ESG in 401(k)s: Fiduciary Rules & Performance Data

[0:00] JD: Color smart bulbs for my TV room, my house. And it's life changing. [0:05] Chad: I don't even know what those are. [0:06] JD: I think she can, like, change the colors of her bulbs in her house, like with her app, like so. Oh, let me get a little green mood setting or whatever. [0:16] Chad: I'm looking them up right now. [0:18] Justin: Hey, Chad, remember, like the. The intruder alert ones I did? [0:22] JD: Brandon's starting the show with no volume. All the good shows start. [0:27] Justin: There we go. [0:39] JD: Yeah, yeah, yeah. A little upbeat. I set up my panelists here. Am I talking to everyone? I wrote this song myself. Acapella. Jingle bells. JD Smells. It's true. Justin never talks. Chad gives us nerdy nuggets, and Roby doesn't give a. Preston's on the show. Formerly from the ebsa. I'll drink. He spoke in front of Ways and Means, and they all have hair of gray. I just don't. [1:25] Mark: Clap for yourself. Don't clap for yourself. [1:27] Justin: I do it all the time. [1:29] Mark: That's not a good look, Brandon. [1:31] JD: Let's do headlines. Headlines, please, Bro. $13.4 billion is the price tag for National Financial Partners. Am I getting that acronym right? I don't know, dude. That. This is a big deal, man. This is an aggregator buying an aggregator which people like Dick. Oh, that's right. I owe for the. [2:12] Mark: Yeah, sorry. I did it. I wanted to interrupt your headlines, so I waited [2:18] JD: and. So this is something Dick Darien has been not warning us, just telling us this is going to happen. And here it is happening live and in color. National Financial Partners is a. Is a big shop, you guys. It's got 7, 700 employees and an estimated revenue in 2023 of just north of $2 billion. I broke that down on their. On their website, and it's broken down into 738 million is in property casualty. Again, this is their revenue they made. This is actually for 2022, but it's very close to the 2,738,000,000 property casualty, 1.1 billion in benefits in life, and 362 million in wealth and retirement. So very, very interesting. I. I wanted to ask you guys, does it seem weird that a company that does 2.2 billion in revenue, that someone is willing to come around and pay almost 13 and a half billion for that company? Like, I just saw first glance. I'll go to you, Chad. You're a numbers guy. Like, does that seem like a high price tag to you? [3:29] Chad: I mean, I don't understand the multiples in this space because it seems like everybody sees more value in the business and the opportunity that exists there than, than what math proves, as we've seen in so many of these acquisitions lately. They know far more than I do. Yeah, it seems outrageous, but clearly they're not dumb. [3:48] JD: I was, I was at first confused by it. I was like, wow, that's, that's crazy because that's like six, seven times revenue. And then I kind of dove deeper into the numbers and I will quote Dick Darian, I know Darian's get some shout outs on the, on the chat bar here, but I kind of started to do the math and I thought to myself, I need to put it more in my terms. Instead of billion dollars, I need to put it in million dollars. Would I pay 13 million for a company that generates $1 million in profit every year? Because I can imagine from that 2.2 billion, about half of that or a little more than half of that may go to their 7,700 employees and advisers. And I don't know, it may be more than that, that goes to National Financial Partners because I don't really know the payouts on health and wealth and, and property casually and all that kind of stuff. So maybe it's a little more. But I think it's safe to assume this kind of $1 billion in profit. So anyways, would I buy a company for 13 million that did 1 million in, in profit? Yeah, that can kind of make sense if you've got that kind of money to throw around. But now I'll add to this chat. Go ahead, Chad. [5:02] Chad: What I was just going to say, what are you going to trim? When you're bringing on a company of that size and you already have the business structure in place at aon, you're probably going to trim some significant expense that exists over there that you can scale with what you've already created. And you're going to create slightly greater margin to call it 1.4 million in your $13 million example, or 1.6 million. They're going to. [5:26] JD: That's a great question to ask, Justin, is you really can't trim the 7,700 people that are generating that revenue for you because they're, they're not expendable. But maybe you trim some of the smaller ones that aren't, aren't really cutting it and whatnot. Darian brought up this. And then we'll move on from this subject. Darian brought up the fact that they want to, and this is his words, not mine, that AON wants to monetize the participants and acquiring National Financial Partners will give them some synergy to do this. I'm going to read you the quote from Aon, which I find so corporate and so hilarious. But they, they expect to make 2.8 billion from this deal in extra revenue. And here's the quote. You ready for it? From the capital. This is where they're going to make their 2.8 billion. From the capitalized value and expected pre tax synergies and capital structure. What is that? Is that as foreign to you as. Who speaks like that? No, nobody. Preston, if you had 13.4 billion, would you buy National Financial Partners? [6:42] Preston Rutledge: If I had $13.4 billion, you're really asking the wrong person. Would I buy National Financial Partners? Well, probably, because if, if I had $13.4 billion, I would be much more interested in, I don't know, spending the rest of my life skiing, sailing. [7:09] JD: Fair enough. [7:09] Preston Rutledge: Drinking beer in Munich. [7:11] JD: Larceny. [7:12] Preston Rutledge: Drinking beer in Munich is what I would do with how much money. [7:14] Justin: If I have to have to spend 13.4 billion on a company like you got to be like 100 billion, 50 billion. What are we talking about? [7:23] Chad: That was one of the issues I have and I have forevermore, even before I was in this space is when you start to hear things like this, especially right now. You know, money's not cheap. And I start to hear of purchasing prices like that. I'm going. Aon's really just sitting on 13 billion for a sale like this. And I know they're financing a of it. And some of it is stock options. And yeah, it's half of it. Outrageous amounts of money. [7:46] JD: I think it's 6 billion or something in cash. And then the rest is stock options. [7:50] Mark: Because money's not real, guys. It's just not real. [7:53] JD: Those stock options are real money. Let's we can move on to another acquisition. Buddies at oaic, they had us at one of their conferences do a show. I had a lot of fun with Brian Brashaw on stage. Maybe one of the better guests we've had. He continues to impress me with his kind of industry knowledge and intelligence. But quick one here. They bought Lincoln wealth, which I think is about 1500 advisors. They offer financial planning, advisory services. And they've got a 71 billion in assets under administration and 38 billion in assets under management. And now OIC as a firm. Just give people some context here. And this was the old Advisor Group, recently rebranded as OSIC, which I think looks beautiful. They're north of 11,000 advisors and 500 billion in assets. So pay attention to Them and keep. Keep watching them and look at them. They're a big deal. Okay, we have a pretty fancy guest on our show today, and Justin, you have the pleasure of introducing him. So take it away. [9:04] Justin: Well, I went golfing again today. Anyone remembers that? [9:09] JD: Private messaging me. And I'm sorry, I haven't been able to read the chat. [9:13] Mark: All right, here we go. [9:14] JD: Wait, wait. Now Justin saying. Please don't ask me to intro the guest. I don't. Oh, sorry, Justin. Jesus. Joking. [9:22] Justin: Twas a night in November when his email made a chime. Want to join us for the finale of Holic Season 9? He thought for a moment and then rolled his eyes. Right before Christmas. These guys. He took a deep breath. He didn't want to dwell. This is a season of giving. What the hell? We'll talk us house ways and woke esg. Mosaic buys Lincoln and Aeon snags nfp. JD will be drunk, Chad will carry the show, Justin won't speak, and Mark for sure does some blow. But there's one thing he's great at, and he does it with ease. Want to be Rich? Uses drunk stock tip strategies. So pop a top, grab a glass, or your favorite drinking vessel. The honorable Preston Rutledge joins us for this Christmas special. [10:11] JD: Wow. [10:13] Justin: I was real worried you're gonna write a poem. [10:15] JD: A tan. Well done. Just. Gee, thank you. You're a much better poem writer than I am. I. I'm down on. You're pretty good. Done. Well done. [10:28] Preston Rutledge: Can I just. [10:29] Mark: Can I just say for the record that I'm not a drug guy. Just gonna say. [10:33] JD: Yeah, I wanna. I'll back Roby up on that. He does not do that. Those things mentioned in that poem. Robey, this next headline is right up your alley. I feel like. Remember we had quiet quitting. Well, apparently there's a new term called coffee badging. [10:55] Mark: Okay, thanks, buddy. [10:57] Chad: Yeah. [10:57] Mark: Really. Thank you. [11:00] JD: What this means is quiet quitting was. Hey, we're working from home. We just kind of phone it in, not do a lot of work and still collect our paycheck. But now the boss is saying, no, come on, you got to come back into the office. Even if that means just three days a week, we want you to come in and kind of show your face and do your work here at the office. And what they do is they show up, they get their coffee, maybe chat it up with a few people, swipe their badge. We never had badges at PDC office, but swipe their badge and then just kind of. Then just kind of do a. What's it called when you're drinking with your buddies and you slink away without telling anyone. [11:39] Chad: Like an Irish, Irish exit. [11:40] JD: Yeah. Then you just do a little Irish exit and head back home and put on your pajamas, back to work. Or maybe you're working. So Robey, this, are you on the side of the employer or the employee here with coffee badging? [11:57] Mark: Well, first off, I think it's a ridiculous moniker if you will, but I mean, I don't, I don't know just which side I'm on. Well, I guess, okay, I'll take the inside of the employer. Right. Because in this, in this context they're just saying, hey, you remember that we, we pay you to do a job and like you've been doing it at home for a long time. Well, now we're stopping that. Things are changing. So now we're going to go back into the office. So now you need to work kind [12:29] Chad: of a hybrid role. [12:30] Mark: Some at home, some in the office. So of course I'm on the side of the employer. It's, it's boohoo hoo, you have to go to the office now. Like, if you don't like it, find a new job. I'm sure there's plenty of remote jobs that you could find at different employers who will allow you to just fully be remote. But hey, they are your employer. They're setting a rule, I don't know, sack up and just go do it. [12:54] Justin: I hear you and I can't disagree with you. But I also wonder if your perspective would be different if we actually had to work from the office, then got to go home and do our job just as exceptionally well. And now we're being told to go back. [13:06] JD: I mean, there was a time when Mark had his own closed door office, so did Chad, and you guys would go there and kind of do office work before you ran out in your suit and tie. But Preston, you don't have to comment on coffee badging specifically, but where do you stand on this whole, I mean this whole work world has evolved quite a bit from work, from home. Show up some days during the week don't show up others. Like, where do you stand on all this? [13:35] Preston Rutledge: I enjoyed learning to work remotely, but if I, I'm thinking back to when I was, I was running EBSA, you know, 8:35 employees. When it, when Covid first hit, during the emergency, everything went very smoothly. Everybody working, working remotely. But unless there's some, you know, big urgent problem like that, no, you want people in the office. [14:04] JD: We don't have we don't have a worldwide pandemic anymore. Right. [14:08] Preston Rutledge: Yeah, it. There's a time and place for everything. And, and I was very impressed at how well it worked and how technology allowed us to do that. But you're also. I think, I think people should come back to work if that's what the business, you know, model needs and that if that's, if that's what you have to do to do your job and satisfy your customers, yeah, you need to come back to work. [14:35] JD: Obviously, it's gonna, it goes without being said that it's gonna vary from company to company and industry to industry. Our internal sales consultant, Devin, chimed in on the chat. We're like, you're wasting gas. And I, I love that. That's the younger generation vibe of like, kind of like, why am I going in to do this when I can just bang it out at home? But so again, it varies from different industries and different companies. I personally, that's not the point. The point is the fact that these [15:01] Mark: employers have said no more. We are having you come back in and really is what it is. [15:06] JD: Can I tell you. And so that's not called coffee badging. Like, this happened before, COVID That's called going to work and just fucking leaving before you're allowed to. Like, you're not ditching work. That's what we called it in the old well. [15:22] Mark: Because nobody's really paying attention. And if they are, they're just looking at logs of who actually came in today and there's so much commotion that they're not actually paying attention. So people always take advantage of a situation if given the opportunity. [15:39] Chad: I think I'm far more ruthless than, than you guys in this situation. Like, number one, if you are hired in a job that requires you to come into work, or we've made a transition to allow you to work from home and now we're requesting. That's your fucking job description. If you don't want to do it, then you should be fired and you should have to find a job that does fit the lifestyle that you want. [15:59] Mark: Isn't that what I said? [16:00] Chad: Basically, yeah. But I don't feel like Justin and JD are in the same boat. And I'm. [16:04] Justin: No, I didn't say. I said I didn't disagree with it. But I'm just curious about if perspectives would be different. [16:09] Preston Rutledge: For sure. [16:10] Justin: You know, the issue. I mean, I have. [16:12] Mark: If JD told us tomorrow that we had to go in the office, yeah, I would be. I'd be like, bummed, but, dude, I would. I Would do my job. If I didn't like it, if I didn't want to go in the office, then I would find a new job. [16:24] JD: Well, we used to make up stats on the show, so I'll, I'll continue that trend. I read something somewhere that when it [16:29] Preston Rutledge: comes, when it comes to if you're going to take the pay, you're going to have to stay, so you got to get in the office. [16:35] JD: Wow, you're like defending oj. Oh, I'll drink for that. What was I just going to say? Don't worry about it. Okay. Oh, 64% or something of employees that work from home now that have employers that are asking to come back to work in the office say they're going to look for a new gig where they can work. They're so in love with working from home that they want to continue to work from home. [16:59] Chad: And they should. But don't quiet quit. [17:01] JD: Yeah, right. [17:02] Chad: I'm gonna go find another job because I'm a reasonable human being and I'm not gonna screw over the company that's been employing me and paying me. [17:08] Mark: Oh, Chad. Oh, Mr. Righteous. Shut up, dude. You gotta get paid to find the new job, dude. You gotta use company property, your resume and think. Come on, dude. [17:18] JD: No. Everyone, Chad applied for life insurance and they asked him if he smoked and he's like, well, I did that one [17:25] Mark: one time in 1973. [17:27] Justin: The cost of how much money? [17:29] JD: Spin the wheel of ice. [17:35] Justin: I feel like it's going to be you today, Mark. [17:38] Mark: If it is, we have a problem, boys. [17:40] Chad: I'm on so much. [17:46] JD: Okay, this works. I'm gonna. What we're gonna do while I pound this wheel of ice or this. While I pound this wheel of ice. We're all going to learn from a Preston. How'd you like to make some more money in your life? How would you like some stock advice that can never go wrong? It's, it's, it's, it's by that. And we're gonna do drunk stock tips. And you might learn a little something here, Preston. [18:13] Preston Rutledge: Thank you. [18:23] Justin: You very good point is Jamie Samson has a very good point. [18:31] JD: What's that? [18:32] Justin: Is Roby even drunk yet? [18:34] Mark: No, bro. [18:36] JD: All I can tell you future shows, the intro to drunk stock tips is the perfect amount of time it takes me to pound a swearing off ice. I just want that record. That was solid, Roby. I had intentions of going back through your. Your history of stock picks. I'll save that for the new year and we'll do kind of a nice 1231 wrap. But just as I kind of put the numbers together and then I got too lazy to finish it off. The surf's been pretty decent the last few days. I. I can't tell you. It's going to be absolutely phenomenal when you guys see Robey's 2023 returns for the year. He's a goddamn savant. That's pretty much what you're gonna think. By the way, Roby, you loved scooters. Every town we traveled to. You love to ride those little scooters. And we were at a live show. [19:30] Mark: Wouldn't say I loved to ride them, but go on. [19:33] JD: And we asked you if. If we should invest in Bird. And I think bird was at $3 and something at the time. And you said, no, no, no. Sell it. Yes. Thank you, Ed. Chapter 11, bro. That shit's. I'm wondering before I ask you about this new stock. Do. Does. Does Robey or anyone here or anyone in the chat are. Think that maybe Rogue guy had some type of effect on that? Maybe the world heard that you said sell and you sent that stock tumbling down? Yeah. [20:05] Justin: Kind of like Mark. He was writing it. Wow. [20:08] Mark: That's just great, guys. [20:10] Chad: Good. [20:10] Justin: All right. [20:11] Mark: Great memories. [20:12] JD: News do that new stock. And I don't know why I'm sticking with this kind of golf theme or. This isn't actually golf, but they. Tiger woods played in his first tournament a few weeks ago. And then he played with his son recently in the Father Son or. Or I shouldn't say father son. Annika played with her son too. So Mother son, Mother daughter, whatever tournament, Family tournament. And it's a lot of fun to watch. If you don't watch it, you should watch it. But they asked Tiger. He's been wearing foot joys on the course. And. And we actually. You. You Talked about the FootJoy company if like a month ago or something. Robey. But the stock today is Nike. Everybody knows Nike. Just do it. The rumors are that maybe Tiger will no longer be wearing Nike. When. When interviewers asked him, he said, I'm still wearing the clothes right now. Today. That was his answer. Are you leaving Nike? I'm still wearing it right now. Didn't say. Yes. I'm staying with them. No, I'm not. Just. I'm still wearing it. Obviously, Nike's much bigger than Tiger woods, but. Robey, take it away. Do we add Nike to our portfolio or do we short this? Like, what do we do, buddy, you know? And why. [21:31] Mark: I usually don't ask questions, but you want to know how to look it up on my second screen. But how are things? [21:38] Preston Rutledge: How's it going? [21:39] JD: Things have been pretty good. Very good. Over the last three months. The stock's been up almost 35, 36% since September. If you look at the six months, it's still up, not as much. And year to date, it's barely up. So, yeah, it's kind of a. There you go. Thank you, Brandon. Maybe pull like a one year or two year number for Robey, if you could. [22:08] Mark: Yeah, I mean, it's my, My, my. My absolute initial gut reaction is that's one of those kind of staple stocks, right? That's Nike is name brand. It's. It's just a stupid check mark that is evolved into something greater. Obviously, Tiger woods shot them into the. The atmosphere when he. When he took golf to another level. They fell out of that. They fell out of that because they realized that golf is tough to overcome. All the other brands. [22:45] JD: Are you saying they are leaving golf? Is that. [22:47] Mark: No, they. They mean they stopped making clubs a long time ago. Balls, all that. [22:52] Chad: Right. [22:53] JD: Scheffler and Brooks Kepka. And they got. [22:56] Mark: Yeah, they're apparel and shoes and all that. And. Yeah, I mean, at the end of the day, who else is on their roster? None other than LeBron James and Giannis and hell, Kobe rest in peace, like, he's still a part of their. Brandon. [23:15] JD: Right. [23:15] Mark: Going any. Well, I was gonna say Nike and Jordans are two siloed entities, but there is some overlap there in some regard. But this is. This is a buy. No doubt. It's. This is an easy buy. This is. I would equate this to like a Disney thought where you're just saying, look, I need something that's gonna be pretty consistent, and I'm acting way too serious, like I know what the I'm talking about right now. Here's what I'm gonna say. When I walk into a shoe store, I don't go buy Skechers. I buy Nikes. Pretty simple. [23:47] Chad: All right. [23:49] JD: Preston, are you a Nike fan? Oh, no. Am I losing Preson? Preston, by the way, don't be a boomer. Don't be a boomer. Don't be a boomer. And mute. [24:05] Preston Rutledge: I'm having technical difficulties. [24:07] JD: Okay. Don't mute yourself. All right, Work on it, buddy. We got your back. Although I'm coming to your big category here in a second. Okay, so it's a buy. I strongly suggest everyone follows Robe Guy's advice. I am. And it's making me rich, so. Making me rich. Stay Tuned in January when we go. [24:31] Mark: No, let's. Let's be clear, jd. It's making you rich. Er, because you were already rich. [24:38] Justin: By the way, we just lost our guest. [24:41] Chad: He'll be back. [24:42] JD: Yeah, he's. I think he's gonna go change Internet. [24:44] Chad: Eggnog and bourbon. That's quite delicious. First time ever. [24:50] Mark: The standard eggnog edition is brandy, right? That's what you usually. [24:54] Preston Rutledge: Hey, can I. [24:55] JD: Guys, Can I guys tell you a real, a real truth? You could put. [24:59] Preston Rutledge: Hey, I'm back. [25:00] JD: Yeah, buddy. You could put urine in eggnog. It would taste great. Okay, let's say. [25:07] Preston Rutledge: Brandon, Brandon, you need to. [25:09] Mark: You need to cut that out. Clip that. [25:12] JD: Tell me that's not true. Tell me that's. [25:14] Mark: No, you're right, jd. That, that stuff is thick and nothing can cover up its delicious taste. [25:20] Preston Rutledge: We've got. [25:21] JD: We've got a. Another thing I think that's really important to talk about. There's. There's potential legislation around Roth. So the national association of Plan Advisors came out with an article in December fairly recently from our good old buddy Sully John Sullivan titled New Roth 401k rollover legislation introduced. This is. This is a pretty big deal like this. This has been a problem for a while, Chad. You can't tell me that your little nerdy bones don't get excited when you think about the fact of rolling over Roth individual retirement accounts into 401k. [25:59] Chad: So initially, as I started reading this, I just started getting into a spiral of going, why has this been the case for so long? Why have we not allowed this to happen in the past? And I couldn't come up with any real logical reason. So perhaps you all are pressed and can fill me in. But what I did think about is how much Roth money is going into the retirement plan space moving forward. We have state mandated plans that are going to hit these individual retirement accounts that are Roth forced. We're going to have some significant Roth contributions. If we force catch up to be in that bucket, those dollars will roll out of plans and hit Roth individual retirement accounts. And they want them to be movable. So think, why now? Well, it makes sense. Why now. I actually get it. Why now. What I don't get is why not in the past? So yeah, does it make me excited? It does. But we have so many stupid decisions that have gone through Washington. That seems like another one that probably should have been changed decades. [26:51] JD: Preston, Preston, this is right up your alley here. You probably even know the names on that article. Take a stab at Chad's question and then tell me how you feel about the. Whether you're positive or negative on this. But why, why now? Why, why not? Why we not been able to roll Roth individual retirement accounts into our 401k? So [27:17] Preston Rutledge: it wasn't that anybody. Congress didn't make a conscious decision to not allow it. The way our pension law evolves is, you know, we get a bill and then we get a law, then they do an amendment, then they do another amendment. It's like you build a house and keep adding on additions. It's the order in which things go. We created, we created 401k in 1978. There was no such thing as Roth then. Then they created Roth, then they created Roth accounts in a 401k. It isn't that he consciously decided not to allow it. They just never got around to it. Maybe they didn't notice it. Nobody raised. It's like when you keep adding additions onto your house and you look back and say, why didn't I do, why didn't I build a stairway to this room when I was building that third room? Oh, first, sorry about that. You didn't decide not to build a staircase. You just didn't think about it. Now you're going to go back and do it. So why now? I think Chad's. Chad is onto something. I think it's the state IRA programs are growing and the goal, the policy goal is ultimately to get people into four 1Ks. And now you've got the starter K as an example. That's, that's something in that direction. If, if an employee, if, if a worker is, has got a Roth ira, a Roth IRA through a state program, then the employer finally decides, hey, maybe I'll start. Do a starter K. Maybe I'll have a 401k finally. Or they go to work for somebody that has a 401K. You want into the 401K system. So it's, it's sort of, it's sort of the, the stars aligned and it became something that was very much worth doing. Sorry. [29:05] JD: Chad, Chad, Chad. Just let, let go. Get ready, Preston. I think you owe us three or four, Mark. [29:11] Mark: Well, you're sitting at four. I don't know if you ever took the first one, but you definitely just had, had three that just occurred over the last second. [29:18] JD: Wigs. Go ahead, Chad. [29:20] Chad: Why? [29:22] Preston Rutledge: How many? [29:24] JD: Three. [29:27] Preston Rutledge: Three. [29:29] Chad: Five. [29:31] JD: Come on, Chad, give him a break. [29:35] Chad: I don't remember what I was gonna say now, J.D. that's what, that's what. Coldness. [29:42] JD: Well, here, let me Give you a quote from Brian Graff. Brian Graff. [29:46] Chad: Oh, oh, hold on. I got it, I got it. Let me ask real quick why Preston says we want money in the 401k? Why the 401k in particular versus sitting in an individual retirement account? [29:57] JD: Okay, can I, can, can we have Brian? [29:59] Mark: Go ahead. [30:00] JD: Preston, you're here. [30:01] Preston Rutledge: Brian, once you're in a 401k, the deferral limits are so much higher, people can save a whole lot more. [30:07] JD: Yeah, but that doesn't. That's not about your money over here. Let me give you Brian Graph's answer to that, Chad, because pretty much is what you what you asked him. And cue the butter beer graphic. Now if you haven't, Brian Graph says allowing workers to move their Roth individual retirement balances into designated Roth accounts in workplace retirement plans. Why don't you just say 401. Jesus Christ. Would benefit workers in several ways, including the reduction of duplicative fees inherent in maintaining multiple accounts. Okay, put a picture. I'm not sure I agree with that. Mr. Graph, I love and respect to you, but duplicative fees. Okay, well, we can discuss that. And reduced retirement savings leakage. Okay. By allowing the same. [30:57] Mark: Leakage should not be terminology used. [31:01] JD: By allowing the seamless transfer of Roth savings through the auto portability process. New and developing. And to Chad's point, Brian backs you up, Chad. These changes will be even more important as state auto individual retirement plans grow. So he backs you up on that. So that's one reason as the state run plans. You brought that up your very self, Chad. Grow. You're going to need a place to kind of consolidate. [31:28] Chad: That wasn't really my question. Oh, I, I get that and agree with that. I guess what I was saying is Preston was making the point of we want money to eventually hit the 401k and I was just confused as to why that would be. My thought initially was because it's more easily tracked and we can keep better record of what money is where from a government perspective, if it's sitting in 401ks versus it sitting in individual retirement accounts, you can take loans from 401ks and you can't from it. I, I don't know. I don't know what the other reason would be. Why we would feel the need. Apparently consolidation side. [32:03] JD: Apparently. Apparently there's this thing called duplicate. Duplicate fees. What Preston, do you think you experience more fees being in a Roth individual retirement account and a 401k account at the same time? [32:22] Preston Rutledge: I, I think there's this I don't know if it's correct or not, but there's certainly a sense that if you have. If you have a PL proliferation of multiple IRAs and 401k accounts floating around and every one of them's got their own fee structures, why not consolidate and get. Simplify the fees? You know, in Australia, that's been a big problem where they've got their superannuation funds and people run around, they end up with working for somebody for a while, then they move and they get another account and another account and all the accounts are. Have their own fees and, and you know, the fees eat up the assets. [32:56] JD: And I get, I get having. I get having one set of fees that you can kind of wrap your brain around. There's some value in that. But I don't think Brian's right there when he says that you're. You're not doubling up on 3% of [33:10] Preston Rutledge: 3% from your fees in the IRA and your fees in the 401k. I see where you're going. [33:16] JD: Bring them up. I would argue, Preston, that some of your fees in an individual retirement account, no offense to financial advisors, but especially if you don't have an advisor and you're just went straight to a brokerage through Charles Schwab, are probably cheaper than the fees you have in your 401k plan. Says the guy who loves 401k. So I, I don't agree. I. Right, yeah, go ahead. [33:43] Preston Rutledge: I. I think there's also. You got to remember that the, this is legislation and members of Congress like 401k. And they want to know. [33:54] Chad: They. [33:54] Preston Rutledge: They want to improve 401k. They spend a lot more time working on 401k than they do on IRA. [34:01] Chad: I don't see any negative in this. Like, I don't see any negative. [34:06] JD: Chad talks. Pressing. You need. You need about three or four drinks. [34:09] Preston Rutledge: Sorry, Chad. Is. [34:10] JD: Am I. [34:10] Preston Rutledge: Was I supposed to say individual retirement Account? [34:13] Chad: There it is. [34:14] Mark: Yeah, that's it. That's. That's a good one. [34:16] JD: Preston. Let me clue. Let me clue you in a little bit. Whenever your big, beautiful face goes up on the screen and you hear all those little bells, you need to drink from your penalty. Drink. [34:25] Preston Rutledge: That means drink. [34:26] JD: Yeah, go ahead, Chad. [34:28] Preston Rutledge: All right. Okay. I think I heard the bells twice. [34:31] Chad: Yeah, I said it, Jenny. I don't see any negative. This. I think it's a good thing. I'm just curious as to why sometimes we know they're spending time and effort on legislation and curious as to what maybe there is that I'm not thinking of. [34:46] JD: Yeah, I'm with you. I. I think it's a good thing. And it is kind of weird to think like, well, why haven't we been able to do it? I might have remember myself in my career 10 years ago looking at those kind of rollover charts and being like, why the hell can't we roll this over? You know, but maybe my timeline's off there. Did we have Roth and 401k 10 years ago? I don't know. But. But this is a. This is a good thing, so it's fine. I don't see any reason to push against it. And if you can consolidate, maybe that's great. And by the way, maybe you do have a kick ass 401k plan. And maybe it's got a stellar lineup of funds and it has great fee structure because of either its assets or whatever it negotiated. And that's a better place for you to be. So I'm all for consolidating your money. Preston, what do you say we play little game, we put you in the hot seat. It's not really a hot seat. Don't worry, you're not going to offend any of your Washington D.C. i'll drink for that. Friends, I call this Christmas movie guest game. That's Santa after he. He was supposed to deliver presents and he got into the. The family alcohol cabinet and pass out on the floor. But Christmas movie guest games, I'm gonna give you, I think for audio only. From a movie. From a Christmas movie. So you just open up your ears, listen and see if you can guess the very popular Christmas movie that you are listening to. And if you get all four correct, every one of us will literally drink like something that will kill us right now. [36:34] Mark: Oh, we don't get to guess. [36:36] Preston Rutledge: Harry, what if I get why the [36:37] JD: hell you take your shoes off? Why the hell you dress like a chicken? Easy, I'm up here. You. You can get help from the chat [36:49] Chad: at the chat bar. [36:51] JD: Home alone. Yeah, there you go. Ding, ding, ding. One out of one. Wow. You're gonna struggle with this game because I think they progressively get harder. All right, everyone quiet. The next one, please. Brandon. Thank you. I'm here with my dad. We never met. And he sing him a song. [37:14] Preston Rutledge: There's elf, an acronym. [37:17] JD: I was adopted. [37:17] Justin: Adopted. [37:18] Chad: But you didn't know I was born. [37:20] Justin: So I'm here now. [37:22] JD: I found you, daddy. [37:24] Preston Rutledge: And guess what? [37:25] JD: I love you. I love you. I love you. Well done. You're two for two. And guys, if he gets Them all. We need to, like, seriously drink some. I got a gnarly vodka thing going on here. We got a pound. Okay, take down the smearn up. I've been drinking a lot of vodka in my free time. All right, Preston, the third one. Here we go. I was always kind of partial to Roy Rogers, actually. [37:55] Justin: Yes. [37:56] JD: I really like those sequin shirts. [37:58] Preston Rutledge: Do you really think you have a chance against us, Mr. Cowboy? [38:05] JD: Yippee K. [38:11] Preston Rutledge: Someone something. Come on. I need a life. Can I have a lifeline? [38:15] JD: They've been cheating for you in the damn chat bar. You little. [38:19] Preston Rutledge: I got a bad Santa. I gotta remember to read the charm. [38:23] JD: No, he's. [38:23] Preston Rutledge: He's got. Thank you. Chat bar, bad Santa. [38:27] JD: No, no, sorry. [38:30] Preston Rutledge: That's Bruce. You Almost Die Hard's not a Christmas movie. [38:37] Justin: It is a Christmas movie. [38:40] JD: That's a. That's a debate, right? [38:43] Preston Rutledge: Isn't that the one where the guy gets stuck in the elevator on the 95th floor and can't get out? [38:48] JD: Yes. [38:48] Preston Rutledge: Yes, that's Christmas. [38:50] JD: That's simplified a little bit. Yeah, it is definitely a Christmas movie. I agree with Samson and sure is a Christmas movie, says Ed. All right, well, we'll give you a chance to save some face. And lucky you, Preston, because this next one is right up your alley. I feel like I'm being offensive now. [39:08] Preston Rutledge: Say that. [39:09] JD: All right. [39:09] Preston Rutledge: Br. [39:09] JD: Play. What is it you want, Barry? [39:13] Preston Rutledge: What do you want? You. You want the moon? [39:16] Chad: Just say the word, and I'll throw [39:17] Preston Rutledge: a lasso around it and pull it down. It's a Wonderful Life. That's a pretty good idea. I'll give you the moon. I knew you'd get that one. [39:26] JD: That, by the way, that's. That's one of my favorite Christmas movies that really. [39:30] Mark: As a. [39:30] JD: As an entrepreneur who runs your own business and makes payroll for a lot of people, that movie resonates with me every year of, like, kind of the drama of it all and everything. So I think it's great. Three out of four. I think that equals Justin drinking his smear off ice. I think that would be. All right. [39:52] Justin: I guess I got to do something on the show. [39:53] JD: Let's. Let's get to the thing that we. I think we actually all came here for, which is you sitting in front of the Ways and Means Committee of our United States government and tackling the issue of. I can't use the acronym environmental, social, and governance funds as they specifically relate to retirement plans. And just to kind of set the stage. And then I'd like you to kind of let Us know how that experience was. Actually, screw that. [40:32] Preston Rutledge: You. [40:33] JD: You got in the front. You were the very first person to answer to the committee. And Brandon has a clip of this that I'd like everyone to experience. Just the first minutes or so of what went down. Go ahead. Thank you for joining us today. Your written statements will be made part of the hearing record, and you each have five minutes to deliver. [40:52] Preston Rutledge: Open. [40:53] JD: This guy seems like a fun guy, by the way, Preston, speaking of the mic. What are you doing, bro? Come on, the world's watching. [41:06] Justin: Let's. [41:06] JD: Let's make sure that you have a working microphone. God damn it, Preston. What the. [41:12] Preston Rutledge: Oh, he's mad at his staff. [41:14] Chad: Look at him. [41:14] JD: Look at his face. He looks. [41:17] Preston Rutledge: Yeah, he's staring at the IT guys. [41:19] JD: He's like, dude, Tommy, were you nervous? [41:22] Mark: Preston? [41:23] JD: Like, were you. Were you nervous right now? [41:25] Preston Rutledge: Yeah. [41:26] Justin: Do you think. [41:26] JD: Can you move Mr. Isaac's microphone over to Mr. Rutledge? Look, now he's. Now he's telling him what to do, how to do his job. [41:33] Preston Rutledge: He's telling the IT guy how to do his job. Hang on. Sorry, I didn't mean to. [41:39] Chad: You pause. [41:39] Preston Rutledge: Can you freeze that picture right there? Can you stop it? I have to point something out. Yeah, you stopped it. [41:45] JD: Yeah, we did that. [41:47] Preston Rutledge: That wonderful woman right over my left. My left shoulder, that's my wife, Julie Gackenbach. [41:51] Mark: She was supporting. [41:53] Preston Rutledge: Hello, Julie. [41:56] Mark: Look at her laughing. [41:58] Chad: Yes. [41:58] Preston Rutledge: Yes. You hear me now? [41:59] JD: Yes, we can. Thank you. [42:01] Preston Rutledge: Sorry, I didn't mean to say it quite that way. [42:02] JD: You already said, can you hear me now? [42:05] Preston Rutledge: Well, we gotta back that up. That was my. That was my high point, by the way. You gotta hear me now. [42:12] Chad: By the way. [42:13] JD: When I was watching it, Preston and I unfortunately watched all four hours. God save me. I saw your notes for what you're about to say there and. Wow. What. What font size was that? 36. On your paper. I mean, you had some big ass letters on your little paper in front of you. [42:32] Preston Rutledge: See? [42:32] Mark: Really? [42:32] Preston Rutledge: Could you see that? That's too bad. That's what happens when you leave the government. They don't. You don't have a teleprompter anymore. [42:39] JD: 1. 1 paragraph and 6 pages of notes is what he had to read to the people. Okay? Now, all the funny stuff aside, here you are. [42:48] Preston Rutledge: Yeah. [42:49] JD: Sitting in front of our. Our government, the people that make our decisions. And the topic is these. These ESG funds I'll drink and are they appropriate for 401k plans? And we all. I think everyone in this industry knows the details of this, unlike a lot of those gray hairs that you were speaking to there, that, okay, this is not an individual account. This unfortunately or fortunately is an employer sponsored retirement plan that is under the laws of erisa. And therefore we have to, as plan sponsors, act in the best interest of participants and nominate things. Nominate or decide on things like what a fun menu might be or more importantly, and this comes up in this subject, what a qualified default investment alternative might be and whether that's appropriate. This gets lost a little bit in the four hours. I won't kind of digress here and talk about my lack of, of fondness of the government right now and their ability to try to intelligently discuss something for four hours. It must have been super frustrating for you. But for our audience just kind of set the stage, like, what was the purpose here? And maybe you can give us a little history in terms of Donald Trump's administration and then what Biden came in and kind of changed in regards to the default fund, fund ability and the whole kind of political back and forth that's happening here. Maybe that's a lot. [44:25] Preston Rutledge: Yeah. First off, let me see. There's a lot less here than meets the eye. When you, when you watched my opening statement, I tried to make the point that in, in all the decades since they've been, since, since the DOL is usually, by the way, this is a, a subterranean issue. The DOL has done all the guidance on this over the years, not the IRS or Treasury. [44:54] JD: Keep talking. We'll just, we'll count them up. Keep talking. [44:57] Preston Rutledge: My. About tonight. Okay, I'm up to nine. Got it. So the basic rule hasn't really changed over the decades. You can't accept lower returns or higher risk in the pursuit of a collateral benefit. And that's based on the way the statute reads. You mentioned, you know, the, you have to operate the plan solely in the interest of the participants for the exclusive purpose of providing benefits. And that's a pretty strong word. And so the government has struggled over the years to give advice to folks who ask, well, does that mean we can't have a secondary purpose? Does that mean we can't have a different purpose? And the answer really has been very consistent all the way back to the 80s when you saw the first bits of informal guidance right up through the Biden administration rule. And it's right there in the regulatory text. If you go look at it today. You can't accept lower risk, lower lower returns or higher risk in pursuit of collateral benefit. I've got a cheat sheet on how things have changed, on how the two different administrations. And I'll just compare Trump and Biden, but truthfully, it goes back to the Clinton and the Bush administration and then to the Obama administration. They back and forth, back and forth. We called it ping pong, but really it always came down, always comes down to like three things. How do you talk about it, how do you document it and may you default it? So what I'm, what do I mean by how do you talk about it? You, there's two ways to say what you to say whether an environmental, social and governance factor. Investment is okay, you can go, you may focus on those factors. If it's prudent, that's the way the Democrat administrations have phrased it. Republicans tend to phrase it. You may not focus on an environmental, social and governance factor unless it's prudent, but they always end up in the same place. If it's prudent. Yes, you do it because we have a principles based rule here. The principle is prudence. You don't have a prescriptive rule like this is an acceptable X stock, X is an acceptable investment stock Y is not. We don't. That's not how our system works. It's always about prudence. And then you'll notice in the Republican administrations, they always want you to document. More specifically when you do that kind of investing to make sure you have, you can prove your prudence. Well, there's always been a general doc, it's always best practices to document. But the Democrat administrations don't like having special highlighted document requirements. So they, and then finally the default, you mentioned the qualified fault investment alternative. Trump administration said, nope, you can't do it. You can't default it that way because the person by definition hasn't made a decision. Now you're making a decision for them about an investment that they, you know, it may be, you know, politically, you know, painted or something. Democrats say no, if it's prudent, it's prudent. Shouldn't matter if it's a default investment or some other kind of investment. If it's prudent, it's prudent. And those, those are the big differences. Strict default requirements, strict documentation requirements, you can't default. You can default those. But at the end of the day, the basic principle hasn't changed over the decades. And it really didn't change between Trump and Biden either. [48:44] JD: I get that. And I think you did exactly what I asked you to do. So thank you for that. Preston, you kind of like set the table And I totally get that. It has. [48:52] Preston Rutledge: I filibustered, though. I filibustered a little bit. [48:54] JD: Sorry. No, we still have to. As Rob said, the pecuniary thing is still in play. Like, you got to make these decisions based on getting the best returns for these participants. But you can't tell me that. And I. I don't like to stoke the political fires, but you can't tell me in the last few years this hasn't gotten more heightened. And I hate using this word, but the woke side of this. And by the way, if you Google what you did at in Washington where you went and spoke in front of them, woke comes up on YouTube over and over and over again. This kind of woke esg. I'll drink for that kind of narrative. And. And I know I'm probably going to get some haters in the chat bar for this, but I feel that that's true a lot of ways. I feel like that there's corporations being asked around diversity and equity and all these kind of things have the right kind of employees on their staff. And I think that that's fine. And I love that. I'm in support of that. Like, we should be a more fair, equitable society like that. But what a lot of those people in the government didn't understand is that because I saw a lot of them speak and they talked about how individuals had a right to choose their own investments and they could choose whatever they wanted to choose. And why is the government getting involved? And every time I'd bang my fists on the table and be like, this is a 401k plan, you idiots. In government, like, we have a fiduciary responsibility to act in the best interest of these participants and put a quality menu in front of them. And therefore, this is why we're in front of you right now and why Preston Rutledge is sitting in front of you having this debate. And therefore, if political agendas or even, I'm sorry, anyone out there, I'm a surfer in the ocean. I'm all for the environment. But even, like, environmental issues or social issues or political issues somehow cross into what is right to have in your investment menu, this is the big debate. This is where we've gone too far, and we're potentially doing a disservice to the participants that we're trying to serve. When I say that, Preston, do I sound like a freak to you, or does that make sense now? [51:22] Preston Rutledge: It makes sense to me. What's happened, though, and what. What used to happen was some plans would make investment decisions for reasons other than just getting the highest return and do it purposefully and purposely accept lower returns. And the classic case was where maybe a multi employer plan would invest in a construction project because they had union, their union was a construction union. And so the investment produced jobs and a return for the plan and they thought it's a twofer, that's a good thing. That was called economically targeted investments. That was the early precursor to environmental, social and governance. But sometimes they would accept lower returns. And so the deal, I'm sorry, the Department of Labor had to kind of, you know, wrap them on the knuckles and say, no, that project is a great project, fine, but it's got to be the best alternative investment you've got at that moment that you're making that decision. [52:22] JD: But that's, But Preston, that's no pressing, as you said earlier, that's no change in the rules. Where the changes happen in the real world. [52:32] Preston Rutledge: Correct. [52:32] JD: Is when they're, when blackrock has influence or committees are being influenced by committee members that are saying no, no, we believe in these things, whether social or political or whatever because we, we know, let's not lie to ourselves. We, this has been happening in our world here in the United States and now it's infiltrating into the f. So here. All right, go. [52:56] Preston Rutledge: And that. And that's the word infiltrating. Now you put the nail and hit the nail on the head. Think of financial institutional investing writ large. Way beyond retirement plans, just everything out there, the entire country. And go to Europe, European, as has been a movement to, to start investing for reasons other than just producing the highest return to, you know, to reduce carbon, whatever you're, whatever you think good is. But within, within that. Think of, think of a Venn diagram within that, within that bubble, there's this slice, this very large slice, but a slice of institutional assets that is ruled by the Employee Retirement Income security Act of 1974 and the exclusive purpose rule. And that's the only slice of institutional assets that's subject to that exclusive purpose rule. By the time you get around to talking about that, the rest of the financial institutional investing world is already into this concept. And they, they don't realize they have to behave differently when they're investing those kinds of assets. And it's sort of goes to what you said jd, about the member who said, well, why can't they invest with, you know, where they, why can't a participant invest their money the way they want? Well, they're thinking of people invest investing Their just their normal money, their non retirement. [54:15] JD: They were like, I saw that a lot. [54:17] Preston Rutledge: IRA money. [54:18] JD: I saw that a lot with the committee members of like, like, why are we getting involved? Let them choose. Chad, let me put you on the hot seat here. Like we've talked about esg. I say that because I want to drink in the past. I don't think we got. I don't think we got this deep with it. Like when I watch this four hour thing, it got me like really going here. Like there's a real back and forth happening politically, socially, whatever. And so where do you stand on all this? [54:50] Chad: Somewhere in the middle, to be honest. And I'm kind of playing the devil's advocate to the folks complaining in the chat bar. For. For one reason, I think, I think in general the thought is we need to put the best possible investments in front of our participants to take on the least amount of risk with the highest rate of return to kind of Preston's note to begin with. But the truth is there are a lot of people that would prefer not to invest. If they're not investing in things, if they're not putting their money into something that they feel comfortable in putting their money in, that's not me. I'll invest in anything. But there are a number of people out there that say, no, I only want my money working in industries that I see as following the right way, that they want their life to be seen and ran. I get that. And if that's the case, then why as a business, if we recognize our employees want that, are we feeling an issue in putting that in front of them? Now I made the comment in the chat bar. I think it needs to be its own asset class. Because if we are going to put it into a plan, we can't compare it to other investments. It needs to be siloed and known that this is an ESG fund and that it should be set up that way to invest on its own and not in comparison to another class. I think that's the only way that this becomes reasonable. [56:03] JD: Okay. Unfortunately. And I hate this when I watch TV and I gotta move on because I only have so much time, but I gotta move on to one other section. [56:12] Mark: Chad, you owe one. Just because I haven't seen you. [56:14] JD: Yeah, you did. Preston performance was brought up a lot. [56:20] Mark: Oh God. [56:21] JD: Are you doing Malort on both sides? And I heard that there was a gnarly guy sitting on your side of the table that was very kind of right on all this. And he was mentioning that the performance of these ESG funds drink. Negative 0.2% and that the Standard and Poor's 500 had returned 19% in that same period. And I think it was referring to like the past year. And, and that the Nasdaq. Oh, I'll drink for that. That wasn't intentional. Will have 5%. So JD talk. Talk English here. [57:05] Mark: That, please. [57:06] JD: That these socially responsible funds were underperforming. They were bad when compared to the non socially responsible funds. That came up again and again and again. And I almost felt like it was as a group kind of like said, okay, we, we believe that this is true. I just made the argument against the ESG funds. I'll drink. Now I'm going to jump on the other side from a performance standpoint because I went out on the Internet and I was like, is this really true? Like, because if those funds are underperforming and they suck, then I say game, set, match, like this thing is over. Like, for at least for now. Like, there's no reason to talk about this anymore. If they're, if they're really impacting participants in a negative way, then we, we don't need to have this conversation anymore. But I went and found the evil conspiracy. Black Rock Company's most successful exchange traded fund in this space. And they're the leader. This is the biggest fund in this space. And I get it. When we, when we compare performance, there's so many flaws to what I'm about to tell you. But. But here we go. I looked at it and I compared it to the standard and Poor's 5500. And this is the. I wish I had the ticker, but this is the iShares. I'm gonna drink my ass off for this. Sorry. This is the iShares. MSCI USA SR UC I t. S. Exchange traded fund. Okay. [58:40] Mark: I don't know how many acronyms that was, but I'm giving you four. [58:43] Justin: Yep. [58:47] JD: And in 2017, the Standard and Poorers did 21.83%. And instead of me using the benchmark that they wanted to use on the BlackRock site because they had some other socially responsible like index or Sorry, benchmark. I went and just said it. Everyone wants to know what the market did and what your fund did. So I'm gonna play that game right now, which is against them and their fund, their socially responsible fund did 23.38. And again, I want to clarify for everyone. I'm not on the side of the socially responsible here. 2018. [59:29] Justin: Sorry. [59:30] Mark: Once again, socially responsible. [59:32] JD: The market does negative 4.38. Their fund does negative 1.95. Better. 2019. 31.49%. They basically match it at 31.89. 2020. The market does 18.4. That fund does 26.33. I'll continue on and on and on, like down market. 2022. The market's down 18.11. They're down 8. 18.75. Oh my God. Let's freak out. They're down by 60 basis points year and then they recoup. No, they didn't recoup. Sorry. G. And this is in. In 2023. Sm. I'll drink is up 24 on that. [1:00:18] Mark: You're good. [1:00:18] JD: Thank you. And their Fund is up 21.81. Preston, when you were sitting there. [1:00:25] Chad: Yes. [1:00:25] JD: At that meeting. And, and it came up a lot where people said that these socially responsible funds were underperforming the market. Did you think that they were full of. Or did you think that that was a true statement? [1:00:42] Preston Rutledge: Yeah, I. It's. Well true, but incomplete. I believe that there's one particular fund that's rather large that had a really bad year and drug the average down. [1:00:56] JD: Oh, okay. [1:00:57] Preston Rutledge: And it wasn't with the fund you were talking about. And on the other hand, I know some very sophisticated people that go. Yeah, this whole. This asset class had a bad year. People. The old blooms off the rows and everything. [1:01:13] Mark: Hey, Preston, you don't have to call me a sophisticated person. You can just call me robe guy. [1:01:18] JD: It's fine. [1:01:19] Preston Rutledge: Okay. Okay. [1:01:20] Chad: Yeah. [1:01:20] Mark: Thank you. [1:01:23] JD: I'm not trying to. I'm not jd. [1:01:24] Preston Rutledge: It sounds to me like what you're in favor of, what you're. [1:01:29] JD: I think we have a little bit of delay, which is fine. I'm not trying to put you on the hot seat. I. Or any specifics. I just want to. I guess I am kind of that narrative that the socially responsible funds are completely up when it comes to performance. I don't think that that's really true. [1:01:53] Preston Rutledge: You have to go fund just like you go stock by stock by stock. You go fund by fun by fun. You don't. You don't just abandon something or something just because as a class it goes one way or the other. I wouldn't think. But jd what you said you were going through all those, all those return numbers. What you're in favor of is high returns. [1:02:16] JD: True. [1:02:16] Preston Rutledge: Which is what you're supposed to be in favor of. We don't have to be. If it happens to be a BlackRock Exchange Traded Fund, so be it. That's a environmental, social governance, but that's the one that's got high returns. Go for it. I said that a couple of times and I'm not sure it made the Republicans on the committee all that happy. Even though I was a Republican witness. I said, and I'm going to drink to this. And I said, if the ESG fund is the best fund available, you're supposed to invest in that fund. [1:02:46] JD: Yeah, but that's, that's on. [1:02:49] Preston Rutledge: I'll drink to that all day long. [1:02:50] JD: But Preston, that's on pure. And I, I always am afraid to say this when I'm drunk. Pecuniary like status here like that. I get that. We, we all understand that like if two funds are the same and they're doing the same, they look the same, they're all great, then I can say, okay, well, hey, this fund is very sociably responsible and does things I like. But I think the problem we have here is does things you like. You're representing 500 people that work for the company. You don't know what they like when it comes to politics or environment or [1:03:29] Chad: alcohol, and they can choose not to invest in it. You're talking about having a, an option within a core menu. [1:03:36] JD: No, we're not, Chad. We're talking about them being able to have a qualified default investment alternative. [1:03:41] Chad: No, I'm not there. No, sorry, that's not where I'm sitting with you. [1:03:46] JD: But that's where the legislation's at. Go ahead, J.D. [1:03:49] Preston Rutledge: you, you've just described the hesitation the, the Trump administration had in allowing an E, an environmental social governance themed fund to be the qualified default investment alternative. That very thing you're not in it doing for yourself. You got 500 employees, a thousand employees. You, by definition, the people in the default are the ones who did not make a decision and you don't know what they want. And that's why they pointed to the duty of loyalty as being a problem. But it went back the other way in the most recent rule in the Biden rule. And their point was, look again, we don't want a prescriptive rule. If, if, if the best possible fund from a return perspective, you know, the 26%, you're talking about outdoing the market. If that's, if that's a great one, then, then, then let it be. But that's the state of the law at the moment. And, and, and, and banning it as a default was actually the only time that's really happened was, was with the Trump rule. So we're Kind of back to normal in terms of the way the, the government's looked at. [1:04:55] JD: I hear you. And we, we just don't have enough time, unfortunately. But I think that Webby just brought up a great point, which is. And Webby, I had that in my own notes, so great minds think alike. Sorry to put your mind alongside mine. Is, is this really happening? Do we have a lot of plan sponsors that have these types of funds as their qualified default investment alternative? I, I'm not so certain that is actually the case. But then to expand on that a little bit. So then we're all kind of arguing about nothing here. You know, like what you said, Preston, is like, look, the same rules kind of apply. Like if you, if you make a choice to put a fund in front of your participants and your choice was a. I'm just gonna say it, a tree hugging choice, you could be like. So this is, this is my last question for you on this subject. Like, if we talk to Fred Reich or Schlichter or whomever. If, if someone can prove that as a committee your choices are politically driven or socially driven as it relates to your current core menu. Take default aside. I think you're in a litigious, sensitive environment. Am I wrong, Preston? And we'll close this out. [1:06:23] Preston Rutledge: You, you, you are correct. And 401k fiduciaries, advisors, 401k committees and, and are notoriously serious about their fiduciary duties. And they are conservative and they, they don't. There's a lot of reluctance to flock to anything, regardless of what the government's saying about it. They're going to focus on returns, I'm sure overwhelmingly now there are some employers that brag that, that they've got. Their whole plan is, is, you know, is, is. It has the environmental, social governance theme, but that's pretty rare. Very, very, very, very rare. I saw a couple of those when I was, when I was in the government. [1:07:08] JD: It's funny to hear our investigation. It's funny to hear Webby say that because Webby focuses in the 403B space, which you would think. I'm sorry for casting a, an impression here, but is that you would see more of that, like where they would be more centric to like these types of investments. And he's, he gets that. So. Yeah, yeah, I, I don't just, I just don't think it's happening. But [1:07:35] Preston Rutledge: I think the real divide is between the fine benefit and defined contribution find benefit much longer time horizon much more precise. You know, what your cash Flow needs are. And you can make the longer term investments. There's a lot of these investments we're talking about there. They also share that. That feature of being longer term, longer to pay off. That's not a. That's a problem for plans like 401k plans that have liquidity needs that are more ser. [1:08:04] Chad: More. [1:08:05] Preston Rutledge: More demanding than a defined benefit plan. [1:08:08] JD: Preston, can I tell you how hard it is to type when you're drunk? [1:08:13] Preston Rutledge: I can't type anyway, so. [1:08:14] JD: No, I wanted it. [1:08:15] Preston Rutledge: It's nothing to me. [1:08:16] JD: I wanted to type. I was gonna vote for Bershad just for using emojis. And there goes Stephen using emojis. I think this is a good trend. We need to keep this up. Okay, we're gonna wrap it. Chap our champion. I. Chad, you should know this. You don't talk about a no hitter when a no hitter is happening. Right? [1:08:38] Chad: Correct. [1:08:38] JD: You don't see any words about it. But I gotta talk a little bit about it. I mean, last week's winner was Samson. I sent him a lot of McDonald's. His wife complained. I shouldn't say complained. He wrote me and said after me sending him all those Big Macs and press, and I sent him like a ton of Big Macs and. And then a little. Little kid's apple juice to white to wash it down. His wife said, you know, a couple of French fries would have been nice. [1:09:14] Mark: I can't wait to tell me Samson's wife gets my vote for tonight. I'm voting for Samson's wife. [1:09:22] Preston Rutledge: Super size. [1:09:24] JD: I sent them 100 french fry orders. No, no, we just went. We went to Burger King and we sent a bunch of Whoppers burgers and fries. [1:09:41] Mark: Oh, you should have just done onion rings or something. And not done. [1:09:44] JD: Oh, Mark, God damn it. I need to consult you when I do this. And. And then an apple juice, a kid's apple, just to watch it. Congratulations. [1:09:56] Preston Rutledge: If we're getting close to ending, I did want to tell you about the stocking stuffer. [1:10:01] JD: Yeah, tell me. I'm a little creeped out right now. [1:10:06] Preston Rutledge: I do have a. I do have a stocking stuffer for you guys if it's almost time to go. I don't want to forget this. [1:10:13] JD: We're getting there. [1:10:15] Preston Rutledge: The. The treasury just put out their. Well, their questions and answers ON Secure. Secure 2.0. 81 pages of questions and answers. I'm not going to go through all of them. There is a stocking stuffer buried in there, Preston. I read down, according to the Treasury Department, 250 gift cards are okay as a de minimis inducement to join a 401k. So get your 250 gift card, put it in stocking of everybody in your company that has not joined the 401k. And if they use that gift card, they. You. You can get them. You can get. If they join the 401. [1:10:54] JD: Press it. Press in. Put your fingers in your ears right now. [1:10:59] Preston Rutledge: Okay. [1:10:59] JD: Chad, did you get an erection? [1:11:02] Chad: Yeah. [1:11:02] Preston Rutledge: Maybe. [1:11:05] Mark: No. [1:11:05] Chad: No. [1:11:05] JD: Jd. [1:11:07] Mark: No jd. [1:11:08] Chad: He got us. [1:11:08] Mark: He got a stocking stuffer. [1:11:12] JD: Okay, that's it. [1:11:13] Justin: I was trying to figure out how to turn that into a sex joke. [1:11:15] JD: Sorry. We are going to vote for the Chat Art champion tonight. And yeah, some serious stakes are on the line because no one's ever done a three. Pete. Justin, your vote for Chapar. [1:11:27] Justin: I mean, that is some pressure, dude, to. To pick him. But I'm sticking by what I said. I'm sticking by what I said on LinkedIn. And Mark's got my chat bar vote tonight. I'm going rogue. [1:11:37] JD: Okay, you're going with Roby because he did a great jingle bell song on. [1:11:43] Justin: He started that off. You see everyone else. [1:11:45] Mark: Justin, hold on. Time out, time out, time out, time out. You gotta take this seriously. You did a really good intro. I'm not voting for you. [1:11:53] Justin: My intro was inspired by you. [1:11:57] Mark: I know, but you didn't like the chat bar person. I'm not in. I haven't even chatted yet. It's called Chat Bar Champion. That was linked in comments. It's not the same thing. [1:12:07] JD: Hey, Justin, don't let him talk you. [1:12:10] Preston Rutledge: That's fine. [1:12:10] JD: I get that. We'll go to Chad. [1:12:15] Chad: Daniela. [1:12:16] JD: But by the way, you could cut the tension with a knife right now. I'm sure that's not how you say that, but this is. This is big. Daniela. [1:12:23] Chad: Okay, Daniela. The whole night. There were a few. Few good ones in there. [1:12:28] JD: All right? It was great. I as much. Oh, Jesus. Go ahead, Mark. [1:12:38] Mark: I'm just nervous. [1:12:39] JD: I'm nervous. [1:12:40] Mark: No, I'm just doing it because I want to see what happens. I'm throwing Samson in there. But primarily because of his wife's comment. [1:12:48] JD: As you should. Sampson wasn't the bar. Samson went 3 for 4 tonight with a stolen base like he was fine. He was solid tonight. There's no reason to think he could not win again. Preston, [1:13:07] Preston Rutledge: I like Daniella's suggestion, but I'm kind of a preacher of habit. And when I was last on your show three years ago, I voted for Daniella. So I'M voting for Daniella again. [1:13:20] Chad: Wow. [1:13:21] JD: Well, she deserves it. She is definitely solid. I got news for you. [1:13:24] Justin: I don't want the best intro ever. [1:13:26] JD: I don't want to talk about the no hitter, but if you're Sampo and Daniela Moises shows up when you're trying to go for a Freedinger, you're pissed. [1:13:40] Mark: You're like, oh, trying to hit for the cycle. [1:13:42] JD: Yeah, I would not want this to influence any. Oh, wait, no one's voting. I. I'm back in Samson too. So I think given the pressure, everything he had to deal with, he said he had some solid. I wish it would have been a little ruder, but he tried to step it up towards the end. So what do we got? We got Samson, we got Daniella, and just Mark. Oh, watch Mark win it. [1:14:13] Mark: No, this. And this means now. I cannot be the one asking the question. [1:14:19] Justin: I are not creative enough. [1:14:20] Mark: Yeah, you have the pressure on. [1:14:22] Justin: It's got to be you. [1:14:23] JD: Okay, all right, all right. Esg. Esg. [1:14:26] Mark: That's two. [1:14:27] JD: Okay, I have it. I have it. I have it. All right, everyone that's in the running, you must finish this sentence. Yes, tree hugging is cool, but I prefer to do this to a tree. Was that all right? [1:14:50] Chad: No, no, no. Come back with. You guys aren't even in the run. You can't say it. [1:15:04] JD: Daniela, I need an honest answer from you. Was. Did you just do that at the same time as Brasha or. Who said that? Because I think that's a good one. [1:15:16] Chad: Same time she said she didn't. [1:15:17] JD: I think she's an honest woman. I believe her a million percent. [1:15:21] Chad: Where's Samso at? I haven't seen Samso. [1:15:23] JD: Great minds, great minds. Great minds. You can take your time. Hey, did anyone notice Brandon's hard efforts tonight? Snow is falling on the rv. Santa is flying through the sky. [1:15:35] Chad: Okay, I haven't seen. [1:15:37] Justin: I saw Santa. I. I didn't see anything else, but. Damn it, Brandon. Great job. [1:15:43] JD: Lighted. [1:15:45] Preston Rutledge: Is that where Mark got his Christmas lights? He stole them off of the rv. [1:15:49] JD: Great minds. Great minds. Okay, who are we waiting on? We got. Help me out, Justin. You're the sober one. [1:15:55] Justin: No, I mean Samson said, find the SAP and drop a load on it. Mark hasn't written anything yet. He's good. This is what it's just happen. [1:16:01] JD: Drop a load on it. That's Samson's like, win for 3x. [1:16:09] Mark: I'm not participating in this. This is between two. Oh, you're out. [1:16:14] JD: Mark, you give up? [1:16:15] Mark: Yeah. [1:16:15] JD: No, no, no. [1:16:16] Preston Rutledge: I need this. [1:16:17] Mark: This Needs to come down to the two people where this means more. I'm out of this running. Justin, I love you. [1:16:24] JD: Okay. [1:16:25] Mark: Daniela says I'll give an answer. I'll get. I'll give an answer. [1:16:30] JD: No, no, I like where. Daniel, this is important. Sorry, Preston. I know this must seem awkward to you, but this is really impress important in the history of retireholics right now. I understand in them, roots could probably win, bro. But we're not gonna let you in. Robbie wins. [1:16:52] Preston Rutledge: Get him in those. All right. [1:16:55] JD: I'm gonna do something we've never done. It's the last show of the year. There's Fatherless. We'll take a vote because, I mean, I don't know what to do here. [1:17:10] Mark: How can I vote if I was in the running? This is confusing. [1:17:14] JD: Out of the running. All right, Justin, your vote for winner. [1:17:19] Justin: All right, I'm gonna say Rob again. No, no, I'm gonna double check this real quick. [1:17:24] JD: If you believe it, say Roby. [1:17:26] Justin: It pains me to do this because we really want to see it happen, but I feel like Samson bit off of Daniela's, so I gotta go. Daniella, [1:17:38] JD: remind me what was Samson was Daniel's. Sorry. [1:17:42] Justin: So Dan. Daniela's was taste the SAP. [1:17:45] JD: Nice. [1:17:46] Justin: And then Samson was find the SAP and drop a load on it. [1:17:50] Preston Rutledge: Oh, someone said tap this apple. [1:17:56] Chad: Okay. [1:17:57] JD: Okay, Chad. So, Justin, your votes for whom? [1:18:00] Justin: Sorry, Danielle. [1:18:02] JD: Chad. [1:18:04] Chad: It's. It's hard for me to discount Samson's timing there, but he did take a while. And maybe he just wasn't paying attention to when the question was asked, but Daniella was on it quick. So I'm going. Daniella. [1:18:16] JD: Well, you guys, for not voting for Roby, because I think Roby had the best answer of the group. [1:18:23] Chad: I think that Groby was in the running. [1:18:25] JD: Hey, hey. Unlike you two political that are influenced by your constituents and whatever is going on, I tell the truth. And I love Samson. I love Daniella. But Roby had the best answer. So Roby, to me, is the winner, and I vote for Roby. [1:18:44] Justin: I gotta say, I did not see his response until you just mentioned he [1:18:49] JD: wanted to, like, stick his dick in the root or something. [1:18:55] Mark: I have implied that. [1:18:57] JD: Preston, shut the up. Preston, what do you. Who do you want to vote for? [1:19:04] Preston Rutledge: Man with Daniella, I'm stubborn. [1:19:08] JD: All right, you're sticking with your is. Ah, that's all right, Caleb. [1:19:13] Preston Rutledge: She likes Julie, so I'm really happy for you. I'm let you finish, but Beyonce had one of the best videos of all time. Great. [1:19:23] JD: Brandon, do you know how much I want to pull that right now? Right now? [1:19:28] Justin: I really do. I'm not gonna lie. [1:19:29] JD: Blame Roby to be the winner, but I won't. Because I think what's clear is that unfortunately, Samson did not reach his three PEDs. And the winner tonight is Daniela Moisesip. [1:19:46] Mark: I mean, it makes sense that she would take him down. [1:19:49] JD: Like, it. [1:19:49] Justin: It makes sense. [1:19:50] JD: Yeah. It's drama. She came in and boom, took it down. Wow. [1:19:56] Mark: She. She. She branch slapped that little man. [1:20:01] JD: Preston Rich, the former secretary of whatever the you were. We appreciate you for being here. [1:20:09] Chad: Thank you, Preston. [1:20:11] JD: And for fighting the good fights. And now for your new gig, Rutledge, Give a, give a, give a promo for everyone. What's the website? What are you doing? [1:20:24] Preston Rutledge: RutledgePolicy.com? no, Rutledge Policy Group, Government affairs, helping you to get. Navigate the stuff that's coming your way from Washington or take advantage of it if it's good. So that's basically it. [1:20:37] JD: You've been there, you've done it, you see how it works. And now big companies, record keepers, mutual [1:20:44] Preston Rutledge: funds around, can see around, can see around the corners that the things that are coming before they happen for sure. [1:20:52] JD: And so they're going to need your knowledge to make important decisions that they need to make to run their companies. That makes perfect sense to me. And I would definitely think you're the guy to go to for that. Roby, Chad, Justin, Silent J, I love you guys. Happy holidays. We'll see you in the new year. I wrote each of you. I'm not going to call it a Christmas card because it's handwritten, but it probably is not going to arrive there by Christmas because, you know, the ways have been good, but it's going to get there and I'm going to express all accounts emotions to you and. And then send you some corporate merch because that's how much I care about you. [1:21:36] Mark: Oh, wow, man. Thank you. [1:21:39] JD: And to you out there, Bottom of my heart to you out there. My gosh. What can we say? You all right? Let's go. Peace out, everyone. Love you too, Preston. Merry Christmas, Samson. Love you guys.