DOL Alternative Investment Rule: Six-Factor Test Explained

[0:00] JD: Hello, everybody, and welcome to another episode of the greatest 401k show. It's actually appropriate for today. [0:06] Chad: I like it. [0:07] JD: Wow. What a great show. The host, J.D. carlson is an amazing guy. So wonderful. Then there's silent J Justin McNeil. What a wonderful guy. Really incredible. If you like spreadsheets, they got this guy, nerdy Chad, and he is always bringing nuggets. Such amazing nuggets. And as always, everybody's favorite retireholic robe guy. So great. So sit back and enjoy as this is retireholics. Welcome everyone. Thanks for tuning in. Mr. Trump was incorrect. There is no road guy today. He's taking the day off for a industry or I shouldn't say industry, work related golf event. You know, it's pulling it. There we go. [1:00] Carl Angstrom: Should I go get my rope? [1:02] Chad: Probably should. Hack. Yep. [1:05] JD: So he's pulling a Devin Windell quick housekeeping right now. We're doing something new tonight, everyone. Okay? And pay close attention, Mr. Hackler, because you're going to have to pull double duty here. Brandon, our producer has been working tirelessly at some tech and we are, you may have noticed in 2026 we have not been playing chat bar champion. And that was by design. We were trying to come out with a new version. You know, we don't like the old stale stuff and Brandon has cracked that nut. It's a weird analogy. You now in the chat bar, I'm kind of just doing this off the cuff here. Can vote for your chat bar champion throughout the entire show and they will accumulate points and we will watch those points accumulate on a leaderboard. I believe. Brandon, kill me if I'm going somewhere wrong here. And even you know how when we acro sin and a little graphic pops up. I believe when someone votes for someone in the chat bar for chat or champion for a point, a little point will pop up with their name on it or something. Maybe. But there's the leaderboard there. Okay, so how to do this? And bear with us, this is the first attempt on this. We will evolve this. And I know you always hear this kind of crap from me, but it's true. Brandon and I have been meeting a lot. Get ready for a lot of new kind of fun interrelated tech stuff in these Thursday night shows. How will you vote for someone? And remember, it's an accumulation of points. In the chat bar, you will type CBC space their name. So if it's Shannon, you could type Shannon. What I just said the chat bar champion initialism. I don't want to drink that vodka again. That Was kind of nasty. Okay, slow down, people. A. God damn it. [3:21] Chad: Do you have to type their whole name or just. [3:24] JD: I. Brandon tells me you pretty much could just type their first name or whatever. Just be careful. [3:29] Carl Angstrom: Like, Shannon's the only one that's gotten a vote, and she's the only one that has her name spelled correctly in there. [3:34] JD: Hang on. Brandon probably has to refresh it or whatever. Calm your role there, Silent J. Be careful if there's a Michael Webb and a Michael Desenso, even though. You know what I mean? Even though are they spelled the same? So then you'd want to add a last name. But that's my basic gist on it. Producer Brandon, did I do okay there? Were you listening? Yeah. [3:59] Carl Angstrom: Yeah. [4:00] JD: Basically, yeah. Okay. Okay. And Justin was ripping on your leaderboard that it wasn't updated. If. Do you have to, like, do something to update it from time to time or. [4:12] Carl Angstrom: What do you mean it's not updated? [4:13] JD: We just see one vote for Shannon. But a bunch of people chimed in with votes because that's how the chat bar is. But. [4:19] Carl Angstrom: Well, if they're not using the person's actual name, they're not gonna. [4:22] JD: I'm gonna show up. Okay, so if you say Hackler and [4:26] Carl Angstrom: Hackler right now is Justin's sister, he's not gonna get a point for hackler. [4:31] JD: Okay, we'll see. [4:32] Carl Angstrom: His username is Justin's sister right now. [4:34] Chad: I am so worried about seeing Justin's sister just threw through this. [4:38] JD: We'll see if it works. Brandon will check back in. But let's. Let's get on to things besides games. Justin, can you please intro our guest? Or I believe it's here for his third appearance on the show. [4:53] Chad: Third appearance. [4:54] JD: All right. I had it at second. All right, but today's guest is back for second appearance. [4:59] Chad: Is less than a year, and it's [5:01] Carl Angstrom: no wonder why y' all love the [5:02] JD: hell out of him and his freaking sidekick. Last time. If you missed that episode, pause this [5:06] Carl Angstrom: one, go back and watch that one. Carl, we're doing things a little bit different with the intros now. Instead, I'm going to ask you some questions that you need to rapid fire respond to. Like one to three words max. You ready? Yes. [5:18] Chad: All right, who's the better attorney? [5:20] Carl Angstrom: Fred Reese or crazy Carl Lindstrom? Carl Angstrom. [5:24] JD: Perfect. Small talk or deep get to know [5:27] Carl Angstrom: you, walk on the beach kind of conversations? Neither. [5:34] Chad: I like it. [5:38] Carl Angstrom: Who is your biggest guilty pleasure? [5:40] JD: Musician? [5:46] Carl Angstrom: Ben Folds. Sometimes with the five, consider thought word one word. Yeah, well, I mean, he got Canceled. I don't know. That's what. But I. I can't let it go [5:57] JD: see a child molester or something. I did not hear of this. [5:59] Carl Angstrom: Yeah, I think he's just kind of a shitty to his, like, thick dudes. [6:04] JD: All right. [6:07] Carl Angstrom: Got any kids? One. [6:10] JD: Ah. [6:12] Carl Angstrom: I was gonna ask which one's your favorite? That doesn't work here. [6:14] Chad: So on a scale of 1 to [6:17] Carl Angstrom: 10, how hot is. [6:19] Chad: Just kidding, Nate. [6:20] Carl Angstrom: We'll give your sister a break this week. Back with his no speak is mine attitude and his new and improved drinking [6:26] JD: buddy, ladies and gents, co founder of InkStreamly, Mr. Carl Angstrom. [6:33] Carl Angstrom: Thanks so much for having me. [6:36] JD: All right, Brandon, let's do some headlines. Let's go. I just. I just went straight to mesero.com people, and I'm reading the headline. Mesero to acquire Leaf House financial advisors, a division of Leaf House financial Group. This is important. Expanding Mesero's fiduciary solutions platform. Well, you know how connected I am in this industry. When a big multi million dollar deal goes down like this, what do I do? I call my Texas buddy Todd Kading, the founder of Leaf House, and I had a little chat with him. I was sitting at my Texas ranch. He was at his fancy lake house or something like that. We just chatted it up, and I asked them all about this. So I'm giving you some firsthand knowledge here. He. He seemed very chill. Wasn't like super celebratory or anything like that. He was very clear with me that they have sold off Leaf House financial advisors, which to me means the 338Fiduciary Services. Okay. And that. That's kind of what I thought of as what Leaf House was, but. Oh, I was so, so wrong. And Todd Kane let me know how wrong I was. They do much more than just 338 fiduciary services. They've been working very hard on what he called the technology side. And so he's keeping the technology side and selling off the 338Fiduciary Services side. And I was like, okay, tell me more about the technology side. And he says, well, he went on and on and on. By the way, I had to remind him. Excuse me. Well, I was trying to get him to show up on this show. He had agreed to show up on the show. And at the time when I. He was telling me all about the technology side, I said, hey, you're really gonna have to, like, tone this down for the show. This is way too long. He went on for 30 minutes explaining to me all the technology they do. He couldn't show up. He's either scared of us. [9:00] Chad: I had too many margaritas, too many [9:02] JD: Tataritas because he gave me some excuse on text of his child's like performance, like something no one could be upset with, like some school performance or something. I'm sure it's true. See, he's a great guy and what's on the tech side they do, he's going to do they have some force out technology. So for, for sales, for smaller accounts, HSA stuff. I believe he was super focused on collective invest. I'll drink for that. Collective investment trusts. And he made some analogy to me about our industry going from proprietary funds way back in the day with just a few investment options to like a multi manager approach that we were also familiar with in the late 90s and early 2000s. And that he was going to bring that to collective Investment Trust, the Leaf House technology and working through record keepers. I thought that was really interesting. He mentioned the other company with an M many times referring to Morningstar. He's clearly competitive with them and he was talking about coming out with or they already have the ability to create their own fun sheets that would compete with these Morningstar fund sheets. And he can offer them to record keepers at a far more affordable price and have some elevated technology to that and make them better because they've all kind of been the same for a long time. So anyways, that's the summary. Todd Koenig has cashed out big. I did not ask him what color Lambo he was buying, but he has cash up big and he's gonna either take a lot of that money and buy another lake house or he's going to put it back into Leaf House. The technology side. He sounds very inspired to me. Doesn't sound like he's kicking up his shoes and taking a break anytime soon. And we might hear of him doing continuing to do phenomenal things on the technology side. So that was pretty much a ass kissing review of someone who canceled on me. But anyway, that was my honest take on it. He looked perplexed. Chad. [11:06] Chad: Well, I'm just, I'm trying to follow the technology side and why the interest came only for the 338 services as it sounds like the future revenue is deeper in the tech side. [11:20] JD: Well, I'll tell you, he kind of told me that he was looking for money. So he was out there looking for money and he had gotten a lot of advice from people about private equity that he was not interested in doing that. A lot of people felt like that was not a good path to go down. They'd been burned by it. And in his search for money, that's where this deal with Maserat came. So the best. That's a great way to summarize this. I believe, hopefully I'm representing this properly, that he now is going to get this money to invest in the technology. I was kidding about the extra lake house to really invest in the technology and this new kind of direction for the company. Where is he getting that money? By selling off the 338 which, okay, you know, mistakenly is what I thought Leith House was all about in the past, but not true. [12:07] Chad: That is where I see them. There were a couple of questions to ask. Like anybody else see them in the technology side of things. I don't. I've only seen them in the 338 side. [12:17] JD: Same. A chat bar champion leaderboard has come up. I can't believe that's accurate. Maybe it is, maybe it's. Okay, let's move on. What are your thoughts, Carl, on Leaf House and Todd King? Just kidding. I know. You don't even know it. So we're gonna go to the next one here. [12:34] Carl Angstrom: Appreciate it. [12:35] JD: Where are my notes? Oh, QuickBooks and basketball. So QuickBooks has partnered with Aaron Schumann Bestwell. We can be quick with this one, but I feel like QuickBooks in this situation is a. This game sounds sexist, so I apologize. It could go either sex. Either way. It's. It's like a. A bad girl that's been dating and cheated on a lot of boyfriends in the past or vice versa. Does that make sense? Anyone listening in? I feel like QuickBooks has always tried to find partners to do this. We had. We had Chad Parks, the founder of Ubiquity, which once was an online 401k on this very show. One night drinking with us, talking about what a nightmare it was to try to do the record keeping for QuickBooks. They've had other little intermediary partners. They've had to. So good luck. Aaron Shum. You're dating this, this chick that's been people over for the last 15 years. We'll see how this works out. Am I being weird, Carl? What do you know about this, if anything? [13:38] Carl Angstrom: I only know this not as a lawyer but as a business owner that there. There's a tremendous potential in general for like to segue the, Oh, I use QuickBooks to the retirement planning thing. Like we were doing payroll through gusto and so we ended up with [14:00] JD: guideline guidelines. Right. Which ended up, which ended up coincidentally, thus. Well, right. [14:09] Carl Angstrom: So it makes sense. It also makes sense why they keep getting burned and that it's sort of, it's ultimately kind of an awkward pairing as well. But you see a lot. I mean, ADP has been going super aggressively, you know. Ah, but they're called, [14:29] JD: but they're called that. I hate it when people say that. [14:32] Carl Angstrom: Attic Data Processing, for example, you know, has their own plan that has, you know, 500 different companies within it. So it kind of makes sense. It's, it's, it's. I mean, that's into it. Right. So they're basically just a rent seeking company because really our taxes should be done automatically. [14:56] JD: Right. [14:56] Carl Angstrom: So I don't know. Makes sense. Try to squeeze a little more. [15:01] JD: Go ahead, Jen. [15:02] Chad: From a business building standpoint, some of their bigger competitors, from a tech, from a tech, emerging tech payroll system, software type business were just bought by or acquired a 401k record keeping system. In Gusto and Guideline, we saw Paylocity launched a 401k record keeping partnership with Veswell. [15:24] JD: Can I ask you though, Chad? Chad, can I ask you about that? Do you really see QuickBooks as the equivalent of those companies you just mentioned? Because I see them as a, as an accounting system first and then a payroll system next. But am I out of the loop here? Is that what does Gusto do a shit ton of. No, no, no, no, no. [15:44] Chad: I'm talking specific to the 401k space. JD think about all of the businesses that we onboard. I mean, you looked at the statistics. How many of our existing clients are using QuickBooks? [15:55] JD: Yeah, a lot. [15:56] Chad: A fucking lot. [15:58] JD: Very popular among small business owners. [16:00] Chad: It is and that's a nature of a third party administrators business. [16:04] JD: So we at Plan Design Consultants. [16:06] Chad: So while you see them as a bookkeeping technology, I see them as a payroll provider. That's where we run into them constantly. [16:13] JD: I use them as payroll too. And so I'm very, I want to be clear about that. I just want to make that distinction. They're also see them as accounting first. [16:21] Chad: This is a natural progression for them right now because they're losing, they're, they're losing business to the likes of Gusto and other tech emerging companies. And they have the stranglehold on the books, the accounting software size for these small groups. What they don't want to do is lose the relationship as a whole because they suck on the payroll side and have no integrations with these different record keepers. So why not Create something with Veswell and launch it out to. I, I have to imagine they've got probably more than 100, 150,000 small business clients. [16:55] JD: They're huge. I'll bet you it's way more than that. Yeah. [16:58] Chad: So this is natural progression for them and at Carl's point, another way to [17:02] JD: make a fucking dollar. But Chad, it's not progression. They've been trying to do this for 17 years. [17:07] Chad: No, they have not. They have not. They have not partnered to build what they're calling an in ecosystem retirement program. I was thinking friendly and sharing data. [17:17] JD: No, no, no. That was the concept with Chad Parks. I mean they've all. Obviously QuickBooks has always fell flat on its face in terms of its ability to integrate with things and do well, at least in our space. But Chad Parks was the fucking QuickBooks 401k plan, man. [17:33] Chad: Like my understanding with that though, and in our, in our time we had Chad Parks on here was I'm gonna, I'm gonna take my outside program and I'm gonna find a way to snap it all into what you're doing. Almost like a payroll integrations and others. [17:46] JD: So you're, you're just. [17:47] Chad: That's what I was building inside the ecosystem is my understanding. [17:51] JD: Yeah, that's. Is that what the press highlight scissors that what is actually happening? You don't think this is just best well being Veswell and partner, you think they're doing all kinds of customization. See, I think this is a. I'm in no offense and Aaron Shoe can smack me down or private message me and let me know. But Vestwell already does great work trying to integrate with payroll systems and they already integrate with QuickBooks. I just feel like this is just a more formal relationship here with that. I don't know how much more details happening here, but whatever. I'm being a negative person here, but I, I, I just want to see. I feel like QuickBooks has never had a successful relationship and so we'll see [18:35] Chad: if, if I want to know if it's going to be unbundled or vest. [18:38] JD: Well, [18:41] Chad: record keeping, admin only. Okay, Same question for paylocities build out. [18:46] JD: Hey, how about this? You and tpas. I'll drink. I think I owe one as well. Um, what about advisors? How are advisors. Where do advisors play a role in the QuickBooks Veswell partnership? [18:59] Chad: Veswell's been pretty advisor friendly all along, so I have to imagine that this platform is still fully open and pushed via that avenue. [19:07] JD: All right, let's check back in on it. Because I think they can be advisor friendly and at the same time work on other things like all these state run plans and individual retirement accounts and this partnership stuff. [19:19] Chad: Maybe that's. Well, can finally get QuickBooks to, you know, calculate the match on Roth contributions. Because we're in 2026 and they still can't do that. [19:29] JD: Hey, with all my talking, I'll, we'll move our plan to basketball if we can get it to work. Well, with QuickBooks less, we can't be all ready to a game. Shall we? Okay. How far are we in here? Not too bad. All right, let's go quick. Let's go with a fucking little quick game. Carl, I don't know if you know this, but a while ago I'm a very creative guy and I was sitting around, I was trying to think of a game for the show and I came up with a totally original no or dope game. So you're going to love it. Is this the first time we've had [20:05] Carl Angstrom: this all year or am I crazy? [20:07] Chad: No, it's been so crazy. [20:10] Carl Angstrom: What time is Shazam that you pro music? [20:13] JD: Maybe. Maybe. [20:15] Carl Angstrom: I know what it is. [20:16] Chad: If you want, if you want it all. [20:17] JD: Nah, N you, Carl. This is where I give you some kind of pop culture kind of thing and you let me know whether you're yay for it or nay for it. [20:28] Carl Angstrom: Okay? [20:28] JD: Nope or nope. And then you tell us why. I learned this on social media. Never heard of this. Very acropo for the show. It's called a Coors medium. You know this, you, you take half of a Coors Banquet beer and half of a Coors Light and you mix those babies together and it's like a, it's going viral on the Internet. A Coors medium. Are you, are you Nope. Or dope on this? Carl, the, the guy who doesn't drink. If you were a raging alcoholic and you loved Coors, would you be into a Coors medium? [21:07] Carl Angstrom: I, I say dope. I mean, granted it's been, it's been 14 years, but like there is a. [21:15] JD: I'm sorry to hear that, Carl. [21:17] Carl Angstrom: I am too. Like, I mean, I, I, I wish I could congratulate like they say in the ads, but there's such a wide disparity between, you know, like, I know that something like Budweiser quarters would be the standard, but if you get used to drinking light beards, very heavy. At the same time, you know, there is something about a beer that has some kind of substance to it. So I kind of like it, like it kind of makes sense that there's something in the middle. [21:43] JD: Chad, have you ever been to the bars where they literally like mixology different beers, like craft beers and stuff, so why not? [21:53] Carl Angstrom: I'm down. [21:54] Chad: I'd give it a day in court. [21:56] JD: Okay. [21:56] Chad: I wouldn't. I don't. I wouldn't call the banquet beer heavy, though. I feel like those two are fairly similar. [22:02] JD: Similar. [22:02] Chad: One's a Pilsner, one's lighter is the way I would describe them in terms of flavor. [22:06] JD: Go back to everyone. Go back to retireholics episode. Like, I don't know, seven, eight or nine. And Chad has a Coors Light 12 pack carton on his head. No, no. And we're doing beer taste testing and he goes like over six, so don't listen to him when he thinks he knows what beer tastes like. Justin, are you. Are you going to run out this weekend and try to make your own Coors medium? No, just choose a beer. [22:35] Carl Angstrom: Like, what are you drinking the medium for? Either get all the way in with it with the regular banquet or not keep drinking your light beer. [22:43] JD: You just want to save that extra 15 calories or whatever. Seriously. Jesus. Okay. Number dope. Carl. I don't. Have you seen these? I'm seeing a lot more of these. Remember when we got AI and you could create your own graphics? And I think Shannon S. Words is here in the audience. And I saw like a Cool soup superwoman thing of hers that she got at a conference, or they turned her into this AI Superwoman, kind of cartoony, but now. And then there was the one where everyone sat in like the, the toy package where they had the things they use. Like, I'm nerdy Chad. I have a cat, a calculator, and. And this. And you're like this package toy the AI Made for you generated. Now I'm seeing, like, legitimate contents on LinkedIn. Like, they're not. It's not a fun thing. They're saying, they're posting about something and then they're having an image of them that's AI generated in the theme of what they're talking about. And I don't want to. I don't want to. What do they say when you, when you, you, you move the. The jury or you. Whatever. I don't want. I don't want to lead the Lead [23:47] Chad: the witness, sway the audience. [23:50] JD: So what's your thought on this kind of AI generated imagery, especially with yourself in it in the work world? Oh, Jesus. [23:57] Chad: I mean, yeah, four times. Brandon. [24:01] Carl Angstrom: I'm, I'm, I'm a 95% nope. And I would just say that doing AI related imagery on LinkedIn or to be, oh, artificial intelligence, [24:19] Chad: go hack, go. [24:20] Carl Angstrom: Almost certainly going to end up being cringe and either semi or maximum maximally embarrassing in as little as a year or two. Just think of like if I could find an ice bucket challenge that your boss did. Right. Like that's embarrassing. I feel the same way about AI. I'd also like to say that somehow it came across my desk the actors from 80s or 90s shows sitting down on a bench with their older self and then the older self walks away. And I'm strongly opposed to that. I find it so incredibly creepy. It kind of freaked me out and probably lost me an hour and a half of sleep. So I mean there are selective instances where artificial intelligence generated images and videos can be awesome, but by and large, nope. [25:10] JD: I love. I think you're the first person to give a 95% Nope. That's. I don't think we've ever had that before. But I love where you're going. I'm picking up what you're putting down and I'm going to tell you I think it's already cringy in my opinion. Like, I look at it, I'm like, what the fuck are you doing? I know what you did here and it's dumb. Justin, are you. Do you feel any different? [25:30] Carl Angstrom: Nope. [25:32] JD: Okay, we'll move on. Nobody cares what Chad thinks about marketing stuff. I should have last one. Oh, it's good that Justin's sisters. We're going to ask Justin's sister about this one. Carl. I was, I just did in basically a 17 hour car ride with two dogs and my wife from Texas back to California. Yes, everyone. I was in the Pacific Ocean today and it felt really, really good. Although surfing is not like riding a bike. I'm going to need a few days to kind of get my feet back under me. But along the way we had to listen to a lot of music, my wife and I and we had one major dispute along the way and, and I, I didn't back down because when I hear the sweet sound of this artist, I gotta turn it up and, and vibe on it. And I love it. So I'm not sure we've done this before, but no per dope on the goddess, the Queen, Taylor Swift and her music. [26:42] Carl Angstrom: Oh, dope. [26:44] JD: Thank you. [26:45] Carl Angstrom: Yeah, I mean look, there are a few. I mean it's get. When you get played a lot. There's really no song that can survive a severe overplay. But I Mean, she has a catalog of like at least 10 to 15. Just bangers. Like, I knew you were trouble. I. I mean, if I did. If I had to do. I mean, just play his best songs of the 2010s, I think. I mean, it would make a playlist of even 20, 25. Like, this is who I expected for your guilty pleasure. [27:19] JD: Did you. [27:20] Carl Angstrom: Why would I feel guilty? She's the most popular artist in the world. [27:22] JD: God bless you, Carl. [27:26] Carl Angstrom: So at the same time, like, I'm not. She can also be very cringe at times. I did not need her writing a song about Travis Kelsey's wood. But you know, look, artists supposed to take swings and sometimes those are going to be misses. Like, that's how you end up with. I mean, you kind of have to risk. [27:51] JD: Okay. One, I love. One, I love that you referenced an actual song that you thought was a banger. Two, I love that you referenced the. The deep cut on the Travis Kelce song on the new album. You're not. Yeah, this is real. I'm gonna skip Justin and Chad and go straight to the acro Sin, buddy, are you. Nope. Or dope on Taylor Swift Tackler. I. I guess dope. [28:18] Chad: You know, I'm gonna have to go [28:19] JD: to the door, I guess. But you know, I mean, you. [28:24] Chad: You drove me for an hour and that's all we listen to. [28:27] Carl Angstrom: So like. [28:29] JD: And actually, I think there was something going on too with. Did you play it in the cart too? [28:35] Carl Angstrom: So, like, you know, might have been five hours of Swifty. [28:38] Chad: We were listening to a lot of [28:40] JD: good music in that collection. And hey, raise your hand if you've [28:43] Chad: been to a Swifty concert, by the way, in this group. Yep. [28:47] JD: Hack. [28:47] Chad: Go ahead and raise that hand up. [28:48] JD: Yeah, I know. [28:49] Chad: You're the only one. [28:50] JD: Yeah, I'm not allowed that. [28:54] Chad: Trace is like anti T Swift. [28:55] JD: Oh, she hates it. She's literally just like. It comes up and I hear the groan from her and I'm like, no, her groan is matching my excitement of like, I cannot wait. It's like it's live in me up and. And a 17 hour drive is no joke, man. There's. You gotta. There's a moments where you got. You need some. Something to lift you up. Okay, let's move on to the main event. And the whole reason that Carl Angstrom is here, I'm actually gonna let him kind of take over the steering wheel for a moment. But it's this whole new regulation on alternative investments. And what is kind of bleed it out beyond alternative investments. Dare I Say, right. So Carl kind of set us up. And then, guys, let's, let's try to go deep on this one. [29:45] Carl Angstrom: So I appreciate you having me on. I've been, I've been working a lot with various stakeholders and folks who care about retirement laid into this proposed regulation from the Department of Labor. Originally, you thought that it would just implement Trump's executive order and say it's cool to have private equity and hedge funds within your plan. [30:15] JD: Those exact words would have been nice. That's the way I would have written it. It's cool, bro. You can do it. [30:21] Carl Angstrom: Instead, it turned into, let me rewrite the Employee Retirement Income Security Act. It's. Well, there's, there's. And, and yet I don't think anybody is talking about, like, the craziest part of it. In other words, everyone's like, oh, look, it talks about liquidity and it gives us more guidance on performance. I mean, and I see that, and I think it is kind of crazy that the Department of Labor never offered a regulation explaining, like, how to look at investments. And so in some ways, it's filling in a massive gap in terms of prior guidance. Just. [31:01] JD: Although, again, look at fees again, though, not. Not something we had anticipated. Right, right. [31:07] Carl Angstrom: Yeah. So that was sort of out of nowhere. Now it turns out that secretly it's burying an agenda within the factors. But I think at first glance, it is kind of amazing that we didn't have content like this because the Department of Labor has historically been so incredibly adverse to talking about prudence and what it might mean, which is it is kind of nuts in its own right. But what it's really about is it's about ending ERISA litigation. [31:36] JD: Yes. Nate Moody is, as commented, Daniel Brunowicz's speech, who I always like to say was a, almost guest on the show, he was about to be on, on the show and then had to, had to back out. Scared the shit out of him. He's completely in big daddy's pocket referring to Trump. But you're right. Daniel Ronowitz has been very clear that one of his big marching orders, or maybe his own, I don't know if it's own inspiration or the marching orders from the President is to snuff out this litigation in this space. And so I can't wait to dig into Carl's brain a little more. But for some context you would be in, you're against that. That's your business. That's what you do. Carl, you don't like Daniel Aronowitz's agenda. [32:31] Carl Angstrom: Yeah, I mean, And I understand he's in Big Daddy's pocket, but keep in mind, he, he was Big Daddy, in other words, his former business was fiduciary liability insurance. He owned Euclid Fiduciary and then Encore Fiduciary. And by the way, speaking of cringe naming, after you sell your business and you start a new business in the same, in the same industry and call it Encore, something is incredibly cringe because I've seen it literally in 12 different industries. But anyways, Encore Fiduciary, his second fiduciary liability insurance company. So he's been writing about this dating back to 2015, which is. Here are all the problems with the theories that plaintiffs attorneys are, are advancing in these cases. And it started like, I'm going to objectively talk and somewhat educate. And it just. By 2018, it had turned batshit crazy. Now I have somewhat mixed feelings because I have to say I'm doing okay. I have a pretty nice house. I drove here in an Audi. And I have, and you know, I'm not rich by any stretch, but I've done, I've done okay, largely thanks to Daniel Ronowitz. Like, he has written checks for me that have gotten me paid and that have afforded me a lifestyle. So I'm just, I am super grateful for that. But no, I mean, he was, what [33:51] JD: if his new push is the end of you? What if you and Schlichter will no longer be able to make all these, these millions and drive your fancy Audi's? [34:01] Carl Angstrom: So, and to be more serious, the thing is, I, I can't fault the backlash and the criticism of plaintiff's attorneys. I mean, I watched it happen in real time. When Covid hit, all of a sudden we were seeing new lawsuits filed every single week that were, that were, you know, oh, no, you can't use the Fidelity Freedom funds. And then, oh, you can't use BlackRock's target date funds. And they were. And they would use just current year's performance data and say, oh, therefore it was imprudent. Like, that isn't just hindsight bias. I mean, they were. It got. Because some plaintiff's lawyers have had success. A lot of meritless cases were filed and there's still probably five to 10 plaintiffs firms that are filing relatively meritless cases. I hate it too. [34:58] JD: I'm glad to hear you. I'm glad to hear you say that. On. I always feel like when they're looking back at performance, I feel like, oh, come on, you're talking about mutual funds that have prudent asset allocation. They're doing like you're looking back in your cherry picking something that didn't do so well in a period. But let me get you back on track because I think. [35:18] Carl Angstrom: Okay, okay, good. [35:19] JD: No, and I actually love how you set up all the, like, the good juicy shit. Like, I like that. But let's get. Let's get back to the actual regulation and its potential and how this could be bad for our industry. Not. Not in the sense that, oh, it'll be bad for plaintiffs attorneys. Because there are some people who think that may not be true, that this might actually be great for y'. All. And this will give you a lot more stuff to sink your teeth into when you're in these courtrooms and do stuff. So I'd like to focus on the regulation itself and how it's starting to talk about all these different areas. Fred Reese mentioned that it's talking now, for the first time ever, about how there's a responsibility around a prudent core menu. And we've always been focused on individual investments and not the collection of the entire core menu. I thought that was really interesting. But take us deeper into the actual what's happening. [36:19] Carl Angstrom: So, first of all, we didn't need the Department of Labor to tell us that performance was a thing or that liquidity is a thing. In other words, like those of us who kind of understand investments have always understood that you can make a case out of what are people doing. Irement plans. And what are the plans that are significantly deviating from that conduct, Whether it's managed accounts, whether it's, you know, you used. You used an investment that was. That did not fit within the overall risk profile of the plan. That. And so there's the fact that they wrote down some factors. Doesn't do anything for us. [36:56] JD: The key for everyone listening and for listening, these are these six factors, right? [37:00] Carl Angstrom: Six factors, right. Performance fees, liquidity, Meaningful benchmark valuation. Valuation and complexity. Complexity, Right. Getting a weird reflection from the sun. [37:20] JD: So it's okay. We love you. We love you in the sun. [37:23] Carl Angstrom: Okay, great. So if I come across like a guy in a David lynch movie, that's why. So and the second part of this, and then it says it. Consider these six factors and determine that they are satisfied by the investment you selected, then significant deference is given to that decision, and there is a presumption that you have acted prudently. So those are massive words. [37:52] JD: Can I ask you a question? [37:53] Carl Angstrom: Yeah. [37:54] JD: There. And I'm not smart enough to understand this all, but there was the Whole Chevron thing that was this big deal in the legal world where we had to kind of accept like a professional's, like, assessment of something. And people are tying this to this now, where they're saying that we're, that we're supposed to accept. I'm probably going to box this, so I want your opinion on this. But we're supposed to kind of accept that fiduciaries are prudent in some manner, that their decision is, is, is the. They have the maximum responsibility and help me out with this. [38:31] Carl Angstrom: They have maximum discretion in populating the investment menu. And in terms of the Chevro, I'll be honest, like, I didn't take admin law, so I get confused in this stuff. Like, there is an irony in that they overturned. Chevron was overturned. It was a project by the Federalist Society and sort of the right wing, within the, at least within the lawyer world, it was a project of theirs for 30, 40 years. They finally overturned it. Then the Trump presidency started and all of a sudden the regulations that they promulgated didn't have the force of law and weren't being, wouldn't be deferred to as much. So there's a certain irony to that. Yeah, I don't know how that shakes down here. It is true. You know, they said in there we get Skidmore deference, which is more like, yes, we sort of trust you. So this is reliable. So I don't know if this necessarily has the force of law. So I've been approaching it from the perspective of I'm going to assume that it has the force of law because that's really the easiest way, because let's just assume it goes into effect and whether it would work or not. So let's discuss its merits and whether it's consistent with the statute. I'm not going to worry about how much force it has. I'll worry about that in two years when I'm doing a brief as to whether or not the regulation has, you know, should be followed. So the word safe he. The word is safe harbor. That's wrong. Safe harbor legally means literally, you're safe. This instead means you get a, you get a presumption going to assume it's prudent unless the other side proves otherwise. This seems like not that big of a deal to lay people within laws. It is within the legal world, it is make or break. [40:05] JD: I mean, can I give you, can I give you an example that everyone understand? Because I fell into this trap, like, I naturally assumed that a qualified Default investment alternative. Like a Target date fund was like a safe harbor. Like, like the government told me that I can use a target date fund for a qualified default investment alternative. So I. I'm. I'm protected. But that's not true. Schlichter can sue me because he doesn't like, yeah, what. Which one I chose. Right. [40:34] Carl Angstrom: You know, so there's two different types of protection, two different issues. Issues here. Now, let's say one of the participants in your plan doesn't pick an investment, ends up in a 2060 Vanguard Target Date Fund, and it drops 20% before the qualified default investment alternative. That person could sue. Just saying, like, I lost 20% in the. In the investment you made me do. And that's why the default funds were tending to be money market funds or stable value. [41:05] JD: Right before that. Yeah. [41:07] Carl Angstrom: But now the regulation says, okay, we will. If you don't make a choice and you end up in the qualified default investment alternative, legally we will assume that you chose it. [41:19] JD: But the plan sponsor is not safe from choosing that. [41:24] Carl Angstrom: Correct. [41:24] JD: Yeah. And Chad on the hook for. Did you do this in your. In your career? Because I did. I sat in front of clients and said, hey, if you choose this Target Date suite for your qdat, you're protected through QDA laws. Like. And I was talking on my ass. That wasn't true. [41:42] Carl Angstrom: It wasn't a sense in that no one. In that no one was going in that your employees could not sue you because their account went down 20% in 2022 or 2007. So it was a certain level of protection, but not. But you weren't safe in terms of your job in designing a menu. [42:01] Chad: But that was there a whole lot of fiduciary risk in designing the menu versus designing the investments being chosen at that point? [42:08] Carl Angstrom: Well, I would say it kind of depends on the level of sophistication having where you are in the world 25 years ago or especially, like, 40 years ago. Yeah, I mean, lawsuits about stocks and investments were like, I lost money. Oh, my God. You use something that lost 15. I mean, that was the way that the investment world was looked at. Just an incredibly simplistic view today. No, I mean, I. For folks who understand how retirement plans work, and I think there's a lot of education generally about, you know, you're gonna have a couple bear markets every decade. You're right. Menu. And. And before Jerry Schlichter existed, the only risk that people thought existed was, you know, oh, the default you put me in lost me money, and I Get to sue you because I didn't actually pick it. So it's. At the time, it felt like a big deal. Now it's kind of obvious, but I [42:59] Chad: guess my general sense is in the past. Okay, go ahead, Judy. [43:03] JD: I just, I kind of want to set you up. But I also want to mention that for years, Rogue Guy would sit next to me on our shows and you would always be laughing at something. Or he'd always be reading the chat bar and laughing. And he would distract me because I was like, I thought like we had said something bad or whatever. And that's what Hackler is for me tonight. He's Hackler's focus on the chat bar. He's laughing and I'm like, whoa, whoa. Did we say something wrong or what's going on? No, no, no. He's just reading the chat bar. Okay, Chad, you're bringing up something that I don't know if Carl us focused on yet enough. And I think you want to go there and you want to kind of pull on this string, the whole core menu thing. My understanding is that they, the government has never given us any guidance on this concept of a prudent core menu, like a well diversified core menu. It's something that we just kind of invented and did on our own and there was best practices and obviously it makes a lot of sense, but they have never commented on it. And so Chad, you're finding this interesting as well, the nerd in you, right, that, yeah, they finally chimed in and now he's got new expectations. It seems like. [44:12] Chad: Well, it seems like in the past the expectations were you need to look at your. Your process and prudent of prudence in individual investment selection. And we call the target date suite or risk tolerance suite, an individual investment. But it was never looking at the overall structure of your core menu. And I feel like this executive order is doing that. It's calling into light the fact that you have to have. And this is. It kind of connects our two topics. JD an outsource 338, like we were talking about with Tony or with Todd, you're looking at that going, can they truly operate under this new executive order? And understanding the business and their structure and their needs from a truly prudent core menu. [44:59] JD: That's a great. That's an interesting concept. Three 38s don't look at, do they? [45:05] Chad: It's individual investment selection. [45:07] JD: I. I love the. By the way, once again, my favorite guy out there, Nate Moody's talking about, in the old days, you had to like Hit those. Check those three boxes. That was what the government had told us. Now we've told ourselves we need to hit, like, the Morningstar 9 boxes. Right. But. But the government never told us that. We just kind of made that up. And so my question, I think what you're hitting to Chad and ask everyone in the chat room included is, are 338s looking at core menus in terms of their diversity, or they just. As Chad just. They're just looking at each individual fund? Because I never even thought about that. Like, would you. Would your 338 approve your funds? And then you. You literally are not diversified. Like, you're not giving your participants the choices they need. That would be really interesting. No, if I just had too many Guinnesses tonight. [45:59] Chad: I feel like you're not asking me, you're asking Carl. Right. [46:03] Carl Angstrom: So there has been. There's two levels of schism here. One is that, ironically, I love that word, schism. [46:14] JD: I don't know what it means, but I want to use it. Hang on, hang on. I gotta look at my Gemini right now. [46:20] Carl Angstrom: I know a bunch of Department of Labor attorneys. I think they're great. But the Department of Labor is run by attorneys, okay? Not by people who know investments. And they have forever thought, oh, the way that the statute is written is what's prudent is determined by investment practices. That's not necessarily for us to decide, so we're not going to weigh in on what's prudent. And whereas in the real world, you all are thinking like, what is the deal? Told us about what is. What is about what is prudent. [46:50] Chad: Yeah, Ackler's got to start drinking with you. [46:54] JD: So. [46:55] Carl Angstrom: So it's two sides that each think the other one is supposed to do the talking. So that's why you've had this vacuum for, you know, for 40 years about talking about menu design. That's first of all, where everyone is waiting for the other to fill in the way this. This is all supposed to be work. So in that way, it really is welcome. And in some ways, it's like, the smartest. The talk about wolf and sheep's clothing, more like wolf in, like, Prada. But the second schism is Houston. You're right. Department of labor has not talked. No one has actually said menu design is part of your fiduciary duties, but everything is your fiduciary duty if there's other investment professionals working on it at the highest levels. Like, you know, I guess I would say I see it in especially 2 billion and up plans. I mean, they focus tons of time on menu design. And it is incredibly thoughtful. I mean, a lot of it is taking into account the behavior. [47:51] JD: Carl. I think even the small market actually these days gets that one pretty right. So I don't think that's a massive liability. I just think I'm with nerdy Chad and that it's just interesting to hear the Department of Labor chime in on it for the first time. But I think we generally do pretty good with that. [48:09] Carl Angstrom: Yeah. Okay. So, you know, I. It can. A lot of it gets a. Here are the different tiers and here's the fourth tier, the self directed brokerage account. And you know, what's going to be active, what's going to be passive. But yeah, you're right. I mean, for 20 years, people have been refining our memory, how menus are done, and it's about how participants interact with it. So there is a degree of sophistication and thoughtfulness that the Department of Labor just hasn't ever. [48:34] JD: Okay, can I ask you, Carl, then? So here's your classic core menu never really included alternative assets. I mean, the most risky stuff we would put into a core menu would be like specialty funds. And so you would use those, hopefully to kind of supplement a more kind of prudent menu. And you have real estate or tech or emerging markets or whatever. So can I ask you, where do you stand on the whole arc, alternative assets, the private credit, the private markets, all that kind of stuff? Because that's. That's what this is supposed to be about. I know it's bleeding into all these other areas, but do you think that this is a good or a bad thing? And then specifically as a plaintiff's attorney, not regardless of whether this. How this regulation plays out, but were you licking your chops that, oh, Trump's gonna say thumbs up to all these, you know, private equity, private credit stuff? I can't. I just stare. Just everyone else. Like this entire story, I just. [49:43] Chad: Moody is on fire. [49:46] JD: He said, first time Justin's sisters ever [49:49] Chad: complained about me being too long and [49:50] JD: like, oh, God, we just lost our guest. I had a question for him, Chad. Do you think he's pro or anti? Private equity, private credit and 401k, [50:08] Chad: That's a tough one. I'm thinking about it from Carl as a human being, and I'm thinking about it from Carl as a litigator, and I think Carl as a litigator is pro. I think Carl as a human being might be negative. [50:19] JD: Oh, pro as in It'll make them some money or. Yeah, yeah, yeah. [50:24] Chad: J.D. nate mentioned something in a chat bar. Not to give him a ton of credit here, but we were talking about outsourced 338s and the fact that there is now oversight over the. The whole core menu, perhaps, with this order. And he mentioned. [50:39] JD: I knew you were gonna love that part of it. [50:41] Chad: I do. Because when you look at it, when you look at a typical 338, they're looking at the individual investment, and they're running it through their methodology, and they're saying it meets metrics. They're not looking at whether or not they have a bunch of underlying correlating assets or investments with. [50:56] JD: Oh, well, now. Now you're going even. Yeah. You're. You're not just talking about. Oh, did you check the nine style boxes? [51:04] Chad: No. [51:04] JD: Where's the correlation? That's. [51:06] Chad: Yeah. Where's the correlation between those investments? [51:09] JD: And. [51:09] Chad: And I think when you look at perhaps an investment company that is a single fund family, and you have a lot of drinking the same Kool Aid, you have a ton of correlation. [51:20] JD: Whoa. [51:20] Chad: If you're an advisor. [51:22] JD: News Alert Capital Group, American Funds. Chad's talking about you. And he does business. [51:28] Carl Angstrom: Right. [51:28] JD: All the time. [51:29] Chad: They now have an outside cap group, outside American Funds investment suite, even in their Record Keeper Direct. [51:37] JD: Okay. But if I did a search of all American Funds plans out there, I find a lot of. Right there. Oh. Which is fine. Same's true of Fidelity. No, you're good. We're gonna play a game because Shannon asked. [51:48] Carl Angstrom: Oh, I don't get to answer the question Because I'm still. I'm still licking my chops. [51:54] JD: Okay, well, let's not leave it. We'll do the extended shutdown. [51:58] Chad: Can I bring one in? [51:59] Carl Angstrom: It's. I am. [52:00] JD: Okay, very quickly. No, no, no, please. I want you to drone on. We can keep going. We can make. [52:06] Carl Angstrom: Oh, we can do the game first. I'm sorry. [52:08] JD: No, no, no, no, no, no. We can make this Joe Rogan tonight if we want to. The game was played, and I don't have smear enough. Everyone. I just drove 17 hours to get here. But I did find this in the. In the deal. Will this suffice? Is everyone okay? Absolutely. [52:24] Carl Angstrom: Yeah. [52:25] JD: Just Justin's sister will not. But I apologize. [52:29] Chad: She's done. [52:30] JD: I can go grab another one. I want to go do four, but. [52:33] Chad: Yeah, I was gonna say. He says four of them. [52:36] JD: I'll do two. There's as much alcohol in that in that as there is in this. Carl, continue on your rant or. My question to you was, yeah, are you pro or not on private credit? Private equity informed it. [52:47] Carl Angstrom: So I am, I'm anti. I, I'm concerned about it on a number of different levels. One is, I think that performance reporting in the way that they calculate their own performance is a joke. Internal rate of return puts too much emphasis on initial returns. They don't count all the money you're not making when it sits in cash and they just only start counting returns the moment they make the call for $10 million. I think they use a lot of leverage in order to artificially boost their returns. And I think. And so nothing I've seen makes the performance numbers of private equity reliable. [53:33] JD: But Carl, in a six factor test, I don't see transparency as one of those. I'm just kidding. [53:44] Carl Angstrom: But I, I would also say that to the extent the performance gains have been legitimate, I think that there's a huge issue which is similar to what happened with hedge funds in the 90s, which is that like is, I'm sorry, that's a bad analogy. What I've seen says, oh, private companies were 2.7% of market cap, now they're 3.7%. And so it's expanding. And I'm thinking, well, is that really publicly traded companies going private? Because I only know of Lifetime Fitness, you know, I don't see it that often. I think it's instead valuations expanding. In fact, it even looks like valuations of private companies are often starting to rival or get close to those of publicly traded companies, which is bonkers. So like how much has been multiples expanding and them just buying stuff from themselves, right? Because every five to seven years you have to close your fund. So you sell it to your new fund and you have a nice healthy profit and looks good. I think that there's way too much assets there. I don't think that there's enough alpha to it. [54:50] JD: But also Carl. So Carl, you do that, you're in the camp that you think that they're struggling, they're playing their little fucking shell game. And for a 1K, the United States retirement system looked like a great place for them to continue their shell game. [55:09] Carl Angstrom: And their shell game, new money, it, I mean it needs new money, right? Because you have to be able to keep buying the companies for more and more. And so of course they, I mean it is the crown jewel to be able to get into the American retirement system. And that's the ultimate tribe, ultimate tragedy of it, which is that like there's $8 trillion sitting in ERISA covered for one case. If they get 1/4 of 1% of market share, given that they're 2 and 20, or whether with all their bonuses and compensation they pay themselves, you're looking at 4% fees, probably, right? So if they just get 1/4 of 1%, that's $20 billion of wealth just transferring to the, you know, the hedge fund billionaires or to the private equity billionaires. Like, buying from a pure. It is a massive distribution of wealth out of the wealthy, follow the money and into the wealthy's pockets. I can't stand it. So, yeah, it makes me ill. Yeah, [56:04] JD: well, I. I got that wrong on this show. I. When it first came out, I got in a few fights with our guests saying that, yeah, I kind of bought into the vibe of, like, look, all the rich people invest in this private equity stuff. And it's. I believe them that it was doing really well. And I was like, I kind of was into the whole concept of, like, it'd be great if the average person can have access to this type of specialty asset class as well. And I've learned more and more, Carl, and a lot of very tenured people in my industry have reached out to me and broke it down for me and shown me that some of the things you just said, like the lack of transparency and the fact that they need money, is kind of a real indicator, like, well, if they're doing so great and if everything's so awesome, why are they on their hands and knees to get in here? And then the industry, I've seen this now, maybe I'm just hypersensitive to it, but, you know, news on Blue Owl Capital and all these, you know, this industry is struggling and. And so now it's. It's all coming to light. So I. I apologize. I got that one wrong. I agree with you. [57:13] Carl Angstrom: I don't think you need to apologize at all. Like, I know people who have run private equity who have, I mean, who have profited a great deal off private equity. Like, we have an expert witness who was sitting next to Michael Milken at Dexter Burnham and he bought out Steinway. Like, private equity is kind of cool in concept, in terms of what. And I've seen them really make incredible differences at companies. So it's not necessarily creepy as a concept. It's more along the lines of, like, all of the. The big gains were taking these. We're taking companies that were relics and making. And turning them around into profitable companies. Those opportunities are gone. It's just more along the lines of we're at the stage of this asset class where it's time to dump on the people who are not going to make the big money. Because the extent the profitability has been there, it's those. I mean, I don't think those opportunities exist anymore. The plum opportunities now, they're still like, we can come in and we can kill your pension plan and we can fire half of everybody. I mean they still certainly have ways to boost growth. I just don't think that. I don't think it will work out well for and for folks. But your instinct, I don't think you have to apologize for it. I mean, I think it's sensible. It does make some sense. Except I would say this. I think rich people are just as dumb as other investors and I think that they're huge suckers. I think that they've fallen for the hedge fund thing and I think they're falling for the thing. Now I have yet to be. I got rich from private equity because my investments made a ton. No, it seems to only be the people on the management side. [58:44] JD: Great analogy. On the hedge funds. Let me. It's not a pivot. It's a straight too. It's a great like transition to some news that we skipped earlier. This might not be in Carl's. I keep using this word. I know it's from like the 40s, but bailiwick. But Blue Ridge, it's just a. It's a third party administration firm that is private equity backed, which is why you made me think of it. They got some cash behind them or venture capital. No, private equity. And the firm behind them is Levine Leachman Capital Partners and they've been buying up third party administrators. By the way. I get emails from them. I've. I've actually talked back and forth to one of the people representing them. They want to buy my firm. They've bought firms larger than mine. Firms smaller than mine. And they have bought. I don't actually know what this stands for, so I'm going to say it. [59:51] Chad: Economic Group, Pension Services, egps. [59:55] JD: Thanks, Chad. [59:57] Chad: I got you, Jody. [59:58] JD: Which cuts close to home because I'm down here in San Diego and they're, they're very big down here, but they're a national firm. By the way, it's 7,500 plans or 7,200 plans or something like that. [1:00:13] Chad: So I mean double the size of [1:00:15] JD: Blue Ridge, pretty big. And they have sold to Blue Ridge, which is again backed by private equity. How much did this deal go down for? You know, I like to talk numbers. You know, I, at my firm, what. We were transparent on the last show. I, I think our last fiscal year we did about 5.2 million in revenue. And I think people want to buy me all the time for 15 or 20 million. And I'm not gonna go there and, and do that. So let's apply that to this one. Okay. These guys are seven times my size. Right. Like they've got 7, 500 plans. Their plans are slightly bigger than mine. That their Average client has 68 participants or just north of 2 million in assets. Mine's more like 35 or 40 and 1.5 million in assets and they've obviously got a lot more. So I'm guessing at their, their revenue, but I'm thinking it's like somewhere in this 30 to 40 million kind of range. Again, completely guessing here. And so if, let's just simplify it. If you could get three times revenue for your company, which I, I think it's. Someone tell me in the chat bar that I'm wrong. I think that's a conservative number for third party administration. Firm that has this reoccurring revenue especially it's bigger. And. Yes, thank you, Kevin. They've been buying up smaller third party administrators. Yeah, this, this deal could be anywhere between 90 and 120 million. And who benefits from this? It's funny, you're hearing this from the drunk guy who's drank four tall boy Guinnesses and is thinking about going straight to the bottle of Greg Goose. This is privately owned. Privately owned. This is my understanding. This is owned by the executives and the top people at the company. So why is this happening? My take is this, is this people cashing out. And what I want to ask you guys now, and maybe even I think it's fair for, for Justin's sister to chime in if he wants to. He doesn't have to. Is this. We always hear these news releases that this is. Oh, we, we're doing this because they're going to help us grow and, and they're going to infuse money and capital and whatever I'm saying this is. And good for you. You were founded in 1971 EGPS, and now you're getting paid and your executives are getting paid or the people that put money into to own this thing and making some money. So is this infusion of cash and capital and a merger to go on to do bigger things, or is this a paycheck for people that deserve it to finally like cash in? [1:03:29] Chad: I mean, I'LL chime in first. I obviously don't know the answer to that, jd but when I look at what Blue Ridge has already done, they've acquired some really stable, really smart, very good third party administrator shops in the last. [1:03:46] JD: They look through it through a filter. [1:03:48] Chad: They do. Like I threw out a couple of names when we were talking via text. As a group, you've got Sliders Team and tsc. I don't know if that's actually an accuracy and I said I was going clean tonight. I'm going to assume it's not Coastal Pension Services, Pam Walker, like these are, these are big names. These were good, well established shops that, that went the Blue Ridge route and now they are the executives already in Blue Ridge. So when I think about, when I think about economic group pension services being acquired and I think about the payday for the people like you're referencing, I don't see how they fit into the structure and operations of Blue Ridge. I think that. [1:04:32] JD: Well, that's a classic. That's. Chad, that's, that's a classic. Sorry, that's a classic question to ask is how does this move on in terms of structure? No. [1:04:41] Chad: So you're talking about. Go ahead, Jess. No, I just asked. [1:04:45] Carl Angstrom: I think thought JD was going that route too. [1:04:47] JD: But. [1:04:48] Carl Angstrom: So you're, you're saying for, damn it, [1:04:50] Chad: egps, it was a payday because they [1:04:54] JD: don't have time to grow up there. [1:04:56] Chad: I'm saying that the press release of this is going to give us access and tools and growth like JD was referencing. When I look at that, I go, it doesn't feel that way with. [1:05:05] JD: It's always, it's, it's always that way. Is that such bullshit? Like, I mean, there's moments, there's times in the world where. And Carl, I'd love your opinion at this point of like, hey, I need money. Like, I think I got a pretty good business, it's flowing really well, I've got a good sales team, etc. Etc. I'm thinking from my own mind and like, God, if I only had, you know, $10 million, I could really like hit other regions and do this and that. But the most of this, when the press releases come out and these are small deals, Carl, we're not talking about like, these are in our real world. This is, yeah, of course, you've been doing this for 50 years. You need to, you need an exit plan, you need to get paid on what you built. So why are you, why do we stick in this narrative of like, oh, yes, this is for the greater because just. [1:06:01] Chad: You know why. You know exactly why. You know exactly why. Because there's 7,300 clients there's 7, 300 clients that have to land and stay with Blue Ridge so that the payout takes full form. All right. You've got to go in, you've got to button up relationships. You've got to tell everybody nothing changed in our business. We're going to continue to service our clients well. That's why. That's the press release versus peace. I made my money. [1:06:28] Carl Angstrom: Yeah. Provision over a one to three year period built into the. Oh yeah, there's all kinds built into the sale price. [1:06:35] JD: Stock too, I'm sure. Well, they're not a public trade company but like. No, no, no. Like stock and they're company as well. I'm sure the private equity firm isn't just something cash. [1:06:46] Carl Angstrom: There's something very meta about stock in Blue Rich. Right? Like an employer stock ownership plan of a company that sells employer stock special. [1:06:56] JD: Yeah, Hackler liked that joke. That was good. Carl. Oh, I got news for you. If I ever sell out to Blue Ridge. Chad press release, my press release is gonna be like Judy just bought five Lambos in a rainbow color. [1:07:17] Chad: It'll be, it'll be, Carlson makes terrible decision and buys Lambo dealership with earnings from. From company sale. [1:07:25] Carl Angstrom: Do you mean that all five of the Lambos would have the colors of the rainbow or do you mean that each, each Lambo separate color and together they appear? [1:07:35] JD: Carl. I would park them in the front driveway. In the rainbow. [1:07:40] Carl Angstrom: Yeah, I think there's seven. Roy G B. [1:07:43] Chad: Let me, let me ask you what's next? [1:07:44] Carl Angstrom: Jd, you, you've got Blue Ridge. Wake up, sis. [1:07:50] JD: Sorry. Watch Blue Ridge. [1:07:52] Chad: Blue Ridge just grew to. Let's call it close to 20,000 plants. What happens next for them? What's the logical. We've saw, we saw the future plan. We've seen it with a few others that have gotten to this scale. [1:08:06] JD: I, I asked chat GPT the same question and I couldn't get a good answer. I honestly don't know Chad. Like. And it's not. Can we be clear? It's not what, what does Blue Ridge want to do? It's what does, what does Levine Leachman think capital Partners want to do? And so I, I'd imagine if I'm Levine Leachman Capital Partners which by the way, if you go to their website they own like a gazillion companies in all different types of sectors. And I'm thinking with your. Let's Put ourselves in their shoes, shall we everyone? What do they want? What's their goal? Is their goal to. Oh God, I'm getting soapboxy here. I apologize. Is there a goal to like make the US Retirement system better? No, actually, I don't think so. Yeah, their goal is pretty straightforward, everybody. [1:09:07] Chad: When you're, when you're in that kind of mix of, of investment companies. Yeah. Your goal is to make money. You're not interested in the retirement plan system. Now could they, could they look at it though and say we're not ready to excel to the chat bar's point. And they can look and say we've got a record keeping arm we can build out, we can get into asset management. [1:09:26] JD: Of course, of course. But to Carl's earlier comments on just private equity in general, like they're, they're trying to invest money for their investors and you know, and, and they're pulling money so that they're trying to make a gain. And so I would imagine their goal is to accumulate all these small companies, you know, in my, myself included, like all these tiny little companies. I mean, where do you think we're at, Chad? Like how many billions of dollars? 1.52 billion. How many? I have no idea. Like our Aum. Oh, I stepped into that one. [1:10:02] Chad: You're talking to us. [1:10:03] JD: No, they're, they're looking to acquire all this $1 million and then package it up and then someone else comes along that's bigger. It's like a small fish, medium fish, big fish kind of thing. And they keep making this money. And Carl described it really well earlier in terms of like the, the vicious circle of these rich people making money and kind of the shell game that's happening. So that's clearly what's supposed to happen is they want to continue to have Blue Ridge buy other firms and get bigger until someone wants to, to buy it for another price. And that someone thinks they're going to do something with it. So I think that's good for all of us in this industry to understand and pay attention to and I want to move on because we're doing as I said we would, a longer show here. But I think that's totally okay. I'm not, not the private Equity, the, the third party administration firm that's been working for 50 plus years. They were, they were founded when I was born. So excuse me, 55 years. I just had my birthday in April. And they do need an exit plan at some point. Like they've worked really hard to have 7, 500 plans and they should get paid and they should also continue on somehow if that's really a thing. So I'm not against this. I think, I think it's a good thing. But let's, let's all put on our spectacles and I love the old school. [1:11:35] Chad: Hey, one last question though. Someone's excited about buying a third party administrator with 7,000 plans. Is there anybody that really wants to buy a, a third party administrator only shop with 20000 plans? [1:11:51] JD: 20, 000? Yeah. Oh, oh. Who's buying that? [1:11:56] Carl Angstrom: Who? [1:11:56] JD: Yeah, big, big people. Go ahead. [1:11:59] Carl Angstrom: Right. I mean isn't that, I mean it isn't, isn't the idea that there's probably some going to be some attempt to monetize their client base and try to get, sell them or provide additional stuff or just jack up rates, I mean [1:12:12] JD: or increase profit margins with tax but [1:12:15] Chad: you're not increasing profit margins on the compliance side. That was my point of. Do they push into asset management or record keeping? [1:12:22] Carl Angstrom: Yes. [1:12:22] Chad: Jd, I, I don't. [1:12:24] Carl Angstrom: You could do a worse job. [1:12:28] Chad: You could do a worse job. I just look at the sweet spot for, for acquiring a compliance only shop and I don't, I don't, I don't see where an empower, you know, a void. These groups that have acquired recordkeeping partners of 30, 40, 50,000 plans, I don't see their interest in a compliance only at 20. [1:12:51] JD: Well, I wanted to, to move on and some stupid. But you mentioned this in our chat or text message. Future Plan was doing this and it clearly had a goal to bring them all together. So I think you're actually underestimating the value of an administration firm's client base. I, I think that Future Plan it up. When they first came to market and said we're not bringing them to our own record keeping system, I was, I was shocked. I was like why would you not buy all these firms and then bring them on your own record keeping system? Like that seems crazy. I think that was a mistake. We had the president and CEO of, of them on the show years back. He made some loose comments about that being a mistake. So I, I feel like Chad, maybe the next person is not that stupid. Like we'll buy all you bring you all in and then we'll convert you all onto our platform. It's not even a pillage. [1:14:10] Chad: It is, it's a pillage because all of those plans were sold with partners. [1:14:14] JD: So. Yeah, but. Chatter. Oh that's fair. But Chad, are you ready for this? If you're a, if you're Joe Schmo, who runs a small business. And this is what these acquisitions are about. These are small companies with 62 people talking about EGPs. Tastes so good. They. They don't know the difference between record keeper, administrator, advisor, whatever. They'll go along in the acquisition with whatever. So I. Someone's trying to. And then there's Carl's concept of like. And then there's this whole other thing of, oh, we're gonna monetize them in the new modern world. Like, we're gonna sell them goddamn car insurance or something. Like, who knows what they're gonna do. Look at the chat, Mark. Everything going? Apparently. Oh, I mean, I need to vibe in on this. There's a battle. It's. [1:15:12] Carl Angstrom: I'm still going to make my joke. I'm pretty sure that discrimination testing is like. Is DEI and frowned upon now. So, like, you can save a lot of money that way. [1:15:21] JD: I'll drink. [1:15:22] Chad: Just don't do it. [1:15:25] JD: All right, let's finish. [1:15:26] Carl Angstrom: Because it has the word discrimination in it, which makes it sound like it's, you know, progressive. [1:15:31] JD: It's. [1:15:31] Chad: Yeah, [1:15:34] JD: that's good. I. I actually, I want to expand on that. I like that, Carl. Let's play. Not play. Yeah, let's do our new segment to close it out. Okay, everyone, they can go on to your Thursday night. I got friends that want to meet me down at the bar with my wife. [1:15:50] Carl Angstrom: Wait, can I. Can I. Jd, Can I jump in? I want to get one public service announcement out right now. Which is that part of the reason I wanted to come on and talk about the DOL Regulation is Department of labor proposed regulation is because, you know, we're in the comment period now. That shuts off. June. [1:16:08] JD: Yes. [1:16:09] Carl Angstrom: I think anybody who has thoughts about it from your own perspective, even if it's a basic paragraph explaining what you think things you. Even if it's things you like. Strongly encourage people to submit. To submit comments also. Okay, Carl, you have questions for me, I'd be happy to help. See angstrom@angstromlee.com I'm gonna finish this bottle [1:16:32] JD: and I'm gonna go. Comment. [1:16:34] Carl Angstrom: I'm done. Spiel. [1:16:35] Chad: Done. [1:16:36] JD: No, that's good. I love that. [1:16:37] Chad: No, that's good, Carl. That needed to be said. [1:16:39] JD: Apparently they have right. 20,000 comments already. But. And. And then I know you're. This is your. Who's Superman's anti. Guy? Lex Luthor. You're. You're Superman and Daniel Renowicz is Lex Luthor. But he actually said to everyone too at a recent conference, like, hey, come on. Bring us the. We want your feedback. We want to know what you want us to do. [1:17:02] Carl Angstrom: Don't want the industry's feedback. [1:17:05] Chad: Right? [1:17:05] Carl Angstrom: And he solicited comments from. From them. I mean, and they. Boy, have they ever been funding the bad study machine. If you, if you dig into the citations and that proposed regulations, it's some of the worst financial scholarship I have ever seen. Like, there are so many things in there. Oh, weird. There's a 2024 study. It turns out that litigation has caused menus to shrink. And in fact, people are losing 2% a year. It's everyone. [1:17:33] JD: We have a. We have a headline announcement right now. Carl Angstrom will be on retire Alex every month for the rest of 2026. Let's go real quick, Brannon, close it out with a little fin talk. Fun. All right, Carl. [1:17:59] Carl Angstrom: I felt like Michael B. Jordan and sinners there right? [1:18:01] Chad: Then [1:18:04] JD: when I get so high up, I don't have to look up professional. I always use lowercase. Never had a subject line and always have many spelling errors. Chad. Like, sometimes when I'm. As the chief executive officer of the company, I'm writing an email to someone. I'm just like, you know what? I don't have the time to make sure that this thing is spelled right [1:18:28] Chad: or it does it for you. So don't say it's a time thing. [1:18:34] JD: It really. [1:18:34] Chad: You just buck in the system. [1:18:36] JD: It really doesn't. You and Carl. I'm feeling very stressed these days. Five years ago, I was a surfer. I ran a company that did well. I put my feet up. I, I had a great life. And now I'm in two other companies and one of them is an artificial intelligence company. Waves AI I'll drink. And I'm very busy all the time. Like, I've got a lot of work. And it sucks, but it's fun. But it sucks, but it's not fun. And, And I feel like this guy, which is I run this company I'm about to run write you an email. I don't have time to do this. You just take it the way I send it to you. And Chad, sometimes my, my keystrokes and whatever's happening spell check doesn't work. It doesn't know what the. I'm writing. Like, I, I, that's fair. [1:19:32] Chad: And I gotta get vodka on your keyboard. [1:19:34] JD: Yeah. Starts up. [1:19:36] Carl Angstrom: Can I. [1:19:36] JD: That can happen. [1:19:37] Carl Angstrom: J.D. can I offer you a few tips like this, please. [1:19:40] JD: I mean, of course. [1:19:41] Carl Angstrom: Yes. Writing it all lower caps, you know, taking three hours to, you know, three hours Three days to respond emails. I mean that's, I would think that's like entry level. Here's next level. Okay, which is someone submits some work product to you. Oh, this is done. Now I like firing off 5 comments. Each of them is a separate entry in Slack and like, and you need to do this. And then they ask, wait, did you even read it? And I say, no, of course I haven't read it. Like I just know those are the things I'm going to think. So giving feedback without reading the work product, that's. [1:20:17] JD: Oh God damn. I love Carl. Look at, he just took me and he raised it way up as he should. [1:20:25] Chad: You own an AI company. Can't you just have it respond your emails for you? [1:20:30] JD: That's my dream, Justin. I, I will. I'm working on products right now for the 400k industry but eventually I'm gonna apply it to my own inbox and do that. Yeah, a brand. Let's play the next one from the beautiful interwebs. [1:20:45] Carl Angstrom: I work from the moment I wake up to the moment I go to bed and I work seven days a week. When I'm not working, I'm thinking about working and when I'm working, I'm working. [1:20:56] JD: Clearly you guys are getting in it inside. Look at my algorithm. Carl, you know who that is, right? Do you know who that is? I'm slurring. [1:21:11] Chad: I think so. [1:21:13] JD: Carl, that's. That's a CEO. Founder of Nvidia, bro. [1:21:19] Carl Angstrom: Wow. [1:21:20] JD: Get your together. Jesus. [1:21:22] Chad: That was not who I thought it was. So I didn't be honest. [1:21:24] Carl Angstrom: That, that comes across as very neurotypical to me, you know, as an attention deficit and hyperactivity. [1:21:31] JD: Is that a schism? [1:21:33] Carl Angstrom: I do some of my, I do some of my best work while playing games on my phone or best thinking. [1:21:39] JD: It's good. Chad, I'm gonna, I'm. You've had a path with this. So I'm gonna, I'm gonna go to you and we're have one more. We're gonna end the night hardcore. Head down. Working to accomplish a goal, achieve something, help people. Like this guy just said he. Someone asked him about his work life balance and he basically said, you I work bro, non stop. You've done this in your life. I think it was to support your family, get things set up. Tell me about how you feel about this. [1:22:13] Chad: Well, I felt like it was a necessity at that point in time and it was a necessity to give me the opportunity that I have now to go to my kids ball games on weeknights. And leave work early to go play golf tomorrow. [1:22:24] JD: Have a golf, have a golf simulator in your home office. [1:22:28] Chad: Absolutely. But that was a point in time where I didn't have kids and I can put my head down or kids were young and I could put my head down and I could work it and I still do it now I, I just break it up differently. I start work at 5am and I'll pull away at 3:30 if I need. [1:22:43] Carl Angstrom: Well, I mean if you don't keep your head down like you're. It's not going to be a pure ball strike this. [1:22:48] Chad: Very true, Carl. You gotta stay down and through slice. [1:22:54] JD: Carl. I was on the range today before I went surfing and I had that exact same swing thought. Thank you very much for, for doing that. Brandon, let's play one more. Right. Biggie Bad boy as a staff. What do you think about that, Carl? You and the South, Carl, what do you think about. Good answer. Good answer. Okay everyone, thank you for tuning in. [1:23:27] Carl Angstrom: I'm just thinking about this. I'm just, I'm just thinking about. Hit him up like that has to be a top five this song of all time. Like. [1:23:35] Chad: Yeah, absolutely, absolutely. [1:23:39] JD: Yes, it might be top one. Yeah, got him, got him killed maybe. No. Yeah, right. [1:23:46] Carl Angstrom: That's what I mean. [1:23:47] Chad: He's not dead. [1:23:48] Carl Angstrom: Yeah, it's like Nas and you know Nas and Jay Z are just. Are doing just fine. I mean but then again I do love Ether but. Oh, can you beat about? I, I don't know. Kendrick. Then again, Kendrick Lamar may. [1:24:01] Chad: I mean that was yep. Climbing levels there. [1:24:07] Carl Angstrom: That's certainly the most profitable this song ever. [1:24:13] JD: Great tanks. [1:24:14] Chad: The fact that Kendrick Lamar was able to do his diss track on the national stage in which he did was pretty phenomenal. [1:24:24] Carl Angstrom: Didn't want to sue him for defamation because it would be he would lose street cred. Instead he sued all of the publishers [1:24:31] JD: or the Ed Di Marino. Don't leave yet. I won. Are you still here, ed? Finish us J.D. [1:24:42] Chad: i gotta pee. [1:24:43] JD: We're out. I do too and I've got friends waiting for me and stay here for a second down at the local little bar restaurants. They wanted to meet with my wife and I at six west coast time and they have no idea what's showing up in terms of me. I'm. I'm pretty. [1:25:05] Carl Angstrom: Which color lamb? [1:25:07] JD: No, not which color lambo. I'm just saying. Yeah, I'm. Well, I dragged four of these. Thank you everyone for tuning into another episode of Retirelogs. We are changing the retirement plan industry one Beer at a time. And we love having fired up plaintiffs attorneys on our shows. And thank you, Carl and Trim, for showing up for your third appearance. I love it when you ramble. I love it when you talk and go on. And I. I'm not even kidding. I want more of that. So we'll see. [1:25:40] Carl Angstrom: You know, I can get to, like, 70 of my content that I prepare. [1:25:43] JD: Oh, my God. Can you call me later, Carl? Let's just. Let's just do it, like, six hours, you and me on the phone, and. And thank you to you out there, Silent J. And everything you contributed to the show tonight. Silent. I. I felt like you were on your game tonight, saying everything. Brandon, can you. Can you put up one of Chad's images one more time before we head out? [1:26:13] Chad: I'm good without those. [1:26:15] Carl Angstrom: Good. [1:26:15] Chad: Totally good without those. I'm wearing a red jacket. Next time. [1:26:20] JD: I don't know if the chat bar channel. Whoa. Webby, stop. Webby, stop. I don't know if the chapter champion worked properly, but it did. [1:26:30] Chad: Kevin should have won. Kevin should have won. Moody started off strong. Kevin. [1:26:34] JD: So tonight's champion is Kevin Spayth for our new chap, our champion model, and we will carry this into the next show. And, Kevin, if you tune into the next show, we'll let you know what your gift is. It's going to be a brand new beard from the beard that you had shaved off at a recent 401k event. You didn't know I knew that, huh? I pay attention to everything. I'm like the goddamn 401k matrix. That's what the. I am. And you. Oh, I forgot. Almost forgot about you. The audience. Thank you so much for tuning into another episode of Retireaholics. Brandon, let's play some punk rock music or whatever you got queued up to send us out of here. We'll see you next time. Yeah, that's. [1:27:22] Chad: Good night. [1:27:22] JD: All right, Prince. Prince is punk, okay?