Fred Reish on Retirement Income & Hidden Conflicts

[0:00] JD: If you don't know who's sitting on our couch, you should just get out of the business. [0:04] Chad: Turn generally off. [0:19] JD: This is the man, the myth, the legend, Fred Reich on Retireholics. Never thought it would happen in my lifetime. [0:27] Fred Reish: Oh, thank you. Thank you. [0:29] JD: And one of the reasons why I didn't think you'd ever be here is we continue to use your name for our own branding purposes all the time. Fred Reich fan club. Fred Reich is my spirit animal. But I was afraid you might come over here and start kicking over chairs or something. But no, you're good. [0:47] Fred Reish: No, you know, and thank you for having me. And this is a special approach. I've never done this before, but it's kind of fun, so thanks for letting me be part of it. [0:55] JD: We're going to keep it very professional with you because usually we're drinking beers on this show. So out of respect to your career and everything that you are, we're going to do this completely sober. [1:05] Chad: No beer, no hijinks, just talking. [1:09] JD: Yeah, just talking. [1:10] Mark: Wow, that's unusual. [1:12] JD: This is a normal webinar then. [1:13] Chad: I want to let you know right now, Fred, that JD is the happiest I've ever seen him in the years that I've known him. Right now. This has to be the biggest moment in entire Hawks history. Yeah. [1:22] Mark: Oh, definitely. [1:22] JD: Before we ask you, we've climbed to the ladder. Tough questions about fiduciary. Mark, by the way, does not know what a fiduciary is finally going to learn. Trying to tell him that. Maybe you can help him out a little bit later. Tell us a little bit more about yourself. Where's home? And when you're not Living, breathing and sleeping 401k. What do you do for fun? Do you have hobbies or anything like that? [1:42] Fred Reish: Well, home is Los Angeles. And as we were talking about earlier, I have a beach home down in Laguna Beach. That's my fun place. In effect, that is my hobby. [1:51] JD: Do some surfing down there in Laguna. [1:53] Fred Reish: No, I don't. I don't. I've never. I know that's your game, but it hasn't been mine. [1:57] Chad: I'm building sandcastles and drinking beers on the beach. [2:00] Fred Reish: Yeah. Getting my toes wet. Just, you know, getting into, like, six inches of water. [2:05] JD: Perfect. [2:05] Fred Reish: Yeah. Ye long walks on the beach. Actually, I get up very early. And, you know, you walk on a BEACH like at 6 in the morning, and there are very few people out there. There's just something really special about. About, you know, it's easy to take life too seriously and you get on the beach when the waves come lapping in, and you realize that that's been going on forever before you were here, after you're gone. And it sort of puts you in proportion to a bigger reality. [2:29] JD: This thing's in perspective. It's funny. That's actually one of the personal advantages I think, of being a surfer, that I get in the ocean almost every day and it connects me with nature. You know, a bird flies by, a seal pops out of the water, shark swims under you. I don't like to talk about that. I agree with you. And I think you would get the same from a 6am walk on the beach. So that's very cool. [2:52] Chad: Yeah, be careful. JD's probably gonna find out where you walk. [2:56] JD: Oh, hey, Fred just happened to be [2:59] Mark: surfing the Frederic Fan Club banner hanging [3:04] JD: behind the airpl to chat producer Ruhl for a little bit. Are you all right, Sherry? Fitz told me that maybe you've got a little bit of a photography hobby. And then she mentioned that it has to do with conferences and stuff. [3:17] Fred Reish: Yeah, kind of on Facebook. I was traveling a few years ago, and I thought about how when you travel a lot and you're going to conferences, the first day you come in, you're lugging your suitcase behind you, you're tired because you've been on an airplane and traveling, and. And you walk down this long hallway and your room is at the end. But the room is a symbol of relief. You get in, you close the door, you unpack. You just take a deep breath and relax a little bit. And so I started. Whenever I walked down a hallway in a hotel with sort of an interesting graphic design in the hallway, like the carpeting mirror, typically I would take a picture of it. And I started the Hallway series. And now other people have, Sherry included, have taken photographs of hallways. And they always attach my name to it because there's the Hallway series. And now a number of people in the retirement community are posting on Facebook. [4:12] JD: And you thought Fred Reich was just a 401k stud. He actually takes walks on the beach. And he's an artsy dude. He takes pictures and things. We're gonna dive straight into the real 401k stuff. Cause we couldn't not do that. I'm sure you get this type of question, but what upsets you? What in retireholics language? What pisses you off about our industry? TPAs, recordkeepers, advisors, plan sponsors? What are we not figuring out? What are you trying to preach to us for these last few decades? And we just can't seem to get it right. [4:46] Fred Reish: You know, I think there are two things. One that's more over on the advisory side, which is elimination or a complete transparent explanation of conflicts of interest. You know, I mean, everybody sells, I sell, you sell. We're all out there making a living. And so when we recommend that somebody work with us, that's inherently a conflict because we're saying, hey, let me make money off of you. But that I'm not talking about because that's pretty transparent. But things that are hidden behind the curtain, the revenue sharing, revenue sharing, maybe even 12v1 fees that are partially transparent, but maybe not in the real world. [5:21] JD: There's even pay to play things happening now. [5:24] Fred Reish: All of that, all of that. And so the conflicts of interest drive me a little bit crazy. My current thing though is that I think we've sort of mastered. We've got a lot of good providers of different kinds of services, good plans, good investments. So we've been working a lot on the component pieces, but not on all of them together. What do all of them together mean? It means people can retire. Regular, ordinary, everyday workers can retire. And, you know, I feel like that we should all be working with plan sponsors now to educate them on how to measure that, how to improve that, what can be done for outcomes? Because we figured out the components now. How do we get to the outcomes of really good components? [6:07] JD: Yeah, we in a sense replaced the old school pension plans and the DB with this wonderful new 401k thing. And I agree with you. We spent a lot of effort the last 20 years, 30 years, on education and fiduciary tools and fee comparisons, and vendors have increased and done all kinds of new bells and whistles and things, but we haven't really focused on the end game. And it's only now where retirement readiness is a buzzword. But are we really making a difference or moving the needle? You don't see us doing that. We need to change. [6:45] Fred Reish: No, you know, I think we are doing it like by explaining automatic enrollment to plan sponsors, automatic deferral increases, defaulting into QDIAs, target A funds, managed accounts. I think all of those have helped, but we don't really know how much because we don't know what it's going to look like when those employees reach age 65, you know, the theoretical retirement age. And then that's really where I think the industry needs to focus right now. But the second leg that we're going to do after, after the thing I'm upset about now, what I'll be Upset about then is what are we doing to help people withdraw that money over 20 or 30 years and invest so they don't run out of money? How do we. We've pretty well mastered the pieces of the accumulation phase. Whether or not we're doing it all right is another issue. But all the pieces are there. But for the so called decumulation or [7:44] JD: payout phase, you don't just take all your money and buy an annuity and then you're set. It doesn't work that way. [7:50] Fred Reish: You know, I think part of the issue is that it's even more individualized than the accumulation period. Think about the accumulation period. Here's your plan, here's your 20 investments. Here's how you save into the plan. [8:03] JD: How do you sock away? [8:05] Fred Reish: It's finite. It's a sandbox and all the parts are in the box, you know, all the toys. But then you get to retirement. How long are you going to live? This guy's going to live 10 years. That couple, one of them is going to survive for 40 years. [8:16] JD: Where are you going to live? [8:17] Fred Reish: Where are you going to live? What are your expenses going to be? [8:18] JD: Are you going to beach in Laguna or are you going to live in Kansas? I have the answer to that. And you have a different plan than someone else, right? [8:26] Mark: Exactly. [8:26] Fred Reish: And somebody else may want to live in a mobile home park in West [8:29] JD: Palm beach, and that might be great. [8:30] Fred Reish: Yeah. And it's perfect for them. The retirement is so individualized. [8:35] Mark: Right. [8:35] JD: I've said that before. I've told employees, hey, the idea of being in some Midwest state, retired on a porch deck, on a rickety rocking chair, having dry mixed lemonade that I made in the kitchen. It doesn't sound too bad. A nice book like, your retirement doesn't have to be expensive. Home on the beach. And you can still have a great retirement, but it is different for everyone. [8:58] Fred Reish: Yeah. And I think there are three phases to retirement. There's that initial phase, which is the one that we all think about 65 to 75. Just say, hypothetically, traveling, going to Europe, maybe all those things you've delayed because you were working and you really, really want to do. Then let me say, hypothetically, 75 to 85 is the middle period. You've gotten that out of the way. You just want to be a little more relaxed. You want to be in the rocking chair on the front porch. You want to visit the grandkids, you want to do. [9:24] JD: Read a book. [9:25] Fred Reish: Read a book, do things. But then you got. Let me create the third phase which is the one we don't want to talk about is 85 to 100 and maybe diminish financial cognitive abilities, ability to make decisions. How do they take their ira, invest it properly, withdraw from it properly so they have money to the end when they can't make basic financial decisions? I don't even think we're at the beginning of being prepared for that. [9:49] JD: Great point. [9:49] Mark: Well, when you talked earlier about we're all salesmen and saleswomen trying to, trying to build a practice, I think folks are looking at that point in an individual's life and probably saying not a whole lot of opportunity to generate revenue and build a business off of. So I'm going to focus on the accumulation phase and efforts tend to continuously be focused in that stage. And the early retirement years when they're spending the money versus like you're saying, when the cognitively they may be a little bit slower and from an account balance perspective it may be even lower. People are avoiding that conversation. [10:20] Fred Reish: Absolutely. And well, it's unpleasant to talk about Alzheimer's, it's unpleasant to talk about dementia and maybe somebody being defrauded out of all of their money. Those are terrible subjects, but we have to address them. And if I were an advisor, one thing I would seriously consider would be developing a structured retirement practice. Not retirement income, not retirement plans, but retirement and where retirement income would be part of that. But I would, I would have like encompassing, yes, Social Security claiming Medicare claiming annuities, investing for withdrawals, investing for lifetime sustainability. And I would staff it with like assistance so that questions could be answered. I would actually structure a business structure around that. [11:08] JD: Maybe this is a stretch for me, but I'm with you on this. I think advisors, retirement plan advisors specifically still struggle with kind of a branding thing. It was the speaker earlier, Liz Ann Saunders, that said we're kind of painted with a wide brush, meaning they still see this Wall street suit and tie kind of sales guy kind of image. We rank very low on things like of trust scales and stuff. And so if advisors could follow your advice and build that all encompassing retirement plan, that's a good step in that direction of trying to show people that no, no, no, these are people that want to help. These are experts in this area that truly want to help people not only get to retirement, but enjoy the retirement and then deal with those tough later years. That's a nice story to tell. I think that helps shape our image more the way it should be. [12:00] Fred Reish: And when I say business model, I really mean business model. If you have If I'm an Advisor for your $250,000 Iraq, I will provide the following eight services. If I'm the advisor for your million dollar IRA, I'll provide the following 15 services. You on the other hand, have a $10 million IRA. And I'm proud of you been doing things right. And I have like 30 services up. I mean so it has to work as a business. But even as a business you can structure it properly. Take some of that 401, thinking about the size of the plan and the number of services, the number of meetings a year. Move that over into the IRA world and create a whole IRA retirement business partner. [12:39] JD: Good stuff. That's good stuff. Getting advice from the man himself. So take it in, take attention. Well, I have you. I know you have to be at a. You have to speak, but I think we got a little bit of time. [12:50] Fred Reish: Sure. [12:50] JD: Can I ask you, how do you feel about like financial wellness? Now that's a big thing. [12:57] Chad: Buzzword. [12:58] JD: We're seeing firms like Advisor and Questus and Advisors proprietarily building things. You think financial wellness fits in our world of 401k? [13:09] Fred Reish: Yeah, I do. I think again, you have to have the business model for it. So if you look at people with 5, 10, $25,000 account balances, maybe the record keeper should provide some sort of a mass. An everybody financial wellness program to help them do credit card debt, student loan repayments. Should you have an HSA basically Team 5. Yeah, the early stuff that when you're 25 and 30 years old, you're still trying to figure out that stuff and then as it gets to larger accounts then yeah, I think a holistic view at your overall financial picture based on who you are as a person and what your wealth is. Yeah, absolutely. [13:51] JD: We don't want to take too much of his time. [13:53] Mark: I have one question I want to ask because I turn to a lot of your releases and information and posts and I read what you're writing and that's where I'm gaining a lot of my knowledge from. I don't know where you're getting your stuff from. We were joking around earlier, like you probably sit with the folks in D.C. and you hear what. [14:10] JD: You have a secret phone that they call you and you say you do. I think the better way to say it is the entire world looks to you for this information. Where do you get it? Where do you find it? [14:20] Fred Reish: I get it from two sources. The main one is I'm hired to work on all this stuff. So my research is work. I do for my clients. So it's not all just stuff I have to do on my own time. A lot of it is work time, but then just driving around or thinking about things, some of the stuff I work on gels into a story and then it's easy to write the story. That's the article, the story. The other is that I'm often hired and a couple other attorneys in the firm are often hired to work on cutting edge projects, which involves discussions with the government. And so we get a lot of insights into SEC thinking, dol thinking based on the work that we're doing and the conversations we're having with the regulators. And that's why sometimes you see some of it's a cutting edge sort of idea because we're working on cutting edge things and then some of it is just a few, you know, then to take that. How does that become a story? You know, just if you think about it, you start saying, wow, this is a really good idea. I think there might be a broader interest in this storyline, if you will. And so it all comes out of real work. There's no secret sauce, there's no magic [15:34] Mark: URL that just gives you. [15:37] Fred Reish: I don't call the White House. Don't call the White House and say, hey, what's up? What's that? [15:41] Mark: Come on, give me the scoop. [15:42] Fred Reish: That's no magic. [15:44] JD: I think we should put them on the spot. You have a very busy schedule. I know you're always speaking. We appreciate having you for the short kind of special edition of Retire lx, but we would love to get you on the couch. In the future. Would you drink beer with us? Maybe in the future, you know, if, [16:00] Fred Reish: if we can do it after all my work is done, I might do that. [16:02] JD: Okay. [16:03] Fred Reish: Yes. [16:03] JD: We'll try to hook up with you. [16:04] Chad: Do you have a preferred beer? Do you have a special beer that we should feature on that show as well as prepared? [16:10] Fred Reish: Sure, absolutely. I prefer Amber beers. [16:14] Chad: Amber, do you have like the brand and everything? [16:16] Fred Reish: Okay, Do Equis, Amber. [16:18] JD: Oh, there you go. [16:19] Mark: We haven't had Do Equis on the show. [16:21] JD: Stay tuned for Fred Reish and the Retire Hux with Doctis. Brad, thank you very much. Thank you for being on the Retire Hole. [16:30] Chad: Thank you. [16:32] JD: I'm going to teach you our tagline and then you're going to say it with us to close us out. Okay. What we say is that we're the retireholics and we're changing the retirement plan industry one beer at a time. Okay. We are the retirement and we're changing the retirement industry. One beer at a time with Fred Breeze. [16:53] Fred Reish: Thank you.