Don Trone: Fiduciary Rule Politics & Plan Sponsor Leadership

[0:00] Chad: I thought you were just dressed like that today. This is a skit, huh? I like it. [0:09] JD: I prepare for these things. [0:11] Chad: So JD dresses for his daughter's birthday. All right, we're streaming. I see you going live. Oh, there we go. Awesome. All right, Mark. It's just titled Mark. I just sent you the link if you want to copy that in your. Your browser at home. Oh, yeah. Thank you. Oh, yeah. Let me go full screen here and see how this all works out. This is Newbie. Sorry, I'm doing a lot of stuff right now. [0:57] Don Trone: Welcome. [0:57] Chad: Nevin. Thought maybe after last week you might. Might decide you wanted to hang away from us for a. [1:25] JD: Volume got killed. [1:35] Don Trone: Did we lose the volume on that one? [1:37] JD: A little bit. Welcome, ladies and gentlemen. We are so pleased to have you here today for another educational webinar. We're going to be talking all things fiduciary, so if you like fiduciary, you've come to the right place. Before we get started, I'd like to introduce myself. My name is James Douglas Carlson, and I'm the CEO and president of Plan Design Consultants. But I'd also like to introduce you to my esteemed colleagues, Justin McNeil, Mark Palme and Chadwick Johansen. Wave hi to the people, fellas. Wave hi to the people. Like to do a little housekeeping. Before we get started with this educational webinar, make sure you're in gallery view. We find it to be the most ideal way to watch the show. You get to see all of the faces at the same time, so please do that. It's recommended. Also, chat it up. Chat. In the little chat technology thing, we would love to hear your questions and any opinions that you'd like to share with us. We find those very valuable, so please don't be afraid. But when you do that, make sure you share with all of the attendees, okay? And not just the panelists because we want to hear your questions and. And before you type it into that chat bar, I will answer the question for you. Yes, the PowerPoint slide deck will be available to you presentation. So rest assured, we're gonna get those all out to you. [3:19] Chad: Okay, I'll just log off now then, [3:24] JD: our guest today, he's a graduate of the U.S. coast Guard Academy and. And served for 10 years on active duty, most notably as a search and rescue helicopter pilot. Mr. Don Trone is the CEO and one of the co founders of 3 ethos. He calls it Ethos, but I think it's Ethos, but I don't know. It's his company. We'll let him call it what he wants. Don was the founding CEO of FY360, which he left in 2007. He's the founder and president of the foundation for Fiduciary Studies, which we'll be talking about today. Fiduciary. And the first person to direct the Institute for leadership at the U.S. coast Guard Academy. And in 2015, he was named by Investment Advisor magazine as the father of fiduciary. That's right, people. You heard it here. And one of the 35 most influential people in the financial services industry. I see other things about US Secretary of Labor, US Senate, author or co author of 10 books. But apparently Chad wants me to wrap this up, so, Brandon, if you could. Let's go ahead and spin that wheel of ice, because I'm just gonna take a little potty break. I'll be right back. Go ahead, spin the wheel. If I don't make it back, explain word to Don. [4:46] Chad: Oh, it's Mark. Did you start? [4:49] Don Trone: I'll start from the beginning. [4:50] Chad: Mark. Sorry. Yeah, I need the noise. You're not getting it. The wheel of. Thanks. I'm just gonna start drinking. What the hell just happened? J.D. [5:05] Don Trone: went. [5:06] Chad: J.D. you know when you watch, like, South park or SpongeBob, where a joke continues to go on forever and you just wish it would stop, but it never does. JD like every zoominar I've been on the last two months. [5:22] JD: That was a lot of work. Yeah, that was a lot of work. [5:25] Chad: Say bravo, J.D. that was good. [5:27] JD: Did you guys explain the prohibitive word yet or. [5:29] Chad: No, no, no. [5:30] Don Trone: Okay. [5:31] Chad: I've actually just. I just actually realized what Chad's gonna look like in 20 years. [5:37] JD: It's gonna be so much fun. Except my hair won't grow out. We have lots to choose from in terms of prohibitive word. Don't. And listening to your many webinars and speaking gigs, stewardship was one I really wanted to go after, because you say that a lot. But we felt like we had no choice. So the word is going to be what everyone would expect it to be. I'm going to say it one last time. If you say the word after I do, you must take a little sip from your prohibitive word drink. What are you guys drinking? Show the audience the word never drink will be Ho. Tito's for the. [6:17] Don Trone: And it's not opened, so you know that it's not filled with water. [6:21] JD: Okay. Oh, who would do this? [6:23] Chad: Look at this. [6:26] JD: The word will be fiduciary. Okay, that's gonna be a tough one. Let's dive right in. I haven't left anything out in my little nerd attack. Right, we're ready to go. All right. It was a little while ago when the fiduciary rule. Oh, Jesus. [6:48] Chad: Oh, man. Give up. [6:52] JD: Forgot a lot of my mind. The F rule was a big deal in our industry. It got smashed. It never came to fruition. But now, and I haven't done a lot of investigation myself, I'm going to ask you. Don't. We're hearing about some new talk around some type of fiduciary legislation or rules. Can you shed some light on what's in the cooker right now or the oven? [7:19] Don Trone: I'm not an expert in that area. I can tell you from a thousand foot view what's going on, but not specifically. [7:27] JD: That'll work. Give us a thousand foot view. [7:32] Don Trone: Let me actually go back to when the DOL rule, the original rule came out. In 2015. You might recall that 60 days before the rule was actually published, there was a press conference with the Secretary of Labor, President Obama. I had a chance to live stream that particular press conference and I was shocked by what I saw. First of all, the press conference is at the aic. I'm sorry, What's the retirement AARP set? The headquarters for the aarp. So the first thing that went through my mind is, if this rule in fact has been prepared by the Department of Labor, why are we not doing this press conference on the steps of the Department of Labor? I can tell you that the 35 years that I've been involved with this F movement. [8:41] Chad: Nice. [8:42] JD: Like a veteran. [8:43] Don Trone: There you go. Never once did I ever have a conversation with the aarp. So all of a sudden, they're a player in this space. Then they introduced Cheryl Garrett, who I know, and a very respectable financial planner. She's a leader in the financial planning industry, but she's not a retirement consultant. Yet all of a sudden we're pointing to this individual as being a model example of a retirement consultant. I said, well, that's not right. Then the real giveaway, a couple more giveaways. One was referenced that $17 billion. You guys are stealing $17 billion a year from the retirees. I had a chance to look at that study, and that's what it is. It's a study. It's not really academic or scientific research. It wouldn't meet that criteria. It was a study that said we looked at what several brokers did with retirement clients. We saw what products they were in. We saw the fees and expenses. They said if we extrapolate that across the entire industry and everybody's doing this, then we're stealing $17 billion a year. Ever since that has still. That number is still being played out there. [10:08] JD: That's interesting. I wasn't going to ask that question, but of course. So the whole fuel to the fire of the F Rule is that people are getting ripped off. And I said this to Chad and Mark and Justin and our audience for years, where at least if you look at the micro to small market, I never see situations like this, not to use the bad apples example, because it's probably the wrong time. But there's a few of these instances out there and of course that's going to happen anywhere. But I agree with you. I think what you're saying, Don, is I don't think the industry as a whole, the retirement industry, was ripping anybody off. Quite the contrary. But that was the motivation for the F Rule. [10:52] Chad: You say that J.D. and I could be completely wrong in this, but most of what I see probably are. Yeah, it could be most of what I see and think the benefit of the F Rule will be and the reason why it was pushed as hard as it was. I know that there are studies and there are things behind it, but the truth in my mind is that too many people were selling a product and not consulting for their clients. And this is supposed. Whether it does or does not, this is supposed to force advisors to spend more time looking at all options that are reasonable for that client and helping them make an educated decision versus saying, hey, this is the company I'm with. So I'm selling you something. [11:32] JD: Don, can I ask you, when I read, watch, listen to your stuff, it kind of surprised me in that. Can I. Can I label you as kind of an anti F rule person? Like, is it fair for me to say you don't think legislation should make you an F word, you think it should work some other way? Is that correct [11:58] Don Trone: or no? [11:58] JD: Say no. [12:00] Don Trone: Yeah, let me fine tune that. I was quite the fiduciary. [12:09] Chad: Oh, pop that top. [12:12] JD: Don't be that easy. [12:14] Don Trone: So did you hear the. Can you hear it? [12:18] JD: Yes, it's good. [12:19] Chad: I heard the plastic clicking. [12:22] JD: I love how the guy who's all about like ethics, governance, stewardship has to remind us like three times that his vodka is legit, that he hasn't filled it with water. [12:32] Chad: I will say, I never thought I'd see someone taking shots of vodka on the show. Whiskey, bourbon, vodka, straight vodka. You're a daring man. [12:44] JD: Okay, Don Roberts, I called you the anti F Rule person. That's not necessarily true. Go ahead. [12:52] Chad: You were gonna. [12:52] Don Trone: Yeah, I was quite the advocate until the Dodd Frank rule was signed. Dodd Frank act was signed. And that's the demarcation. Once, once the government, once Washington got involved, they totally destroyed it. And I, when I say Washington, it's not only the politicians, but it's, you know, it's the CFP board, an association in Washington D.C. what I say now is the F movement is fueled by politics. Power, ego and greed isn't everything. Yeah, well, it's everything that destroys good things in the world. You know, it's politics, power, ego and greed. Take your pick. Or a combination of it. And unfortunately, that's what's happened to the F movement. [13:48] JD: Can you clarify for me? The cfp, CFP board. I should say so. I'm such an idiot. Are they for it or against it? Yes, they want it. [13:59] Don Trone: They're both for it and against it. [14:01] JD: Oh, yeah. [14:01] Don Trone: You know, this is an organization that is imposing. Has imposed also on June 30, same with Regbi. CFPs now are subject to a higher fiduciary standard. [14:17] Chad: Bing, Mark, get on it. It's not as easy as it looks, guys. [14:23] JD: Yeah, [14:26] Don Trone: where was I? Oh, a higher F standard. And I have to chuckle with that because it reminds me of that scene from Animal House where the dean says that the fraternity now is double, double secret probation. CFP board's been doing the same thing with its CFPs. And the reason why I said it's both yes and no is they advocate the F standard, but they have deliberately interfered with efforts to train financial planners on the F standard. And if you look at their more recent announcements, they were kind of pounding their chests thinking this was a good thing. They said that we have just committed $5 million to enforce their F standard. Here's an organization is gearing up to prosecute CFPs that don't meet the standard. And at the same time, they have deliberately interfered with efforts to train CFPs on how to get ready for the standard. So you see this? Yeah. Yes or no? They want it, but I think they really want to use it for power. [15:48] JD: Tony Davis. Tony Davis. That's a question for another show. I would love to go into that. I'll quickly just answer you. I won't throw it at Don. But of course TPA should disclose all the revenue share. That's a no brainer. You can't answer that any differently. But should they discount 100%? That's a far more detailed question than yes or no. We could tackle that. We should definitely tackle that in a future episode. [16:14] Chad: Love that question. [16:15] JD: Yeah, we've talked about that a lot, Don. I think that some of the problem with F rule F standards is that plan sponsors employers just don't have the time to understand all this stuff. I've heard you talk about this extensively. So what's the solution? Like if you want to sit down with your clients and you want to teach them how these things work, but they only allocate 60 minutes a year to let you do it, how do we solve this problem? [16:51] Don Trone: Yeah. First of all, question for the panel there, for the four of you. You know how many men and women serve in a lay F status? [17:05] JD: I do. Guys, let's say it on three. One, two, three. [17:08] Chad: Eight million. Yeah. [17:10] Don Trone: So now there's five of us in the industry that know that number. Eight million. [17:13] JD: We do our homework. [17:14] Chad: That's because we watch your recordings. [17:17] Don Trone: Yeah. And the 8 million are responsible for managing 80% 8,0. 80% of our nation's liquid investable wealth. And we're seeing that come out in spades during these crises. Look at the colleges and foundations having to revisit their endowments and their foundations, public pension funds beginning to sweat out rather they're going to be able to meet future obligations and so forth. The quality of the decision making of the 8 million has a direct impact on our fiscal health, our nation's fiscal health, as critical as this is. Who's responsible for training the 8 million? [18:02] Chad: You are, Don. [18:04] Don Trone: No, yeah, it's us. [18:08] JD: Yeah. To put your 8 million in context, when I started out in this industry, I was dealing with a lot of smaller plans and it was really eye opening me to step into boardrooms of 50 million and 100 million and $150 million plans to find out that they really didn't understand their shit any more than the one million dollar plan I'd been sitting with before. I was taken aback, but it's very, very true. It's few and far between that you walk into a 401 committee that really understands their shit. Right, Chad? [18:40] Chad: Very, very true. And your point about large plan versus small plan was eye opening to me when I first started to get in that space just a little bit. It was, it was honestly terrifying. And that's just what I wrote in the chat a moment ago, that of the 8 million that there are how many actually have an understanding of what their responsibilities are? I know you say who's. Whose job is it to educate them or to teach them Even. Even if there was a Sounding board for that. I still think there would be very few people that took the time to pay attention to the importance that. That it carries. [19:13] Don Trone: Yeah. [19:14] JD: Donna, go ahead. You gotta point out. [19:15] Don Trone: Yeah. So building upon that, one of the mistakes I think we as an industry have made over the years and JD you talked about, you know, we're lucky if we get 60 minutes in front of these trustees investment committee members a year. One of the mistakes we as an industry have made is to try to teach these 8 million men and women the arcane language associated with fiduciary and portfolio management. [19:51] JD: I'm going to drink for Don on that one. [19:53] Chad: Say, I kind of want to taste my bourbon again. So. [19:56] Don Trone: Did I just say that again? [19:57] JD: Yeah, we got your backs. [20:05] Don Trone: All right, so here's what we're proposing as an alternative. And this is what 3 ethos has been working on now for 5 years. Let's teach them a decision making framework they can use every day. Use it to run a team, a department, a division, run the C suite, run a board of directors. Oh, by the way, same process we're going to use to manage the 401k. And now we're teaching clients something they can use. It's relevant. We add to it the leadership and stewardship behaviors we know from neuroscience. It's going to improve the decision making and we take on a different relationship with the client. You know, rather than being the 401 nerd that comes in once a quarter, semi, annually, taken up their valuable time, we now become the leadership coach. [21:02] JD: I like that. I think the glue in between has to be the advisor I want to jump to. We're going to play a fun game with you and Mark. Get ready, because it's your game. But I first want to tackle two questions from the chats. Shannon says the PSCA has some great training available for clients. Shannon, I get that. And I think there's all kinds of fiduciary training for plan sponsors, but I got that. I'll get that problem. But the problem is getting the plant sponsors to sit down and actually go through it all. So I get it. I love the value and I just don't see it being adopted that much. And then Corey Zeller, who were you here last week? I'm guessing you weren't. Isn't that the problem? Peps were meant to solve the F problem. Corey Zeller. I'm going to come after you, bro. [21:53] Chad: Read the rest of his statement, though. It's about consolidation and I don't disagree with that. Does it? Does it relinquish it. Absolutely not. I think that's what last week we fought over. [22:04] JD: I have three words for you, Corey. Not unique to Pepsi, or is that four? I don't know. [22:09] Chad: A lot of lords. [22:10] JD: Oh, man. [22:11] Chad: J.D. [22:11] JD: all right, Mark, you have a game. You have a game. What's your game? What's your game? [22:15] Chad: Am I supposed to actually be preparing for this game still? [22:19] JD: If not, I have an addition to your game, so. [22:21] Chad: Well, you should add it, because I will say this week is a little bit more mellow on the game front. Don. That's because you were scared of Don. [22:33] JD: You must know. [22:35] Chad: Not gonna lie, Don. I listened to your podcast when you were on with rick unstro on 401k Fridays. This portion of our show is brought to you by 400k Fridays. And I was intimidated. I felt like I was gonna be speaking to, like, the Godfather of the F word and all these other things that I believe to hold you in high regard. So I got a little nervous. I'm not gonna lie. And so my game is called Is It Lame or Are youe Game? I. I'm gonna name some things. You just tell me if you think it's lame or if you're game for them. It's gonna be real simple. We'll just go rapid fire. And, Don, I'll start with you on every question. So just for fun, here. Here we go. You ready, Don? [23:20] Don Trone: Sounds like Madonna's Truth or Dare. [23:23] Chad: Pretty much. No clue what that is, but, yeah. [23:26] Don Trone: Okay. [23:31] Chad: I see by your shirt that you have a distinct taste in fashion. So my question is designer clothes. No, J.D. this isn't directed at you, but kind of are you. Is it lame, or are you game to buy, like, incredibly expensive clothes when you can go buy, you know, eight pairs of jeans from Kohl's for the same price as one? [23:58] Don Trone: So, yeah, no, I am not a designer guy. [24:02] Chad: So it's lame. Designer clothes are lame. [24:05] Don Trone: That would be the answer. Lame. Yeah. [24:07] Chad: Spun that on us. Mark. [24:10] Don Trone: This shirt, I think I'm pretty sure was $15. [24:14] Chad: You know, like, your style. Chad. Yeah, I'm gonna say lame. And it's not the designer clothes are lame. It's spending money on designer. [24:25] JD: Don't get mad at me, Dustin. [24:29] Chad: It's not for me. Say the word lame. J.D. [24:35] JD: you're missing the point. Okay? YSL, Yves Saint Laurent, Gucci. These things are art. These people are artists that make this fashion. Fashion is art. I'm completely game, and I will spend 500 bucks on a T shirt if it's got the right logo on it. [24:56] Don Trone: Wow. [24:57] Chad: Okay. Moving on. Moving on. Don, again, I'll start with you. Is it lame or are you game about starting a show where four dudes sit on the couch and drink beer and talk about retirement plans? That game or are you lame? Is that lame? [25:21] Don Trone: First time I saw you guys, which was October in 2018. Yeah, I do. Because you shocked the living daylights out of me and not in a good way. [25:40] Chad: I just said yes. [25:42] JD: Yeah. [25:43] Don Trone: So I don't know where that's labor game. And no, you know the first impressions. I had been out of the. I had not been in a conference for a couple years. So I'm coming back to my first conference in 218. I'm bumping into you guys. I'm bumping into 401k, lady. I'm thinking, what the heck is this all about? 401ks, lady. Oh, yeah. You had the brawl going on with the two guys, Aaron and Alex. Yeah, Alex. And man, I was shaking my head like, what. What has happened? And now. Now, today I. Not. When I say today, I mean in the last year. I get it. And. And very much I'm on game with you guys for what we were talking about, which is sitting down and trying to tell Leifidoosh. [26:43] Chad: Well, you caught it. You're good. [26:45] JD: Yeah, you caught it. [26:47] Chad: Take it. [26:47] JD: That's a. He likes our show. [26:51] Don Trone: So two checks gets a full drink. Okay. These lay decision makers is we have got to make it more palatable for them to want to listen and participate. Engage is the word. One of the definitions where the definition we use for leadership is your capacity to inspire and engage. And every 401k retirement consultant out there should be sitting down, looking at their presentations, looking at their materials, and saying, what are we doing today to inspire and engage our clients? [27:31] JD: What he's saying was, we were lame, we're now gay, and we aspire through business. Go ahead, Mark. [27:39] Chad: But I'll take it like you just stole the show there. I think I can go to sleep a happy man later. [27:44] JD: Do you have another one, or can I throw in the video one I want to do? [27:48] Chad: Not yet. Is it lame or are you game with Kanye west running for president? Let's get political. Why don't we? [27:59] JD: Who's first? [28:00] Chad: Funeral. Don's first. [28:02] Don Trone: Repeat the name again. Kanye West. [28:05] Chad: Kanye West. He's one of those guys that wears a lot of designer clothes. It's kind of like JD and he raps. [28:11] Don Trone: He doesn't know the guy who just. Okay, I'm with you. All right, so here's. In 2016, in the election, I got asked all the time, who should we vote for? And I would never answer that. Instead, what I would do is I would take the 10 leadership and stewardship behaviors that's in our research and I give it. I wish I'd done a formal survey on this. I would give it to the individual and I'd say, look at these 10 behaviors and tell me which candidate best represents this list of behaviors. Here it is. Real quick. [28:47] JD: Yeah. Kanye would crush those, I'm pretty sure. [28:50] Don Trone: Yeah. No matter what political leaning the person had 100% of the time. That's why we say had a more formal service 100% of the time. They came back after look at the list, and they said, well, neither candidate represents any of these behaviors. And my response to that is, that's a problem, isn't it? And we got the same issue. We're going to have the same issue in 2020. [29:19] JD: I say, Mark, I'm saying I'm game [29:22] Chad: and just because I want the merch, right, Justin? Chad. I'm game for anybody who believes they could make a difference trying to get in the presidential R race. So the most politically correct. JD I do have more, but I think my time has taken. [29:48] JD: Mark, you can. You can kind of take the lead on this. It's the video from Jeremy Palm, the Cares act baby. You can introduce it and we're all going to vote on it. [30:00] Chad: There's no introduction necessary. Jeremy Palm just absolutely crushes a Vanilla Ice influence Parody of Ice Ice baby with Cares act baby. And just enjoy. Just enjoy it. This is art. Just JD not designer T shirts. This is art. Yeah, we need volume, [30:27] JD: Baby. Cares act baby. [30:32] Chad: All right, Zoom. [30:33] JD: Collaborate and listen. Look at cares qualifying conditions. Furlough has affected so many hours Reduced [30:39] Chad: counting down to the penny. Will it ever stop, yo? [30:42] JD: I hope so. Have to believe and spread hope Cares act is here. [30:45] Chad: Let's explore all the fine prints so many facets just like a diamond tears [30:49] JD: Here's a new revolution Coronavirus related distribution access Hundred grand per individual Planning ahead to promote the residual loan at a freeze it. [30:58] Chad: There's always different ways Pay income tax [31:00] JD: over a thousand plus days since there [31:02] Chad: was a problem this helps solve it [31:03] JD: Cares act is here. The Rona evolved it. Cares act baby. [31:09] Chad: Wear a mask for safety Wear a [31:14] JD: mask for safety Cares act baby. [31:23] Chad: Dude, Rona evolved it. [31:25] JD: Go ahead, Don. You can say lame or game, but then we're going to limit you to about 15 seconds. Go game. [31:31] Don Trone: Game. He's spot. On, you know, first of all, he's linking the retirement to the current crisis and everyone that we're talking to today. We cannot ignore the crises that are going on and whether it's through humor, however, you know, you can't simply go out in isolation and say, here's our 401k business, and not reference it back to the crises. [32:01] JD: I love it. I feel like Don looked at Jeremy's video like a fancy person looks at art. He went deep into that. I'm game. Go ahead, Justin. Are you lame or game? [32:11] Chad: I think the retireholics in Germany need to team up. Oh, God, no. I mean, I love what he's doing, but could you imagine me trying to rape? As bad as it could get? [32:24] JD: Are you're a game for everyone's game for that video. [32:27] Don Trone: Oh, yeah, yeah, yeah. That was. [32:29] JD: Way to go, Jeremy. Way to go. Shout outs from us to you. Yes, Mark. Oh, yeah. [32:33] Don Trone: No, no, no. [32:34] Chad: This is my game, by the way. I'm gonna call it lame. Dude. You were all about that. [32:46] JD: Wow. [32:47] Chad: Here's why, gentlemen. It's too short. It needed to be more extensive. He needed to have a cameo by me. I mean, a lot of gold opportunity there. So that being said, you know what they say? You know, like that. Oh, and he goes, truly's too. I like that being said, Mark. [33:14] JD: I just picked up on that. Is there always a click of the can before the statement? I didn't know that. I like that, though. That's good. [33:22] Chad: You know what they say. Did you see Shannon talking about your poem? No. [33:31] JD: In the words of J.D. [33:32] Chad: carlson, it was art. [33:34] JD: Yes. All right. Last week we had on a gentleman Mike and we had a big, aggressive debate about PEPS and whether they were going to change the industry or whether they sucked. How I want to tie it in to kind of your headspace and what you spent your whole career thinking about is Mike and Peps and our buddy Corey, if he is still on, have this concept that PEPS will, like, resolve you of your f responsibility. Right. They're going to take all of that stuff off your plate. And what I said to Mike was that that sounded like a very apocalyptic world for me to go down this path where we're teaching plan sponsors to not care about their responsibilities and they can just shovel it off to some other person to do it for them. I want to know, how do you feel as someone who has spent their entire career thinking about the F word? Aren't you more of a fan of teaching plan sponsors to know more about this stuff as Opposed to teaching them to not care about it at all. What say you, Mr. Trone? [34:52] Don Trone: Yeah, what I would say about that is I believe we have made define contributions so complex, it's beyond the average person's capacity to get their arm around. So I'm a big fan. And outsourcing, whether that's 316, whether it's 402A, whether it's PEP or MEP, what's a 316? [35:22] Chad: Oh, gosh, [35:27] Don Trone: let me finish and I'll come back. [35:29] JD: I was trying to set you up to drink your vodka. [35:32] Don Trone: I know. [35:33] JD: Okay. [35:36] Don Trone: Now where I differ from what you were saying is that the plan sponsor who comes and says I do want to delegate the response back to that is terrific. However, you cannot, as the plan sponsor, abdicate your leadership and stewardship role because the ultimate quality of the retirement outcomes is going to be directly correlated to your leadership and stewardship. If you come across as not giving a shit about the retirement plan and that's why you're outsourcing it, I guarantee you that is going to be evidenced throughout your organization. When they talk about 75% of American employees not being engaged in the work they're doing today, 75% not trusting the organization they work for. Those are the organizations that you're talking about. [36:35] JD: I just feel like the most lovely meetings I've ever been in where I've really felt like I'm in the right career and things are going well is when I'm sitting in a committee meeting with plan sponsors and everyone's actively engaged and you're trying to make decisions throughout the course of quarters and years. And when you see it working, it's a thing of beauty. And that is premised on education and teaching them and filling their brains full of this knowledge over the years. And when you get to when it comes to fruition, it's phenomenal. Chad, you had a thought. [37:09] Chad: Well, number one, you're filling their brains. But dude, they're running a business. They're forgetting what you're filling their brain with very quickly. And Don, you mentioned that we have a complicated industry. I'm not disagreeing with you here. But the vast majority of mistakes that plan sponsors are making are not about the complicated side of this business. Look at the lawsuits. The lawsuits are fee based. And whether or not they're spending time looking at the lowest possible cost share class and the areas that the F word is creating exposure for are not the complicated things that go on behind the scenes in my mind. And the other thing, J.D. something I had Never thought about until Don just said that is. We've seen so many fee related lawsuits. Are we soon to see one for a plan sponsor that's paying for outsourced 316 roles where it's built into plan assets? Participants are coming back saying, hey, that's your responsibility. You guys should be covering the cost for that. And now you built it into plan assets. And we are and we shouldn't be as participants. I haven't seen that one yet, but with all our F word discussion last week, I think that one's probably coming pretty soon. [38:28] Don Trone: That's an interesting report. [38:30] Chad: The idea. So good job there, Chad. [38:33] Don Trone: But Chad, one comment about the focus on fees and expenses and the litigation. Before Schlichter filed the first lawsuit, he met with me in St. Louis. [38:50] JD: You hang out with the boogeyman. [38:52] Chad: Boogeyman. That makes sense. [38:55] JD: Tell us more, Don. Tell us more. [38:57] Chad: Now I'm. Now I'm even more scared. [38:59] JD: He. [38:59] Don Trone: He asked whether I'd be willing to serve as an expert witness on these cases. Here is beginning to line up. And I asked him, what's the premise behind the suit? And he says it's going to be fees and expenses. And I said, there's a lot more to the F word than fees and expenses. Why are you focusing on fees and expenses? It's the easiest thing to argue in a court of law where people don't understand. And so we're gonna. Yeah, so that's why we're not seeing these more. You know, why aren't we seeing a litigation on a faulty IPS or, you know, a bad asset allocation and a target date fund? [39:51] Chad: Hard to uncover and hard to understand. [39:53] Don Trone: Makes sense. Yeah. [39:55] Chad: Didn't that just happen to Fidelity. [40:02] JD: And then. [40:03] Don Trone: Well, that wasn't on the asset allocation, I don't think. By the way, I'm not. I have not stayed really, really close to everything that's going on in plan design and record keeping. Only because I got my plate full arguing the behavioral governance side of it. [40:24] JD: That's fine. [40:25] Don Trone: Plus there's so many. There's so many ERISA attorneys now that are out and about with that expertise. I didn't see myself adding anything to the equation. [40:35] JD: Chad, you said that to piggyback on what you said where I thought you're going to go and you didn't. But is a conversation you and I had the other day where we're working with three 16s that partner with us. And I've been on the first front lines with clients that are working with them. And I think that shifting your F responsibilities to another entity sounds good and it looks good in bullet points on a leave behind brochure. But in the day to day running of a plan, there's a lot of little things, little minutia that comes up that a lot of these 3 16s aren't really prepared to happen. And I think the lawsuits that you're going to see is someone's going to get sued for these F practices. They're going to look to their 316 and the 316 is going to show them the contract and say, look, I can't take responsibility for this stuff. You have to play a certain role in this. And by the way, the data and the information that you provide to us is crucial. And so if it's tainted or flawed, we can't be held responsible. And I think that if you understand it that way, you're going to put a lot less value and strength and power behind a360, a 316 fiduciary or any type of F roll. If you understand the real world, [41:56] Chad: how do you battle? I mean, because I agree, you know, I think we all do with, with Don's approach here on the F word and what it means. But you have everyone else battling for efficiencies and we know every one of those or the majority of plan sponsors are just going to eat that up and that's what they're going to want to hear and they want to focus on running their business. How are you going to battle that? There's no need to battle it. Just that's what's going to exist. And my comment to JD when we had this conversation the other day was the only way you're going to solve this is if someone with the brain of J.D. carlson or Don Trone that knows this business, that understands the in the outs is sitting in the HR CFO role and is involved in the payroll processing and the determination of wages each week and what's eligible comp and the tracking of dual eligibility, all those, all those nuances an outside 316 is not going to catch before it's too late, before the money hits the truck. I guess. What, you're not going to battle it. That percentage of those HR people that are actually in the seat going to take that type of responsibility are so small. [43:00] JD: Yeah. You know, it's funny you say that though Chad, because I think if you're a billion dollar plan, that's not a bad idea. [43:07] Chad: We've talked about that. [43:08] Don Trone: Yeah, yeah. [43:09] JD: Why wouldn't you just hire someone that is an absolute retirement plan beast, pay them 300 grand a year, sit them in a cubicle and tell them to watch out for everything. Maybe Justin's right though. Maybe nobody wants to take on that responsibility. But anyways, I think that's interesting idea. [43:25] Chad: I'll do it. [43:25] JD: Yes, you'll do it. [43:27] Chad: Jd, There was a point with a very good advisor and I was probably two years into this business and it was a large plan, it was probably 250 million. And he was going for a consultative role on only the investment lineup. So it was a long time ago. And they asked him like, what would it cost for you to leave your wirehouse and come be employed by us to run our 401k plan? Did Don drank education, you do it all? [43:59] JD: I think Don just drank his tequila for fun, which is a very good [44:03] Chad: vodka, not tequila, buddy. [44:05] JD: Very, very proud of that. No, that's, that's. I think that's interesting. I'm surprised we don't see more of that. Greg Shannon, you're talking about plan participant data. I know there's a lot of headline news about that right now. I think that's probably a subject we should push to later shows. Unless Don jumps in and tells me he's got some thoughts on it. [44:27] Don Trone: No, I don't. [44:29] Chad: Yeah, Brad asked. Brad asked a question I was interested in for Don. It was a long time ago, but he said if you're a plan sponsor and you're interviewing a few advisors and you get to ask one question like what's your first question? You ask for an F word advisor. [44:49] JD: To vet them out. [44:50] Chad: To vet them out? Yeah, to determine. You get one question. What are you asking? [44:57] Don Trone: I'm not sure I understand your question, Chad. Are you saying the plan sponsor is asking the question of a candidate? [45:04] JD: Yes. [45:04] Chad: They've got three advisors they're interviewing and they're trying to make a choice, what's [45:08] JD: a great question to ask one. The most important question you could ask an advisor. [45:17] Chad: Hard right? [45:20] Don Trone: What comes to mind is, and I guess maybe I'm a one trick pony now. But the question to the advisor would be what kind of leadership role are you going to take on this committee? I do the reverse with advisors. When I'm training advisors, what I say is one of the first questions you should ask the finals committee is who's going to lead? In other words, is the role of the advisor to come in and support the chair of the investment committee. So the advisor is really a steward. I am your steward. My job is to Provide you expertise, agenda so that you, the plan sponsor, the head of the investment committee, can do a spectacular job. Or. Or you, the search committee, the investment committee, looking to me, the advisor, to take on the leadership role. But the first question that needs to be asked is who's going to lead? So we know what roles each party is going to take and in turn, what kind of contract we need, what type of services agreement we enter into. [46:34] JD: I want to go into that because that's your bailiwick, that's your strength. That's what you spend a lot of time thinking about. And if you. Is my last question for you today. But before we hop into that, we like to break it up with a little bit of fun. Because this 401k stuff can be a little boring. We play a game, Dawn. It's called who is that? And what we're going to do is we're going to play some video audio clips for you from movies. And you need to guess a movie. And I hope I'm not stealing from my brother Thunder here, but I think everyone should know before we play this game that Don is a movie star himself. He actually played a role in a movie. He played himself back in the early 80s. And I will save that for the end of this game. I'll let you know what movie that was when we get to the end of this game. Okay? All right. It's a big one. You know it. All right, roll the first clip. How long after we're declared overdue can [47:35] Chad: we expect a rescue? 17 days. [47:39] Don Trone: 17 days? Hey, man, I don't want to rain on your parade. [47:43] JD: We're not gonna last 17 hours. [47:46] Don Trone: Those things are gonna come in here [47:47] Chad: just like they did before, and they're [47:49] JD: gonna come in here, and they're gonna [47:50] Chad: come in here and they're gonna get us. [47:51] JD: Captain, this little girl survived longer than [47:55] Chad: that with no weapons and no training, right? [48:01] Don Trone: Oh, aliens. [48:02] JD: Why don't you put her in charge? You better just start dealing with. [48:06] Don Trone: But I needed Your hint there, J.D. by the way, I suck at this type of stuff. [48:10] Chad: Brad, you put in the chat. [48:12] Don Trone: Yeah, I saw the episode when you guys did this with John Sullivan. Man, he nailed that stuff. [48:20] JD: Yeah, we fed him those answers. All right, Number two, You'd better tell the captain we've got to land as soon as we can. [48:32] Don Trone: This woman has to be gotten to a hospital. Oh, yeah, Airplane. [48:34] Chad: Mind, [48:37] Don Trone: that's not important right now. [48:39] JD: Correct. You're two for two, Don. For some, they suck. You're doing pretty good. All right, another one. [48:51] Don Trone: Why did you kiss my ear? Why are you holding my hand? [49:00] Chad: Where's your other hand? [49:02] Don Trone: Between two pillows. Oh, those aren't pillows. Planes, Trains and Automobiles. [49:15] Chad: I had no idea what that one. So long since I've seen that movie. [49:19] JD: Mike, you're three for three. Three for three. We'll leave it at that. Brandon, we've got nine minutes left. Actually, you got another one queued up, right, Brandon, one more if you have it. [49:33] Don Trone: My office is right across that hall. [49:35] Chad: Any monkey business is ill advised. Any questions? [49:41] Don Trone: Yeah, I got a question. [49:44] Chad: Does Barry Manilow know that you raid his wardrobe? [49:47] Don Trone: Oh, yeah. [49:49] Chad: Question, Mr. Bender. Next Saturday. Well done. [49:53] JD: I'm claiming Don crushed it, bro. That was like. [49:57] Chad: He didn't even need help either. That was clean. [50:00] JD: He didn't need any help at all. [50:01] Don Trone: Yeah, right. [50:05] JD: We want to see the movie he was in. Yes. [50:08] Chad: Oh, yeah. Bring it. [50:09] JD: Clip and see who can guess. See if the audience can guess. Here we go. [50:17] Chad: Got it. [50:31] JD: I'm not seeing anything from the audience. [50:34] Chad: It's an oldie. [50:34] JD: It's an oldie. Blake got it. [50:38] Don Trone: No, Blake got it. [50:39] JD: Cocoon. Cocoon. And we couldn't find the clip of Don, but he actually. Don, you explain your clip. I'm not gonna explain. [50:48] Don Trone: So if you're familiar with the movie Cocoon, first of all, most of the movie was shot at the Coast Guard air station in Clearwater, Florida. So for three months, we had all the staff. Ron Howard was the director. Great guy, just as genuine as come across. And Ron Howard loves helicopters. And so whenever he can try to work in helicopters into one of his scripts, he will. So in the movie Cocoon, the ending has elderly people from a retirement village escaping on a boat for the purpose of being uplifted into an alien spaceship. And when the facilitator, the people running the retirement village, realized the people were gone, they say, call the Coast Guard because they see this boat going off. So the next scene then is two Coast Guard helicopters taken off. And I'm on the far side, and we begin to track down this boat. And as we do, this fog bank comes in that's been created by the spaceship. And in an extremis, the command is speed selectors, full forward, wheels up. So that was my line. And in the movie, you'll see the cameraman is sitting over my right shoulder, filming into my helmet and into the. Into the cockpit. So that's my. [52:29] JD: Wow. Very good. And I love how you. I love how you name drop people like Ron Howard and Schlichter all the time. [52:36] Chad: Get them in there. [52:38] JD: All right, let's move on to the last. [52:39] Chad: Hold on. I'm just curious. Don't you get paid for that? [52:42] Don Trone: Yes. Yeah, yeah. That. That is your qualification for the Screen Actors Guild. [52:49] Chad: That's your retireholic story right there. [52:52] Don Trone: Like, yeah, that's paid for that. [52:53] Chad: We get paid for this? [52:55] Don Trone: Yeah. Yeah. So you're paid for this. What? [52:58] JD: Yeah, they paid him with a bottle, A really big bottle of Tito's. Okay. [53:04] Don Trone: Not. Not even. I'll tell you what was. What really was. Ron Howard sent me a personal letter afterwards saying that, you know, the whole experience was more than you ever. You know. And in turn, I got one of the movie marquees, you know, the posters outside, and the letter was cut into the marquee. That was really cool. [53:30] JD: Nice, Chad. We're only Jessica Alba next week. [53:33] Chad: Yeah. And Tom Hanks. [53:35] JD: I'm in. Okay, Don, as I go through a lot of your stuff, the theme that I get from you is one that kind of confused me at first, but it's soaked in, and I really get it, and I'm a huge fan of it. You talk about these leadership qualities. Integrity, stewardship, all these things, and I'm kind of sitting there as a 401k guy going, come on, man, get to the actual F stuff, you know, and the operations and processes. But after listening to a ton of your stuff, what I've learned is that you can't be a good fiduciary if you don't have. And it seems to be the centerpiece of everything you teach and talk about. So when integrating leadership and stewardship into this whole thing, is that something that has to come before being F word along with it? I mean, how important is it. [54:36] Don Trone: Yeah. Now, what we would say it's critically important. In fact, if I was. Again, the way we train the retirement consultants is the retirement consultant working with a new plan sponsor would start with. With the conversation. Before we talk about F and all the duties with it, you've gotta understand your leadership and stewardship role in managing this plan, because if you don't get leadership and stewardship, then all the work we're gonna be doing is for naught, just gonna be spinning our wheels. Furthermore, they like talking about leadership and stewardship. You know, you sit down with a plan sponsor, the typical plan sponsor, and say, you know, before we get started, we got to talk about your f responsibilities. They're tuning out. [55:28] JD: But if you start, you know, where this blends for me, Don and Chad's going to back this up, and you guys, with all your Point of sale. Experience. We all know how important trust is. Like to walk into that room with a plan, sponsor a prospect, and win their trust is probably the undebated number one thing that has to happen. Right. They've got to trust you. And it seems to me that the best pathway to trust is all this junk you're talking about, Mr. Troan. Right? [55:59] Don Trone: Yeah. There's three things. The neuroscientists know exactly how to get the trust. Three things have to happen. You know what those are? And by the way, during a crisis, the crisis we have right now, everything you just said, multiply it by a factor of 10. Three things have to come together. The first is compassion. Second is character. Third is competence. Biggest mistake retirement advisors make in their presentations, they're focused all on the competence component. [56:34] JD: Right? [56:35] Chad: Right. [56:36] Don Trone: We also know during a crisis, what matters most to clients are the first two items. Compassion and character. Competence. Less so. [56:49] Chad: I'll argue that a bit that when I first started in this business, which wasn't that long ago, it was a little over 10 years, the confidence and the way in which we communicated as an industry was about making sure people knew that you knew your shit, you were smart. Now, I have seen a transition from that, especially the last three or four years, where that compassion and that ability to connect with the people in the room and to understand what they're going through and to be a resource for them and to help them see you as a peer has become far more prevalent than it ever was in the past. I don't know if that's true today. [57:35] Don Trone: You guys are proof of that. Think about who you invite on the show and how often is it because of compassion and character versus competence gets them on your show. [57:49] Chad: We don't invite them. They just. They just ask. [57:54] JD: Yeah, I just try to find the coolest people in the industry. Don. That's why you're here, buddy. [58:01] Chad: All I'm hoping for was to have you on. We finally have you, and now we're done. [58:04] JD: We're done. No, I think we're tapping into something that's very real, and I think you said it, Don, and I think it's still true today. You guys are there in point of sale. I think too many advisors walk in trying to show what they do and how well they do it and how cool they are, and instead of trying to make an actual emotional connection with the people in the room. And I know that sounds cheesy, and I know that sounds, you know, kind of. But it's true. You have got to Connect and win their trust. And you don't do that by showing them a handout that you created with six bullet points on it. You do that in other ways. And so advisors should focus on how they're going to approach that and how they're going to do it. [58:51] Don Trone: Yeah. I'm sure you guys have heard my joke. It's been around for 15 years. What's the difference between 338 and 321? [59:00] JD: No, but I'm gonna love this. Hang on. Don't say it. I have beer in my mouth. I don't want to split it on the screen. Go ahead. [59:08] Don Trone: 17. [59:12] JD: Brandon, do you have the monkeys? [59:14] Chad: The actual monkeys between 38, 21? There's 17 numbers in between there. Hold on. I gotta verify that on my calculator. [59:25] Don Trone: Yeah, okay. Yeah. [59:27] JD: I'm not sure how that joke has survived 20 years. [59:32] Don Trone: It's sad. You know, you go into. You see these guys, these professional, these people from our industry going into these final presentations, and they're told they got 30 minutes for their finals presentation, and they spend 25 minutes talking about the difference between 338 and 321. And all the client hears is 17. And in a court of law, there's going to be no difference. They're going to be both treated exactly the same way. [59:59] JD: I think Brad brought that up earlier. He said we need to make sure that we're not speaking in our industry lingo. I mean, come on, everybody, please understand that. Don't go in there with your 401k hat on and not talking about you, Chad, but. And speak our lingo. Talk about. I was speaking metaphorically, but go ahead. [1:00:20] Chad: But to Your point, though, J.D. not only our lingo, but understand, please, please understand the difference between 321 and 338 and what the actual difference is to the client. Like that liability what you're trying to shed. Because I think there are so many folks that get super excited that they can be a 338 and they're so excited, but the client doesn't see any actual difference in that. They still have a liability of hiring you. They know that they still have a liability of making sure that the procedures are taking place for adding and removing funds. Even though you're taking that on. There are many. I can't believe you've gone an entire show without saying the words procedural prudence. And we have dawn drone on right now. Well, it's because I used it last week. I used it too many times last week. [1:01:13] JD: Shannon. Edwards says, great show, guys. And dawn, you are awesome. That's her way of hinting to us that the hour is up and it's 8:30 where she's at Dawn. I'll also go to Bryant, I think threw it out there. And this can kind of be our close. Can advisors learn from you? If people are interested in this kind of stuff, this is your plug moment. Where do they go to check this out or learn more about it? [1:01:41] Don Trone: Yeah, just. It's simple. Don@3ethos.com and then we'll find out what they're looking for. [1:01:47] JD: Okay, you guys heard that. It's don@3ethos.com, [1:01:53] Don Trone: by the way. [1:01:57] JD: Let's figure this out right now. [1:01:59] Don Trone: If you're a Greek American, you use ethos. Okay? Ancient Greek. Where the word ethos came from is ethos. [1:02:09] Chad: So you're. [1:02:10] JD: I got it. If ancient is a good way to describe, we'll stick with it. [1:02:15] Don Trone: Yeah. [1:02:15] JD: Hey, no, we really appreciate you, dude. This has been awesome. I think we'd love to have you back. You clearly are an icon and a legend. Yes. Justin, what's up, Brie or T H [1:02:27] Chad: R E E C. Greg's comment there for your email, Don. [1:02:33] Don Trone: So, yeah, it's the number three numeric three. Ethos. Echo, Tango, Hotel, Oscar Sierra dot com. [1:02:43] JD: Military. Military. All right, everybody, it's been another words too. Thank you so much for joining our educational webinar. Please tune in next time. We love to have you. We're gonna play a little music for you now, so if you want to stick around, watch a nice little music video, go ahead and check it out. Thanks for hanging. See ya. [1:03:03] Chad: Thank you, Don. [1:03:04] Don Trone: Yeah. Thank you guys. [1:03:05] Chad: Thanks for joining us. Take care, guys. [1:03:09] JD: Thanks. [1:03:09] Chad: Don's that music, J.D. [1:03:17] JD: i lost it. [1:03:18] Chad: Make it up in your head, dude. [1:03:21] JD: You'll find it. [1:03:23] Chad: Bourbon was good. [1:03:25] Don Trone: I'll just. [1:03:25] Chad: I'll go with Beastie Boys. Just let it, Brandon. There you go. Planning. [1:03:47] JD: I know you plan it. [1:04:03] Chad: Oh, my God. [1:04:04] JD: It's so. It. It's. What could it be? It's a run. You scheming on a thing to sabotage it.