Fee Comparisons: Winning Plan Takeovers Ethically

[0:00] JD: If we. [0:00] Chad: How about what if we started instead of, like, just bam, Right to you? [0:03] JD: What if we were just kind of casually talking, like, starting off, like, dude, did you guys watch the nine Raider game? That was awesome. [0:36] Chad: What do you get when you mix 401k with beer? Retirement plan conversations. Fun and hijinks. You get Retireholics, the coolest retirement plan show in the history of the world. [0:53] Mark: Every episode, we're going to introduce you to a new beer. This episode is Saint Archer's Pale Ale out of San Diego. Brewed by the surfers in this world. It's 5.5% alcohol by volume and should be a tasty treat. [1:07] Chad: Hell yeah. Hell yeah. [1:13] Mark: And thanks to Darren here in the office for the beautiful bottle opener from. [1:18] Chad: Oh, Canada. All right. [1:35] Mark: Oh, yeah. [1:36] JD: Oh, God. [1:38] Chad: Chad's pretty excited about this. [1:44] JD: Well, the retirement plan industry is a little messy. [1:46] Mark: That's gonna be. [1:47] Chad: That's gonna be a keeper for sure. [1:50] Mark: You are the dumbest person alive. What is wrong with you? Don't feel bad about that. You do. [1:58] Chad: For our best practices kind of segment. [2:01] JD: Best what? [2:02] Chad: Lame corporate word. What are advisors doing? Are you practicing it, or is it [2:07] JD: really going on like I practice golf. I'm not good at it. I'm great at it. [2:12] Chad: There's things that people are trying to [2:13] JD: do that call better than Shankaholic. [2:15] Chad: Shut up for a second. Okay, so what advisors are doing out there that we get to see firsthand. And what I think is a big one because of PHI regs 404A5, 408B2, which, by the way, I know that was some time ago. Two years. [2:33] Mark: Very relevant. [2:34] Chad: But. But now it's when the teeth are kind of clenching down right now. It's when plants monsters are really thinking about it. And what I wanted to bring up is something that we're involved in all the time with record keeper partners, with advisor partners is when you're going after a prospect trying to win a takeover plan, you try to convince that plan sponsor that to move to you and your team. And potentially your new record keeper solution would be, you know, advantageous to them. Many times the go to is cost. Right. Inevitably, it's your easiest thing to go at. And I'm not accusing anyone because I'm the same way. If I see something that's overpriced, I'm gonna jump on that. [3:21] Mark: Right. [3:21] Chad: It's a great way to win that plant for my advisor. [3:23] JD: Is that how you go about purchasing surfboards? [3:26] Chad: I'm just curious. Absolutely not. [3:28] JD: Right. [3:29] Chad: But. But if I saw One that was. Yeah. So when I see an overpriced plan and you're with an advisor, I'm like, we can take advantage of this. We're showing something better. Because, you know, as a consumer, if someone walks in and says, you're paying too much, I can get you something better for less. That's an easy sell. Right. And it's the truth if you're helping them. So here's the problem with that. [3:51] Mark: This is where you're going. [3:52] Chad: Yeah. My question to you is, there's so many games that are played with those numbers because unfortunately, in our business, one of the biggest costs is the investment [4:04] Mark: cost, not one of the, the biggest cost. [4:06] Chad: Well, many times it depends typically. And that is a. Is a number that can be massaged, tweaked, interpreted differently. So it's, it's a tough game out there. And I'm not so sure I really approve of how everyone in the industry is going at this. But. [4:28] Mark: And everybody's got different thoughts with it too, is, is how do we represent those numbers? Each vendor is different. Each advisor has a different belief. [4:38] Chad: They're all trying to do it differently. [4:39] Mark: And the key, I mean, in the time that I've been doing this, the key that I always come to the term is that it has to be apples to apples. So when you're showing what a client currently has versus what you're bringing to the table as an advisor, what you have to portray to the client is that it is even. [5:00] Chad: That's what the person with integrity does. Right. As they say, I'm going to take your current program, present it to you in one way, and the way I'm going to show you my new proposed will be the same way. So it makes sense. But where the games get played is when they go, here's your current lineup. And I'm going to get technical here and use an example. Here's your current lineup of a share or R3 equivalents, right. And maybe there's a wrap there of 50 bibs, you know, and I'm going to show you that lineup and then I'm going to show you my program where I'm going to use institutional share class of index funds, you know, like vanguard stuff. Totally different. I've gone from apple to pineapple and I might have a wrap as well because there's no rev share in my funds. There's no rev share in my funds. And now I'm showing you this gap of 60 bits. [5:57] Mark: Well, and I'll take it even further. You talk about Best practices at times. What, what I see often when sitting in that, and I won't say sitting in that meeting because typically the advisor and I tend to speak the same language and get away from that. But when we're competing and we're seeing what another group is bringing to the table is that not only will they show a complete different share class, potentially with a higher wrap to make up those costs, but you're seeing a weighting of the cost versus a linear average, for example. And so often I sit in those meetings where the client says why would I currently have. Why is what I currently have less expensive in terms of an investment cost, investment cost than what you're proposing to me. And often it's because they have half of their assets that than a fixed account or a guaranteed account and the current providers representing it as zero. And this gets back to what you mentioned a moment ago as I was being so naive and saying you need to have it apples to apples is that many of your competitors don't. And I mentioned this to an advisor today. 98% of what Mark and I do out there when talking with folks are trying to build trust. And if you can look the client or the prospect in the eyes and say, hey, I'm going to, I'm going to. You taught me this at the beginning. I'm going to lift open the hood and I'm gonna help you see what this engine looks like. [7:16] Chad: I'm glad that you said that because I was gonna try to conclude that to say that there's so many games that can be played. You talk about fixed income, you talk about GICs, you talk about even we know crazy stories of people map to the target dates with rev share but then move to. There's so many games that can be played that it really in the end comes down to will they trust you to say, look, I'm here giving you the no BS version of how this and if that client or even that advisor who's looking for your health goes okay, I believe in Chatty or Mark and they're telling me the truth, how this works, that's really where it all comes down to, right? [7:58] Mark: The unfortunate part, as we all know sitting here and many listening will know, is that often and I'm just being blunt, they look at the cost. Sure, they don't care what game is being played. I sat in a meeting, I sat in a meeting of almost a four and a half million dollar plan where they called us back and they said is there any way you can get your investment Costs down to X, which was below 1%. And I said, well, of course we can, but all we're going to be doing is loading that lineup with passive funds. But of course we can get there. Well, we want to see that you're losing focus of what this is all about. And we know that in a prudent, diversified menu, it's not going to be all passive funds. That's not what is the right approach for these participants. Simcoe. [8:52] JD: Seriously? [8:53] Chad: Simcoe hops. [8:54] JD: Wow, that's really lame. [8:57] Mark: What do you think about this beer? [8:59] JD: That it tastes like Coors Light, but way better. You would. [9:04] Mark: It's a casual pale ale. [9:06] Chad: I only like Coors Light. [9:07] Mark: It's got multi taste. [9:11] Chad: It's time for the Wheel of Ice. [9:14] Mark: The wheel of Ice. [9:17] Chad: Oh, my gosh. Here we go. Every episode, one poor SAP. [9:23] JD: It's gonna be ice. I'm guessing my best. [9:25] Chad: They will have to pound the Smirnoff ice. [9:28] JD: I'm guessing I can't see it. [9:29] Mark: But you're the one that likes the flavor of Smirnoff. [9:31] JD: I don't like. [9:32] Chad: I have no idea who the loser is. [9:33] Mark: You called flavor of Smirnoff? [9:36] Chad: Oh, it's monkeys. Seriously, you're the Smirnoff Ice. And I've got it right here for you. [9:45] Mark: It's from Saint Archer. [9:47] JD: I have a pretty pale Smirnoff ice. [9:49] Mark: Who makes Smirnoff ice? Question of the week. [9:51] JD: Who makes it? [9:52] Mark: Yes. [9:54] JD: Who cares? [9:55] Mark: I don't know. [10:00] Chad: Wow. [10:01] Mark: Actually, I'm relatively impressed. [10:02] Chad: The day I lose. [10:03] JD: I'm sorry, guys, we gotta take. We gotta shoot that again. [10:08] Mark: Hopefully you're ready for that. [10:09] Chad: Oh, yeah, [10:17] JD: Hook us up, bro. [10:18] Chad: What's our question on the show? Celebration of the San Francisco Giants third World Series win in five years. Which Giants player would make the best retirement plan Compliance administrator. [10:31] Mark: Ooh. [10:32] Chad: We're gonna start with you, Chad. [10:39] Mark: The common answer would probably go to Sergio, because Sergio football, you have to be able to just. To just dedicate. Get in there to get it done. Done. Which is exactly what he does. [10:54] Chad: That's because you're. Did he lose the starter gig, though? [10:57] Mark: Starter, closer, whatever dumbest person. This was a committee. [11:02] JD: He. [11:03] Mark: A committee effort. [11:04] Chad: He passes his client passes ADP test, and he's like, [11:15] Mark: Actually, I take it back. I pull. I pull everything. I previously said, it's me being a pitcher wanting to go that route. You have to go the man that calls the game. You have to go to Buster. Right? [11:25] Chad: That's a good call. [11:26] Mark: Sits back there. He coordinates the field. He's calling. I think he's calling pitches at least. I haven't paid attention whether or not Bochy's calling. But he's controlling a staff. He's working the game. I'm going, Buster. [11:37] JD: I hate that. [11:37] Chad: You're right. Buster feels he would make a good complaint. Compliance administrator. [11:41] Mark: Could you imagine seeing Buster quote code? They'd be talking about limits and 415 code. It'd just be hitting it right on the nose. [11:49] Chad: I hate to give it up to you, but that's a good one. I hadn't thought about it. No, these are giants, not Raiders, so. [11:54] Mark: Yeah, good luck. [11:56] JD: I'm going with a panda. Oh, wait, wait, no. [12:00] Chad: He qualifies. He was a giant. [12:02] JD: Administrators are dedicated, tenured people, and he [12:07] Mark: just bails for money. [12:09] Chad: Right? [12:09] Mark: So, man, harsh. [12:11] JD: I'm going with 100 pence because you got to be a little. Gotta be a little loopy at times [12:15] Mark: to be able to deal with some [12:16] JD: of the stuff we have to deal with. [12:18] Mark: Hey, you've got to see the unique setup of a business. [12:21] Chad: That's so funny. [12:22] JD: And he's got crazy facial hair. Like, our loans and distributions guy, like, just kind of all over the place. [12:27] Mark: Depends on the day of the week. [12:28] JD: Hashtag, yo. That's crazy. [12:31] Chad: I think Hunter Pence would be, like, [12:33] JD: at the bottom of the hashtag. You're right. But part of it is that I would want to work with that guy. Like, I would want to come to the office, like, hey, Hunter, what's going on? He'd be like, tell me the coolest story ever. [12:44] Chad: Well, okay, so that's a separate question. Would I love to have Hunter Pence here in the office working at bdc, Right. [12:51] JD: Although, guys, sick Madison Bungard would drink [12:54] Mark: five beers at the same time. [12:55] JD: So we. [12:56] Chad: Hunter. Pen would be my first choice. [12:58] Mark: Madison would be. He. Yeah, that would be a good fit. [13:01] JD: I'm sticking with. [13:02] Mark: That's a number two. [13:03] JD: Yeah, I want. He'd be great. [13:04] Chad: I totally disagree with you. I totally agree with you. [13:08] Mark: So where are you going? [13:09] Chad: Way less sexy than yours. But I don't know why, but I was thinking Jeremy Athelt, because he seems kind of nerdy to me. Like, he could almost be one if he wasn't a baseball player. So I could see him coming to work in khaki for valuable content for our advisors. Right, Shay? Shay, Shay. Content for advisors. Good. See? Very good. So we're gonna work on that. Yes. And so for our next episode, I got two things that I want to key you guys into for the Future see ya is we're gonna have a in depth, detailed discussion around TPA revenue share. So this is something that's really not talked about a lot. It's not funny. It's interesting. TPA rev share is not talked about a lot. He's getting a call from someone during my conclusion. I'm doing business here, guys. [14:15] Mark: Oh. [14:18] Chad: TPA rev share we'll talk about. And we'll do it in a very disclosure based way, an eye opening way, letting you inside, you know, the closed doors to see how all that stuff works. [14:35] Mark: Most think, and I'm just being honest, most think that it is a way for TPAs to. To make more money. [14:43] JD: Right? [14:44] Mark: And that's not it at all. [14:46] Chad: And we'll cover that. We'll cover all angles. And for the first time, we're gonna bring in a guest. We're gonna attempt to bring in a guest. I'm gonna call it the suit and tie segment. So do we have to dress up for this one? Not you guys. I know you live your days in suit and ties, but we're gonna bring in a DCIO specialist, you know, defined contribution, investment only person. We're gonna force this person to wear their suit and tie and act in a professional manner. [15:19] Mark: Do they get a try? [15:20] Chad: No, no, no, no. [15:23] JD: This is. [15:23] Chad: This person's coming from a Fortune 500 company. They need to play by the rules. We will drink our beer, we will make fun of them in their suit and tie, ask some questions about their mutual fund and put a little retireholic spin on the interview. So stay tuned. [15:42] JD: Hey, Chad. Yeah, no, last night was good. It was fun. I had a lot of fun doing that. Wait, what? You want me to explain to you what a 401k is? Really? Oh, I thought you already knew that. No, no, I have time. I have time.