not bring the Lambos. [1:27:15] Carl: Put some like 20 acre big ass mudders on your lambo. [1:27:18] JD: To go around the farm. No, no, I'll leave the Lambos in Cali. And I'll have the big truck in Texas. We know how this all works. Okay? That's right, Roby, you gotta throw the sentence out. And then those three candidates need to finish your sentence. And who are we dealing with again? Hackler, Donaldson and Greenfield. Are they. Are they all still here? I hope so. [1:27:41] Carl: Makes here. Will is here. And Donaldson bailed. [1:27:48] JD: He lives. [1:27:48] Carl: Well, guess who's not winning. [1:27:50] JD: Okay. Sherry. Sherry. No, she's gone. All right? Just those two had to go. I should have thought of this earlier. Okay, not a sentence, but how about this? More of a question to the two people who are in this competition, please let us know. What [1:28:16] Carl: was. [1:28:16] JD: What was JD's last search in on his search bar in Google? Like, where are you going with this? Yeah, what was my last search? Should I look up the real answer? Yeah, it was probably. Can I. Can I put Mutters on my Lambo? [1:28:32] Carl: We know that. [1:28:34] JD: Where's my history? I don't even know. [1:28:38] Carl: I. I thought it was. Was pooled employer plans. Jeffrey Epstein. [1:28:46] JD: I can't even look at my Google history. I have no idea. How do you kill a map? Ooh, Mark Akalupo. I like this. We're gonna let everyone play a role here. But we're. Oh, Greg's a competitor. He went. Mark, for all of you, that's knowing your audience right there. This is. Yeah, this is a world surfing champion from Australia who is basically second to Tom Curran. Probably be my favorite surfer. Oh, Fred, you had it good earlier when you knocked me down. And then you ruined it. You ruin it with a stupid one. [1:29:21] Carl: Good thing he was only an honorable mention. [1:29:23] JD: I mean, so witty earlier. And then he just. He just. With a dumb comment. Who are we waiting on? It's Hackler. Still here. Hackler. He's still here, right? [1:29:35] Carl: Hacker. [1:29:36] JD: Can you just give it. There you go. What do you do? Can you make an AI of Nick Thompson and Carl? Oh, God. Well, it's not up to me. I don't know. Why not? Your best work hack. I'm gonna give you that right now. Carl, it's up to you. And Nick can whisper in your ear if he'd like to. I mean, who's the champ? Because you're gonna send them 99 worth of Angstrom Lee LLC Merchy Jones Law [1:30:05] Carl: hats, which are in high demand. But we do. We have. You know. But then again, the. The Yeti is. [1:30:20] JD: Nick wins. Wait, I haven't been reading these. I've been Focusing on. [1:30:27] Carl: Think of Danny, dude. Just think of Danny. Yeah. Oh, yeah. Oh, boy. [1:30:39] JD: Carl, stop. I'm gonna give you car, blonde chair. If. If people can actually pull this off that weren't in the semis and they deserve the win, then by all means, [1:30:55] Carl: Yeah, I'm going with Greg G. Okay. [1:30:58] JD: Greg G. Was. I personally. Daniela. Daniela, I think you. [1:31:08] Carl: Yeah, wait, no, that's right. I'm changing my vote. Daniela. [1:31:15] JD: Yeah, it was peer pressure. [1:31:17] Carl: No, he cannot change. Honestly, Justin. My guy wins. My guy wins. [1:31:24] JD: Dustin. Even Daniella says, give it to Greg. Thank you. [1:31:27] Carl: Okay, okay. [1:31:29] JD: All right, all right. Well, look at that. Oh, look at her. [1:31:33] Carl: This is why I'll never be a judge. Too much of a pay cut. [1:31:36] JD: I won, like, 50 times. Yeah, yeah, yeah. Okay. I got a closing. As I was sitting in the car with the two dogs and my wife was driving. I wrote like a. A closing thing here, but I can't fucking find it. So thank you. Thank you, everyone, for tuning in to another episode of Retireaholics. Carl, thank you for coming back again. I know that what you do, your occupation can, you know, has a lot of scrutiny, and so I appreciate your honesty and your authenticity. And you know what? I'll tell you this. I don't think you need advice from me, because you definitely don't. But that's what we'll always win. Be true to yourself. Talk like you talk, and you can stand in front of anyone, a judge, a jury, and say, yeah, that's me. That's what I said. That's what I do. I've got no qualms about that. And I'm sure Nick follows that. That same deal. Allegedly. And thank you to you people for tuning in. [1:32:37] Carl: My response to that. Okay. [1:32:43] JD: Oh, here's Joe. [1:32:45] Carl: Carl. [1:32:46] JD: Go ahead, Carl. [1:32:48] Carl: I say I'll be doing it for the first time as lead trial counsel in a trial starting in four weeks. So let's hope your advice holds. Mexico. [1:32:59] JD: Internet is. [1:33:00] Carl: Oh, no. [1:33:01] JD: The aliens got it. My Internet. [1:33:05] Carl: Think good thoughts, everyone. [1:33:07] JD: Yep. Good luck, Carl, now that you need it. Hey, also, start a podcast, because you're awesome. [1:33:16] Carl: Thanks. Microphone. [1:33:19] JD: If I'm. If I'm back, which I am, I think my Internet struggled. Never be the guy, which I just was. Who says, am I. Am I not coming in? Am I pausing? Am I saying. Because if you are, nobody can fucking hear you. Okay, it's been another episode. Retire, Alex. Thank you, everyone. We will see you next time. I'm too drunk to remember who our next guest is, but Brandon knows who it is. [1:33:43] Carl: Oh, Wendy. [1:33:43] JD: Wendy Eldridge, a financial advisor who, coincidence, does a lot of shit on TikTok. So we'll be talking to her on the next show. We've got stacked guests for the rest of the year. We can't wait to see you for our future. What is it, Justin? What is it, Justin? What is it, Justin? Yep, on this side of me, Mark's [1:34:00] Carl: going to be doing the intro. I won't be here. I will be partying with Kevin and Deb. [1:34:04] JD: Seven. That rhymes. [1:34:06] Carl: No more races. [1:34:09] JD: First off, Justin, you don't assign me to a task. I'm not doing the intro. [1:34:12] Carl: No. [1:34:13] JD: Everyone, we're gonna leave you with this. Just remember I was gonna do the intro for the. For the past 10 years of this show. You know who's always here for you? It's me. I don't miss like these. I'm here, so come see me in two weeks. I'll be here. Oh, maybe a few. Okay. We are the retireaholics. We are changing. Thanks so much. Oh, God, Nick, I love you. God damn, I love you. All right, Brandon, play some music. Let's get out of here. See ya. Peace out.