Guaranteed Income Portability: Why Adoption Lags Demand

[0:00] Chad: Oh, I've got extra Lacroix. Scott, don't make me go there. [0:03] Scott Colangelo: Hold on, let me get my stuff. [0:04] Chad: Calm down there. Yeah, yeah. [0:05] Scott Colangelo: I used to have a little bit of hair in that picture. [0:09] JD: Really? That's what you call I like your jacket. [0:13] Scott Colangelo: I go Woodford or Casamigos. [0:15] Chad: Wait, which kind of cosamigos? [0:17] Scott Colangelo: I say, I got the repos, I got the. Which one is this? [0:23] JD: Okay, go Tequila, bro. Go Tequila. [0:27] Scott Colangelo: You guys choose. [0:28] JD: That's a little more fiery. I feel like no need to put [0:31] Scott Colangelo: it in a glass. [0:46] JD: Hey, welcome to Retireaholics, everybody. This is one of those episodes where I'm going to need you to close your eyes and imagine the intro that you want. Like a great poem that was really creatively written, maybe a really cool song that we did for you or whatever you want the intro to be. Just imagine it as such. And there you go. That's it. Pretend, because I have no intro, you crush that. [1:14] Mark: J.D. [1:14] JD: thank you. Thank you. Let's go straight to headlines because that's what our thing was. Guess what? Smart is back in the news again. Okay? These suckers got another $95 million in, I don't know what you call it, Series E, F, G, H I, J, K funding or whatever. So kudos to them. If you remember, everybody, we talked about them two weeks ago. They're the United Kingdom based company that came over to the US to kind of disrupt the marketplace, if you will. They are very pooled employer plan focused, but doing other things. If you remember, they bought Stadium, the longtime managed account service dealio. And then I think our headline from two weeks ago was that they were teaming up with Transamerica on a pooled employer plan. That the name of it is escaping me right now, but I'm sure Daniela in the comments can let us know I maybe mistakenly positioned them two weeks ago as coming to the US and being knocked over by our legislation and regulations. Oh my God, I got a pop up. [2:31] Chad: Oh, that's a good one, B. [2:34] JD: And my hand was swatted. Not really. They politely reached out to me and I reached out to them and we chatted and they let me know that. No, no, no, J.D. look, it's not as though we weren't ready to do what we're doing, but just in current times, we want to tackle these certain things. This is where we can be most effective with, you know, all the hundreds of millions of dollars that they've got and all the research they're doing and all the slick technology that they're working on. So anyways, to get 95, I love [3:03] Mark: that they're spending time correcting you on this show. Well, pretty funny. [3:10] JD: I'm going to get a lot of things wrong. [3:11] Mark: All the tens of people who see the show, sorry for being wrong. [3:16] JD: Remember Robey, they always are watching at one point. But I will say this, to get 95 million right now, which I'm sure Scott can chime in here a little bit, this is not a time where money's flowing very freely amongst venture capital and private equity. But I'd also like to bring to everyone's attention that first name in that second line there, Aqua Line. Are you familiar with them, Scott? [3:42] Scott Colangelo: Yeah, yeah, I believe. Are they behind Pension Mark or was it Sage View? It's one of those two. [3:49] JD: They're behind Sage View. They're behind a census. I mean, I like to refer to them as the 401k Illuminati. They're the people you've never heard of, but are very powerful people behind all these, these different companies. So I mentioned them once in a past show. If you don't know who Aqualine is, take a little peek at them. Go to their website, check them out. They're a big power player that understands our industry and is investing. [4:16] Mark: Having to go do my own research. Why don't you just tell me who they are so that way I don't have to do that. [4:20] JD: Well, we just nailed it. They're behind. [4:22] Mark: They don't have to go. [4:23] JD: Look at them. They got money. [4:24] Scott Colangelo: There's a trend with these guys like this is I think that what you look at you say, okay, if they're going to invest in a company, you know, great company like Sage View, then looking at these other things that they can invest in and then get those firms to cross utilize services. [4:38] JD: You're perfect. You're going to be so good on this show. That's what I just wanted to ask you is when, when these big shots are doing this, are they, are they going to find all the companies within their family and try to find ways for them to partner and utilize each other and therefore benefit all their companies? Is that right? [4:57] Scott Colangelo: Yeah, I mean ultimately they have. Listen, they even, even if they end up being a minority investor, they typically get sort of control of the company. So even if they don't own more than 50%, a lot of the times they put in, if they're going to put money into a company, they want. These PE firms want provisions where they make decisions, strategy. [5:18] Chad: Yeah, time for that tequila, Scotty. Mike, I guess my question Back I get their private equity investment on their side. But what about the others that you see putting money in Smart, like Fidelity, they came over with J.P. morgan. Oh, that's got to be a. Accuracy. So. So is their play a return on their investment or is their play to try to get in deeper knowing or thinking that they're going to be a powerhouse in this space and they want their claws in there for a potential easier acquisition later? [5:56] JD: I mean, I would simply be pontificating here, Chad. I would have to guess that they looked at the success that Smart had in the United Kingdom. Remember, this is a London based company that apparently crushed it over there in their European version of a pooled employer plan. So if you're the, the company you just mentioned, Chad, or these other investors, and you see the landscape here in the United States and you believe that pooled employer plans is going to be a big deal, this would be pretty smart money to put into someone who's already has a proven track record somewhere else, you know, unintended. [6:37] Mark: Sorry, what's that pun intended? [6:40] JD: Did I. Yeah, no, obviously not because I didn't know I used one. [6:45] Scott Colangelo: So anyway, ultimately they're trying to pay that they're trying to get, they're trying to get the multiple they paid on EBITDA down by cross selling these. Both these companies at the same time. Yeah, [6:59] Chad: I get that. Yeah, that's. [7:00] JD: I totally get that. And so we should, we should keep close tabs on that and see what kind. When you see headlines around some of the companies that Aqua Line is, is partnered in, see if you can find some Venn diagrams in the future. By the way, I don't consider that [7:15] Chad: an evil thing, I guess, and I guess it's a bit of a separation of church and state probably between the folks who are lending out money out of Fidelity or at a Morgan versus those that are building investment in product. Because my mind, my mind kind of goes potential conflict of interest. If the stakeholders in the company end up having a heavy suite of their own investments as the underlying holdings in that multiple or in that pooled employer plan. And I do, I worry about that a little bit. But if it's separation of church and state and they're truly investors, then I could see how there's no worry there. [7:55] JD: I think there could be a little bit of both happening there, but I'm okay with it either way. [7:59] Chad: I'm sure from a money standpoint, it absolutely is a little bit of both. You know, they're going to want positions in that, in that large plan. [8:08] JD: Although did I did I make the assumption two weeks ago and I want to be proven wrong if I did or I, I was wrong. I think I made this statement that stadium would most likely be a 338 option in the Transamerica thing because Smart was involved in smart owned stadium. Not true. So they're squeaky clean in that, in that sense with that Transamerica pep. That's not happening. Oh, I got a drink for that. Let's do something we don't do very often at this point in the show. I want to go kick it old school people. If we can. Let's introduce our guests before we head on to some future topics. So Justin, this, that time the show, are you going to introduce our guests and you out there in the audience, you know you're going to do. You're going to vote for Justin on a 0 to 10 basis. So if you want him to keep his job. Okay. [8:58] Justin: Did you forget that we said we're going to do the intro for the start? [9:02] Chad: Just asking. [9:03] JD: No, I always. Brandon, remember Brandon always wants me to do one headline first. [9:07] Mark: I love that you've already gotten scores. You haven't said a word yet. [9:10] JD: This is. [9:10] Chad: I'm giving him an escalating score. If he does well, I'll go up anyways. [9:15] JD: This is brand rep is here. Nice. [9:17] Justin: He's got us. He got to start in the the Wirehouse channel just shy of three decades ago, after recognizing shortcomings in an area of opportunity, partnered up with a buddy to start the first RIA in the great fly to state of Kansas. He resides in Overland park with his wife, three kids, four Lambos and even a golf simulator. When he's not helping people save the Benjamins, he fancies himself playing some golf and some basketball. But in his own words, he's not very good at either. He's got the best looking bald head I've ever seen on the show. But he missed the memo on proper attire. The chairman and managing partner of Prime Capital Investment Advisors, ladies and gents, Mr. Scott Colangelo. [9:54] Scott Colangelo: Wow. Wow. Wow. That was. Thank you, gentlemen. [9:58] JD: Yeah, four Lambos is one thing, but the golf simulator, that makes me jelly in a big way, bro. The golf simulator. [10:07] Scott Colangelo: What's good enough? [10:10] JD: Scott, we're going to dive. We're going to, we're going to dive deeper into your career a little later because I'm actually, I'm very interested in how you have your fingers in so many different things. But let's, let's put that on pause for a Little bit. And let's go to a. We got a second headline from Plan Advisor magazine titled schwab sees record attendance in Participant 401k sessions. And my big takeaway from this was the virtual sessions are taking over big time in the live. Everything that I grew up with in this industry, the live 401k education meeting with the pizza and the pop at the back of the room is pretty much dead on the vine. Like, that shit is not happening anymore. I think that's relevant. Nice. Well, apparently they still want the education. They just love it in this online type of zoom environment. Scott, I'll go to you. Being the head of so many of those little firms there you got going on. You're working with a bunch of your advisors. Is this something you guys have seen, you've recognized? Are you still gripping onto the old 401k education meetings in the conference rooms? [11:29] Scott Colangelo: Yeah, well, you know, I think, you know, we own Financial Fitness for Life. We have, you know, over 100 people that do education. I will tell you that everything that we built was originally was on site. During the, during the pandemic, we ended up having to go largely virtual and get very innovative with using QR codes and using texting to participants to get them to simply click a link and finish your thoughts. So ultimately, ultimately they. We ended up doing. Finally, the numbers were almost identical only because we. Because we weren't traveling to the location. So if we were going to go to a location and do 10 meetings because we weren't traveling and taking a day there and then traveling and taking a day back, we'd offer like 40 virtual meetings instead of 10 meetings. Because we, we just, we just allocated the same amount of time. So I will tell you that the one. The. Being on site is far more effective, but you can make up for that with pure, just sheer volume. If you're going to commit the same amount of hours, same amount of time, which is how we price things either way. So we ended up with. With almost within 1% of the same engagement, but we had to do a ton more meetings to get the same engagement. [12:46] JD: So can you give me a breakdown of maybe you did there and I missed it, but do you have any idea, like, what percentage is happening live versus online these days for you guys? [12:56] Scott Colangelo: It's still, I bet you it's still at least 80% live. [13:00] JD: 80%. Okay. [13:01] Scott Colangelo: So if that's our model, you know, we have educators, we've hired them, they're salaried. I mean, so for, you know, and by the way, there's still a major advantage to a participant seeing another human being. [13:11] Chad: You know, I feel like we need to distinguish between the two of education and enrollment because I feel like what I've seen be most successful in the past few years is group education can be done virtually. But everybody in the chat bar is saying there needs to be both, there needs to be both. And they're talking about the one on one interaction with an individual. That's more enrollment to me. You're not usually doing one on one interaction. [13:37] JD: Can you define enrollment for me, Chad? Do you mean that this 10 million dollar plan is moving from principal to voya and you want to run out there and kind of explain that to everyone and enroll them? Are you talking about a startup plan that everyone's getting enrolled for the first time? [13:54] Chad: I'm saying it in two ways. I'm talking about new hire enrollment primarily, but I'm also talking about taking action, sitting with someone and having them increase their deferral rate or adjust their investments. And I think that one on one when you're looking to get them to take action is better in person or at least in this format versus group setting, which I think for years we, we tried to do both. We did a group setting education and then we said whoever wants to stick around, stick around and we'll, we'll do one on ones or help you enroll. But nobody really stuck around. The virtual gives us an opportunity to schedule those meetings and to do real one on ones, whether it be enrolling them into the plan, a new hire, or whether it be spending some time and creating a, a transaction, an action for them of raising a deferral rate or moving money or rolling money, something along those lines. [14:43] JD: This is probably going to be sound weird or not super valuable, but of the. Remember, I tell people on the show all the time, I sit down, so I sit in on some of our larger clients and so I get, I get to see what's happening there. And I would say I see pretty much a split. Like I see 50, 50. I see a lot of my big larger clients using their advisors for education and using it online. And then I'm still shocked to hear that no, the advisor is going to fly out to Las Vegas to enroll these people and do this live meeting and the vendor is going to go support them and help them. So this article I guess is not entirely accurate in that virtual has not completely taken over live Truly. It hasn't happened in Scott's world. It's not happening in some of our. So I will Tell you. [15:30] Chad: And there's, there's a few on tonight in, in the, the new stomping grounds for me in the Midwest. The Midwest way of, of enrolling and educating employees is so different than what I experienced in coastal states, especially California. [15:44] JD: So are you talking about, are you talking about the, the wranglers in the boots or. [15:51] Chad: I'm talking about them rolling up the sleeves and going from location to location and spending time with individuals and walking into, you know, that 150 person company and they probably know 95 of them by first name basis and have relationships with them like it's, it's an entirely different way. [16:10] JD: Can I counter you and get that stock? What about the 40,000 plans that we had Guideline on two weeks ago? The founder. What about the 40,000 Plans that Guideline did in the last eight, seven years? I'm imagining those have zero fucking live meetings and that's working out for them. [16:30] Chad: Um, I'd be curious to see by region. [16:33] Mark: Right. [16:34] Justin: You know, cause that, I mean I think that rings home. Chad, you're talking about that's just what people out there want. They want that in person. They want on one that personal, you know, relationship. But out here where life moves super fast, especially in California, like people don't have time for that and they just go, go, go, go, go. [16:49] Scott Colangelo: Yeah. [16:49] Justin: I wonder if there's a. I would imagine there's a correlation. [16:52] Scott Colangelo: First of all, look at the. So the data. If you look at just what Schwab says, participants are favoring virtual sessions. I'd like to actually see the data because when we poll participants, which we do regularly ask them if they like the on site. Like having someone present, they like the in person or they like virtual. It's like 85% like, like the on site. And you know, and that's country wide. People prefer to have a person in front of them. So I question is, is the survey question was did you find the virtual meeting valuable? Did you find the virtual meeting favorable? You know what I mean? What, what. How is the question written? Is one. [17:30] JD: We'll talk about it later tonight. But it's kind of like when you ask participants if they want guaranteed income. Of course they're all going to say yeah, I'd love to. Guaranteed income sounds great. But there's, but I would take a stand on that just based on my instinct. I personally feel like if you lined up 20 participants in a plan and said would you rather get education in the conference room on Wednesday at 2pm with Domino's Pizza in the back, or would you rather do it from the comfort of your own home on a screen on demand when you want to, or virtually live on a scheduled webinar? Geez, I don't know. The guy at me thinks that a lot of them would choose the latter, not the former. But apparently Scott says, no, it's not like that. [18:19] Scott Colangelo: And by the way, we're thinking of virtual. Different than some of the comments I'm reading and some of the thoughts have been said, like virtual. You can do virtual. Like we do virtual webinars and we'll have thousands of people log in. We do a monthly and we'll do a different topic each time. Social Security, stuff like that. [18:35] JD: Education. [18:36] Scott Colangelo: Yeah. The virtual meetings we're doing are typically one on one where they can we. We assign education consultants by location and so literally so they see the same face every time or faces every time. If it's on site or if it's virtual, it's a virtual meeting. They're talking. [18:52] JD: You're talking wellness now in a way, right? You're talking. Yeah. And so I get that because then it's like, oh, I can have my spouse with me. We can maybe do it in the evening and talk to our advisor. So I get that. Where I was trying to focus here more on just like these classic 401K, I call them education. Chad was smart in saying that sometimes there's enrollment kind of vibe to them, but that's the meetings I'm thinking. [19:16] Scott Colangelo: Well, Chad was right though. But where I was going with it, JD is if you think about it, the what we'll do is we'll do a virtual meeting, education meeting. And then, okay, so let's say we do Social Security, 85% of the people, 90% of the people, if we do on Social Security, which is a topic they all want to talk about, all the fears that they have lie and no truth whatsoever. They just don't know. So they don't know and it just scares them. You do an education meeting and 90% of them on the basic education meeting, whether it be virtual or in person, are going to. Are going to walk away feeling a lot better and be like, okay, but there's going to be 8 to 10% of them that have a disabled child or there's something with a prior marriage or something like that, that then they're going to schedule that virtual. So I don't know if you call that wellness or not or just maybe take an education a little more specific to that individual's needs. [20:01] JD: But yeah, actually, I Feel like that kind of opens my eyes to what really is an evolution of our industry. I mean, that's how we'd want it to happen, right? Like we'd want those big widespread meetings to kind of then motivate smaller, one on one, more detailed, more nuanced conversation. I mean, that's the dream of financial wellness and convergence in the whole nine. So it's nice to hear it happening at. Remind me again, your wellness company. Sorry, Idiot. I am. What's it called again? [20:35] Scott Colangelo: The. The Wellness Company. Financial Fitness for Life. [20:37] Justin: Yeah. [20:38] JD: Financial Fitness for Life. Yeah, Financial Fitness. Fitness for Life. We were going to talk about that a little later because how many companies you're involved in? Let's. Let's go to our last kind of headline. Actually, fuck that. Let's Spin the Wheel of Ice and then we'll go to our last headline. Spin the Wheel of Ice. [20:54] Scott Colangelo: The Wheel of Ice. [20:55] JD: The Wheel of I. [21:02] Chad: Oh boy. Well, that is so many in a row. [21:07] JD: It just so happens that I. [21:09] Justin: You've been getting hammered with this lately. [21:11] JD: Smirnoff on the way. It's not. It's not smearing off ice, so I'm guessing it's what, vodka? I don't know. No, it's something fancy. Oh yeah, it's got a flavor to it. Okay. [21:26] Mark: Drink the whole thing. Dude, that was tiny. [21:29] Justin: Got a rating of 1 to Malort. [21:31] JD: I will right now. Chad, did you get a chance to look at the state based individual retirement accounts are a perfect private public partnership type of comment there? [21:39] Chad: No, no, but I mean, I. If you're talking about the podcast that. [21:44] JD: Yes. The. The podcast spoke to this woman, District of Columbia. Yes. [21:51] Chad: There you go. [21:54] JD: I don't know if she runs, but she's a big wig at the center for Retirement initiative. Scott, she launched it. [22:00] Scott Colangelo: She launched it. I have not heard of her. [22:03] JD: Isn't that fun? I had not either. And I think that that's a really cool moment. Neither had. Chad, when you're in this industry, you live, breathe and sleep it and you don't even realize that things like this are happening. This woman in this initiative, this little group is actually running around and counseling all these states that either have state individual retirement accounts or. Or are thinking about putting them in place, have certain legislation that's heading down the pike. She's involved and she's bringing them all together to talk to each other and learn from each other. So I thought that was really interesting. And if you go to their website and you sign up for an account, you can get a lot of really cool kind of interactive maps and it can show you like what Minnesota is thinking about doing from a state run plan. But I want to pivot this to you real quick, Chad, while I finish this little fancy bottle. Everyone knows about the boom we had in California. Okay? Everyone's heard about that ad nauseam. If something's going to happen in another one of these states, and especially if they're going to have some type of mandate, do you think that advisors should be aware of this and could they benefit from this? I guess my point is like we crushed it in Cali. We want to share this news with other people. Can they also crush it when this happens in Minnesota? And could they come from other states? Could they be remote? Anyways, take off. [23:27] Chad: That I truly believe. And JD's teeing this up because we chatted about it from a third party administrator perspective that you should be building a program around this. I know that the advisors that are going after this, the state mandate plans are saying I'm doing it to protect my other lines of business. I'm doing it to protect my private wealth that I have with that business owner. And I don't want anybody else involved. I'm doing it out of the kindness of my heart. And I know that the startup space doesn't necessarily bring a lot of profitability if it's not something that you've built into your practice and, and have an offering. But for the advisors that are growing the book, the advisors that have an established business practice and have a service model set up, damn right you should be building out your pitch for these small, closely held businesses that don't have anything. And you should be going after them with a way in which you can simplify the process but also create some profitability. Go in with one vendor or two vendors. Go in with a simplified lineup. Go in with a 338. Go in with what your offering is in that micro space. Go in with a build expense. [24:32] JD: Go in with understanding secure 2.0 tax credits. [24:36] Chad: That's what I mean. Go in with a build expense. Justify your role. Allow the business owner to get a tax credit. Build out one presentation that you can use vastly across hundreds, thousands of plans. [24:49] JD: Wait, Scott, are you just going to drink every time Kading tells you to? Because I don't. [24:53] Scott Colangelo: Kidding is my boy, man. So I'm going to. Yeah, if he tells me to drink, I'm going to drink, Scott. [24:57] Chad: So yes, build it, jd. [24:59] JD: Okay, I love that. With Prime Capital Investment Advisors, qualified plan advisors, I'm imagining I'm Just guessing, but maybe you're not all your people aren't really into startup plans and stuff. I don't know. Do you motivate any of them, maybe the junior people to like do startup plans or. [25:17] Scott Colangelo: Yeah, we have. [25:18] Chad: Yeah. [25:18] Scott Colangelo: I mean obviously we have over a couple hundred advisors and they all have different marketplaces. The younger advisors definitely do that because it gets them in the door with business owners that, you know, because a lot of these business owners have, have real wealth, even though maybe their company is small or whatever. So it gives them an entree into both building a relationship, getting starting to build their retirement practice over time and getting in with the, with the cfo, the CEO, the owner, picking up on the business. [25:49] Mark: Bartender, make it a double. [25:51] JD: I think that was two. So with that at those. [25:58] Mark: Don't forget, don't forget, Scott, you have a dinner to go to. [26:01] JD: Don't. [26:02] Justin: I know. [26:02] Scott Colangelo: That's why I'm dressed like this. [26:05] JD: Okay, okay. So to, to double down on that, do you, as companies, as the companies you run, do you look at these states and then try to educate your advisors to take advantage of this? And are you familiar with everything I just talked about that happened in California where we just had like two years of like crazy new business? [26:28] Scott Colangelo: I didn't know to the extent you guys had the success in California. I am aware of them. I'm not an expert in them. I would say that we have put zero resources towards educating our advisors on these mainly because our, you know, our wellness and everything else is growing so fast that, you know, it's kind of [26:48] JD: only so many hours. Only so many hours. Well, that's kind of good to hear. So I actually kind of like that. So that reinforces the point that Chad and Mark and Justin and I are trying to make here, which is, okay, everyone, we've been through this for two years. So if you have any strategy to focus on the next state that's going to especially have a mandate on an, on a state run individual retirement account. Chad is saying, and I'm backing him up. And I'm sure Mark and Justin would chime in too to say, look, you should spend a lot of time preparing strategically on how to take advantage of that because it will be a boom for your business. [27:26] Chad: It doesn't take a lot of time was my point. Most of the folks already have a model built out for larger plans for, for plans that are super profitable. Narrow your, your request for proposal process, narrow your vendors. Create one lineup. That doesn't take much time. If you're already in this space. And Scott, to your point, I think you teed it up perfectly for us. A lot of these business owners do have wealth. And you said they're smaller businesses. I said to JD in our strategy meeting this week, and I'd have to go back and check it. I would say in the last three [27:59] Mark: years, such a good meeting. [28:01] Chad: Number of startup plans I. We wrote that weren't safe harbors. [28:05] Scott Colangelo: Ouch. [28:07] Chad: Less than. Less than 5%, guys. Maybe less than 10%. Number of startup plans you wrote that weren't safe. These business owners were sheltering so much. We're putting in heavy profit sharing. We're putting in cash balance. They're putting in $300,000 a year for themselves into this plan. And they are super profitable. These smaller businesses are super profitable for these advisors. And you have to be willing to go after it, find it. [28:33] JD: We have strategy meetings. I'm gonna be. I want to have an honest moment with everyone out there. I. I know Jim Sampo says Guideline sucks, and I know I talked mad about guidelines for a long time. I was. I don't know. And Scott, I don't know how aware you are of guideline and. And Kevin Bousque. Boosque. Boosque. I busky. But I was impressed by him. I was ready to lock horns with him and kind of like fucking go at him. And I was really impressed with his kind of humbleness, his willingness to answer our questions and being very direct. And then, like I said numerous times two weeks ago, and then I just can't ignore the fact that the company has sold 40,000 plans, albeit small plans, 8 billion in assets under management. But in the course of. Of eight years like that, I truly feel like that's a success. I never would have seen, like, I just didn't think someone could come from outside of our industry and grab that type of market share in a short period of time. And so my hat was off to him. But what he also did for me, to Daniella's point, is kind of motivated me, kind of inspired me. And I was like, if this motherfucker can come from outside the industry and crush it over eight, eight years, like, why can't I fucking pull up my bootstraps and start having strategy meetings with Chad? And. And like, you know, that's the problem right there. [30:03] Mark: That's the problem. [30:05] JD: And kick some ass. So anyways, the guideline dude actually inspired me. Want to kind of grow our business even more. So Mark starts selling some shit, bro. Let's go, buddy. Kidding. [30:16] Mark: Well, yeah, if you guys actually Put in strategies that work that would really help. I don't know what you guys talk about, but y' all never communicate with us, so it's fin. [30:27] JD: All right, Scott, let's talk to you. I ran into you several years ago. They kind of lined me up with you to talk to you about the financial fitness for life. Did I get that right? [30:42] Chad: Yeah. [30:43] JD: Okay. And that was kind of my introduction to you. And I'm sure that's phenomenal. That's great. And I want to hear about how that's going to. But I also look at your bio and I go, okay, here's a guy who is running this like really large registered investment advisor, Prime Capital Investment Advisors. And you tell me when I get this wrong at any time. So. And I'm going to drink for this because I want some more great goose, but this is a big RAA shop. What are we talking about? How many, how many advisors and was qualified plan advisors just kind of your own advisor shop before that? Like what came first, the chicken or the egg? And help me understand your entrepreneurial path here. [31:27] Scott Colangelo: So we had, we, we started the RIA was in I think 99 or 2000 JD don't quote me if it's right around then. And we started to build. We started doing risk based portfolios. Just five risk based, really plain vanilla. And those are growing really quick. We had an investment advisory committee managing them so our advisors could just go out and sell and service clients and then we'd manage the money. And then I had a customer in Boston say, hey, would you manage our retirement plan? And I told him I knew enough to be dangerous, but he said, yeah, that's great, you know, whatever. And I went out and met with the employees and the participants and it went really. [32:06] Mark: I tried to get you, Chad, and [32:09] Scott Colangelo: I think that it. And I really enjoyed it. And so we started to build out retirement. [32:15] JD: And. [32:15] Scott Colangelo: And what happened was through the years, the wealth and the retirement grew together. We had the same investment advisory committee sitting on top. So it was managing the core funds and the model portfolios. And then those same principles were being used to manage the money for wealth clients. So they actually kind of grew. They kind of grew up about the same time, but I sort of. [32:32] JD: But I sort of the same time, but I almost got it back. I almost got it backwards a little bit. Yeah, the qualified plan advisors was the retirement plan company thing about a year [32:42] Scott Colangelo: or two after we set up the RA on wealth. Yeah. [32:44] JD: Okay. [32:44] Scott Colangelo: That makes 21 years or 22 years together. I'm in Trouble. I'm terrible. [32:52] JD: Help us understand how many advisors we're talking about and how many plans. Like give us a scope to your size. [33:00] Scott Colangelo: So we have a. Probably 185 to 200 advisors with a couple acquisitions recently. So I'm not exactly sure the exact number. And then we have about 1100 retirement plans and then trying to think what else. About 51 offices. That's our sort of current makeup. About 60% of our revenue is wealth and about 40% is retirement. Just a couple years ago, it was 60% retirement and 40% wealth. So that's mainly because of. Some of the acquisitions we did recently were more wealth based. [33:35] JD: Should, Should I consider you in an aggregator in the same vein as a Vince Morris or Cap Trust or whatever? That's. Those are your peers, your competitors. [33:45] Scott Colangelo: I mean, listen, we. Most of our growth was organic up until a year and a half ago. And then we did a bunch of acquisitions last year just because the interest rates, you know, a year and a half ago, because interest rates were so low and the arbitrage was so high, you know, and then as soon as rates moved up, we're like, no, we'll just keep growing organically. But we were, we actually were doing more strategic acquisitions. We're not just trying to buy everyone. No disrespect. They have, listen, they have a company, great model, no beef with them. I know Vince, I think he's very talented. We just, ours were more like, hey, you know, we need to build out family office. We need to build out. You know, we had a, we had a need for more fiduciary support. So we bought a practice that had an ERISA attorney and a team and we, So a lot of them were just. We had to fill some. [34:33] Mark: That's a hard one, I will say. [34:35] JD: How do we define that? How do we specifically define the difference between a national aggregator or just a bigger. I'll drink for this RIA shop that's just trying to add on firms. What is the difference? Is the difference big venture capital backed or private equity backed money versus just. I'm curious what your thoughts are on that. [35:00] Scott Colangelo: Well, we don't have any PE money right now. Oh my God. Yeah. [35:08] Justin: I'm not going to make dinner. [35:09] Scott Colangelo: I'm going to be walking to my dinner. [35:11] JD: So even, even when the interest rates were low and you said money was pretty relentless though, when money was. Was free and accessible, this wasn't private equity or venture capital. You were just getting your own loans and stuff for money to acquire these firms. [35:30] Scott Colangelo: We have a We have a investor who's not private, who's not private equity. I'll say the whole world. This whole word. So I can stumble out of here. That is a. He owns, I think, less than 18 or 17 or something like that. But he's one of our biggest clients, and just. He wanted to be our sort of access to credit and stuff. Yeah. So it's been a real. We've been very lucky. He's. He's awesome. We don't have all the governance. We don't have all the control issues that having a private equity firm would have. He's a friend. He's interested in our firm growing. [36:05] JD: Did he recently buy Twitter? Okay, so we've got the Prime Capital Investment Advisors. We have the Qualified Plan Advisors. But now I hear, like, you're involved with our buddy Matt Wolnowitz and Income America. So. And I think when I went to the original press releases, it was like the role of Prime Capital Investment Advisors was as a. Like a consultant, almost kind of helping them build the. The product. Can you help us understand more? What is your role there? Why. Why are you involved in that? [36:42] Scott Colangelo: That was my product design, and I brought it to the consortium and created it. Yeah, we created it and then brought it to them and pitched it with them to. To a number of different companies. Candidly, we've stepped out of the management of that. We're not. We're very barely involved in it anymore. The. [36:59] JD: The. [37:00] Scott Colangelo: Matt is the president of Income America. He's. He's really the guy that's kind of running that. And so it's really candidly actually running that. [37:09] Mark: Or is he just running around to conferences, taking selfies? I'm just. I don't know what he does. [37:14] Scott Colangelo: I think. I think it's a little bit of both. [37:18] JD: I want to get a. I want to get a. A fun together from everyone in the chat bar. If we can get Matt Wolnowitz a new sport coder, too, I think. Yes. [37:29] Mark: His wife is like a judge now. I know he can afford it. [37:31] JD: Okay. [37:33] Scott Colangelo: Yeah. [37:35] JD: Okay. So you're. You're kind of stepping back from that a little bit. And I hate to pry in your personal business, but so. But what? You just have some money with them or, like, you want to see it grow? You've reached out to me privately. You're excited about. [37:51] Scott Colangelo: Oh, yeah, that thing's going crazy. I mean, they signed. They did 46 plans last year. Everyone's saying there's no demand for these products. They just. They just had 5,300 plans go live in April. So you guys, like, everyone's saying, oh, guaranteed income isn't going to work. And anyone. Not if advisors aren't educating themselves on these. You know, that's a raise your. [38:16] JD: Raise your hand in front of you or in the chat bar, however you think you can. If you listen to the Nevin and Fred podcast on this. I put it in there. Okay, so Scott, I'll tell you the most. [38:37] Mark: It's a meatloaf. [38:40] Scott Colangelo: Hey, Mom, I think I have the sun behind me. I'm gonna turn around. [38:44] JD: I'm just drinking straight Grey Goose. I got nothing else to drink. I would argue once again, great podcast. You know, I love these two people. They do a good job. But Justin, you, you said you listened to it. Your overall takeaway from it was they seemed a little pessimistic about it. Did they not? [39:06] Scott Colangelo: Did you see my, my comments to Nevin on the, in the, in the LinkedIn stuff? It was funny. I love Nevin and he's so. He's done just, I mean, think about all the great things he's done for our industry. [39:15] JD: 100. [39:16] Scott Colangelo: And I just said, hey, I said, here's the problem that Nevin and reporters and everyone have out there is that they're associating utilization with demand. Here's the deal. Demand is there. Participants do want it. Plan sponsors want it. [39:36] JD: Why don't to their point on the podcast, then why don't they use it when we put it in front of them? [39:41] Scott Colangelo: That's what I'm telling you. Because right now the problem is, listen, give me two minutes, I'll explain this. 2014, Mark, Mark Evry writes a letter to the industry. He's. He's under Janet Borzi at the time in Department of Labor, and he says, we need guaranteed income. This is really sort of the real inception of the Secure act and stuff, years before. This is really what's got the thing going. And he said, listen, you know, ultimately we have a situation where you have [40:09] JD: to drink for 2.0. [40:10] Scott Colangelo: You know, we have a situation where the problems that they had with guaranteed income were one, these products being proprietary to these products not being portable was a big one three, single insurer risk. So a participant pays for 20 years and they fail. Okay? [40:29] JD: Right. [40:30] Scott Colangelo: Portability is the number one problem in the business. Okay. So what happens is what's going on right now is all these products coming out. Unfortunately, I'm being honest with a lot of them are proprietary. So they have, you know, they have some of those. [40:46] JD: That's capitalism. You're gonna want to create a. [40:48] Mark: Let the man speak, J.D. [40:50] Scott Colangelo: no, I understand, J.D. but the problem is that the. The industry's moved away from proprietary solutions. The industry's moved away from implicit fees. And a lot of these new products are built around, hey, there's no cost, which is just asinine. Okay, agree. But here. But the big issue is portability. And so you say, why is there no utilization or, you know, because the reason is that the products are not portable right now. And, and all these companies, it's taking a year, two years to get these middlewares set up so that then they can move from one record keeper to another. So, for example, Matt Walnut deal in Come America is portable between Nationwide and Lincoln. And then there's two large announcements coming out very soon where they're. There's going to be a network of portability. And so that product is ahead of everybody right now, candidly. But that's a lot of walnuts is working. SS&C has done a great job, but McCruity's working on this with other products like Nationwide's Nexuses and stuff like that. The bottom line, you guys, as soon as these products are readily portable. And so what do we mean by Portable1, the plan can move from a XYZ record keeper to an ABC record keeper and keep those would move. But real portability, which is like what S and C has done, is imagine you leave your company. You have a $500,000, $500,000 market value, a $700,000 guarantee, and you leave your company. You work at Boeing and you go log in at ge. You take a new job at Geological Login. It recognizes your guarantee. That's what's happening. So. [42:25] JD: Okay, I have a thousand questions. [42:27] Mark: Okay, I'm gonna say one thing, Scott. We have a lot of people that come on the show. They're great, they make a lot of good points. But the chat bar was eating every word you just said. I could have rang you up for now, three different. [42:41] Chad: I had four. [42:43] Mark: And I'm gonna take every single one of them for you because I want you to go to your dinner and have a good time. [42:49] JD: Okay. [42:50] Mark: All right. [42:51] Scott Colangelo: So you want me to be able to function at my dinner. That's right. I'll do. I'll do one big one. [42:56] JD: You say, like, portability. Portability is like, one of the biggest hurdles. And you say that that's the reason why they're not engaging or signing up for that. I'm not so certain I agree with that. [43:08] Mark: I don't spend A lot more time. [43:09] JD: You spend a lot more time thinking about this than I do. But, but let's. Let's go to portability first. So if the Nevin and Fred podcast, they talk about something which I'm sure you're aware of, it was Fred Reich. And we all worship and love Fred Reach. I mean, we all have a little shrine. We all have that little shrine next to our bed. You know, that you light the candles before you go to sleep for Fred Reich. And he said, look, I think this thing works if, like, we can give it a ticker, right? If it can be a collected. Collected investment trust. If it can. [43:45] Mark: Well done, JD and what he meant [43:47] Scott Colangelo: by that, the Income America is a collective investment trust. Fred helped design it. [43:53] JD: Okay, Scott, I'm not. First of all, let's remember something on retirement, we're not trying to pimp your product. We're trying. [44:00] Mark: I know that. [44:02] JD: No, no, no. So I'm just talking in general. And so. So what he's saying is like, look, if it's an actual ticker, then you've got your portability solved, so long as that ticker is available in every different record keeper. And so you just said it. Is that the answer to this, how you see portability, or. No? Okay, yeah. [44:21] Scott Colangelo: Fred's not right about that part of it. So that you have to have a middleware that connects to the different record keepers so that. Because you have to understand something, jd. These insurance companies need daily downloads to hedge the risk. And so when you have multiple record keepers on a product or a participant can move from one plan to another plan, fundamentally you have to have that connectivity from a central data point. I get it. I get data, different things. So Fred's not right. Just having the Q SIP makes possible the middleware makes it operational. [44:52] JD: Because this is insurance. [44:54] Chad: So I feel like we've looked over some. I need an answer to before we can continue into this. When, when you're saying the usage, Scott, and you mentioned this earlier about utilization side of this, are you talking about it from a plan level or from an individual level? [45:10] Scott Colangelo: So when I'm talking about utilization, I'm talking about actual assets going in these things, which means the plan has to decide to make it available and participants have to use it. [45:18] Chad: Okay, now that's where I struggle, though, and be honest with me, because maybe I'm being naive in this. I get why the advisor community wants it to be a ticker. I get what the advisor community says it needs to be portable. I get why the advisor community may not want to put it on a client because of those things. The average participant that is a good fit for this kind of solution does not understand any of that. They're not making the decision not to utilize. [45:44] JD: I'm going to. [45:44] Chad: Because of those reasons. [45:46] JD: I'm going to defend Scott for a second. You don't think they think that through when they're deciding to sign up? That. Wait a second. What happens when I leave this employer? What happens if I retire? Like, can I roll it to an individual retirement account? Can I roll it to my next employer? You don't think they worry about that? [46:01] Chad: No. And look at Danielle's point in the chat, like, remember how hard it was to introduce target date funds to people and to really help them understand it? And that is simple. [46:12] Scott Colangelo: So you just. I was just going to say to you, this is just like the target date. [46:16] Chad: Yeah. I feel like they still don't understand target date funds in all reality. And I know that this fixed income SOL solution, this guaranteed income solution is right for these people. [46:27] Scott Colangelo: Right. [46:27] Chad: I just think that we have not done a good job telling people why it is right for them yet. [46:32] Scott Colangelo: But see, you're not. There's no audience to tell them because the plan sponsors haven't added them because they're not portable. [46:40] Chad: You just made my point, Scott. You just made my point that it's the plan sponsor and the advisor that's saying, I'm not putting it on the plan yet because it's not portable. [46:48] Scott Colangelo: That's exactly right. That's the biggest. [46:50] Chad: That's the difference between utilization. To me, it's not a great answer. [46:53] JD: That's a great answer. [46:54] Scott Colangelo: Then you're exactly right. [46:56] Chad: All that. [46:56] Scott Colangelo: We're all kind of saying the same thing. Fundamentally, you have to have portability so that it's a digestible solution for a plan sponsor because they don't want to get stuck with the same record keeper. Then when it's as digestible to the plan sponsor. All right, then you move to the education process, to the participant. We're not there yet. [47:15] JD: By the way, I should have started the show with this topic because I feel like we got another 30 minutes on this. But. Okay, but now that sounds to me like that's an uphill battle. Now you're woven into the industry and I loved how this was a consortium and that you brought. That was the coolest thing about this when the first press release came out was it had all these different logos involved within our industry. I think it's one of the first times really where we. Oh, wow, look at all these competitors. Like playing together on something. So I say it's an uphill battle. Can you tell me differently? Like, no, jd, we're going to be able to get Voya, Empower, principal ADP paychecks, guideline, everyone to like jump on this. [48:05] Scott Colangelo: I mean, I honestly, I wish I had the ability to share with you what is going to be happening, but I don't. [48:12] JD: You got some contracts laid up. [48:13] Scott Colangelo: There's stuff. [48:14] Mark: Don't worry, Scott. Nobody watches our show. You can tell. [48:17] Scott Colangelo: I can tell you everything. So now listen, you guys, it's not just us. The portability is going to be, the interconnectivity is going to, I would say it's about two years out from being industry wide. I think there's other products that are going to be, that are going to be very portable in the next few months. And I also think that once that happens, you're going to see a massive uptick in utilization. But again, if they were available tomorrow and you had to add it, it's still six to nine months away. So you're still talking a year out for real utilization. I, I just, for me, it's a little bit of a. It drives me nuts when I keep seeing articles like there's no demand. No demand. [48:56] JD: Yeah, right, right, right. [48:57] Scott Colangelo: It's just not right. Like it's like it couldn't. Further from the truth. [49:01] JD: Hey, hang on, Chad. Yeah, that's, that's actually great insight because you're more on the inside of this thing and even Nevin and Fred and myself and everyone out there chiming in is kind of looking at it from a surface level. And I like what you just said. It's like we're being a little naive to all the things that need to click into place and happen over time. This isn't going to happen overnight. And so I, I appreciate you sharing. [49:30] Scott Colangelo: Target date funds first came out, there was two turtles. The first hurdle was fundamentally there was no education. No one understood them. The second hurdle was operationally the QDIA structure of the technology. The record keepers wasn't in place. I mean, they wasn't there. [49:49] JD: Qualified. Qualified default investment alternative. Chad, you had a thought? [49:53] Chad: Yeah, I'm just the no demand for it bothers me. It's almost like the state mandates that we were talking about earlier. When people say like these businesses don't want plans, I want to argue back and go, you may be right. But there's two issues with that statement. Do the businesses need plans? Yes, they do. These employees need access to a Vehicle to save through payroll. And second, most of these small businesses haven't had an opportunity to understand the benefits of a plan. And when I look at people saying there's no demand for these solutions, I have the same response. Is there a need for them? Yes, we need this in our industry. We know that. And so we need to help educate the people and help them understand why they need this so that there is utilization. And I love that you guys are working on that or maybe not you all but Income America and others to solve that. Because there is a need, there is a demand. We just don't see it yet. [50:47] Mark: Because there's a need unknown demand because nobody knows. [50:51] Chad: Well, he wants to admit. [50:54] Scott Colangelo: I think what you're going to find is here's how this thing will stage out, okay? Fundamentally it will end up being used as a qualified default investment alternative. [51:04] JD: Oh boy, here we go. [51:05] Scott Colangelo: A drink. [51:06] JD: Actually where I wanted to go next. Yeah, go next. [51:09] Scott Colangelo: So I'm actually learning. I'm a little hard headed guys. But, but, but ultimately, once that happens, I don't think that you're going to see a broad based like, okay, let's use the whole Target Date suite as the qualified default. All right, Scott, we all, I realize you guys do this so that you can drag out the thing and make people say the full words instead of into an acronym. [51:33] JD: We all, there's a lot of. [51:34] Mark: Scott, it's because we don't actually know what any of it means. So we need to learn. [51:37] JD: Yeah, there's a lot of pros. There's a lot of pros listening in. So we all understand that. But I'm glad you brought that up because you were talking about the portability being the biggest hurdle and now I understand why the way, just because of you tonight. But now let's go to that next step, okay? And I think you just showed your hand to us and I've bitched. I want to be clear. I've complained about this on this show before. The qualified default investment alternative strategy of the guaranteed income, you know, retirement plan income, you know, solution or whatever. And what I think is going to happen is so now that portability works, plan sponsor says, yay, okay? Now you're at a different point in this venture where you're like, okay, here are 300 employees. We'll just have some fun sitting in that room with the pizza at the back, in the back of the room, you know, whether that happens or not. And we're trying to explain to them, look, you can use this guaranteed income solution. I Think this is going to go right over their head. I think no matter how simply you design it. And I know that was part of your, your goals, your mantra. When I'm saying you, you're not income America. But when income America came to fruition, simplicity was also a goal. And I think you tackled part of that. But now how can you expect those employees to sign up for this? I think they're not going to do it. And your only solution will be qdia. And if that's your only solution, real scalability. Now I'm. [53:17] Scott Colangelo: Hey, J.D. oh, who's that cute guy? [53:20] JD: He can't hear you. [53:21] Scott Colangelo: So, so listen, here's the deal, guys. That's where I was, that's where I was going. I was saying that there's going to be a phase in. The first phase in. This is how I believe, just talking to so many people about this topic, the first digestible phase in for a plan sponsor is going to be default participants, 50 and older into the guarantee. [53:40] JD: Okay. [53:40] Scott Colangelo: Because then you can say, we've guaranteed your retirement. If you want to opt out of that, opt out of it. But as a plan sponsor, we're doing a safe harbor. We're matching, we're auto escalating. I think that's all this stuff. And we're gonna, we're gonna, we're gonna default you at 50 and over. If you don't want your money guaranteed, that's on you. That's. [53:59] JD: Scott, I, I'm telling, I'm not trying to be an. [54:02] Mark: Where's the catch? [54:04] JD: I think that's. No, I think that's a very big ask for a, for a committee at a plan to make that call at 50, 55, whatever, 60, 65. [54:16] Scott Colangelo: I don't care the age. [54:17] JD: Care what age is. [54:19] Scott Colangelo: Oh, why I couldn't, I couldn't disagree more. No way. [54:24] Chad: Why is that a big ass JD [54:26] JD: Scott, I've been running. [54:27] Scott Colangelo: You've just, you've protected your company. You're like, hey, we did all of this for this participant. And Garrett may put him in a solution that we screen that's high quality, that's multi managed, multi insured, portable. And we've guaranteed that their money is protected. If they want to opt out of it, they can opt out of it. But we are going to be as paternalistic as, or maternalist as we possibly can. [54:51] JD: You, you show up in your nice spark coat with a little, little napkin in your pocket with the confidence and the experience that you have, and you say that and the committee will agree you want the rest of the industry to sell it with your skills. It's just not going to happen. Like, I just, I just think that's, that's. You got to have so much confidence over that committee to make them decide to default people in this into an investment like this. [55:16] Scott Colangelo: But JD this is the same argument that target date funds had. You. Yeah, you. You can sell it to them or [55:22] JD: whatever on steroids a little bit. [55:25] Chad: Like, I don't understand your point, J.D. i'm confused. Why? If we believe for the average person at age 60 that this is the right fit, why wouldn't we want to nudge most of them into it? And then the ones that don't want to be in it will not take it. [55:44] JD: The answer being. [55:45] Scott Colangelo: And don't forget, you have safe harbor protections now to use these products, too. [55:50] JD: Yeah, I'll get that. Fair enough. Great. Great point. Yeah. And I don't. Hey, first of all, I want to be clear. I want this to happen. [55:58] Scott Colangelo: I know you do. Yeah. We've talked offline about it. [56:00] JD: I'm just trying to. I'm trying to be a realist in terms of how it happens most effectively. And Chad, to answer your question, because there's extra layers of complexity and because there's extra fees and because it's all those nuances, like, it's far more complicated than a target date fund. I think a sponsor committee looks at a target date fund just like a little nuanced version of a mutual fund or an investment. Like, it makes a lot of sense. But when you start talking about actually giving people payments for the money that they've built over time in the retirement, that's a far more intimidating conversation to have. And I can't imagine a lot of the committees that I sit on today having the balls to do that. [56:46] Chad: Totally fair. I get that. [56:48] JD: That's my point. [56:49] Scott Colangelo: I do think that the tide has turned, though. I mean, listen, this whole concept of wellness has made fiduciaries better. It's made them think more about. And, you know, you know, the whole wellness story. You now have HR and this and, and human resources in the same. [57:06] JD: I love how he covered himself. [57:09] Chad: Sorry. [57:10] Scott Colangelo: I mean, listen, I mean, he's over here. I mean, he's nailing me. So. But listen, the bottom line is you now have human resources and chief financial officers understanding that having, well, people. Well, mental wellness, financial wellness, all those better employees, they retire younger, they'll have less medical costs. All those things. They all agree you should do it. And because of that, it has kind of brought these people Together where this more paternalistic approach to retirement has happened. I've seen it in my own clients. These conversations are hard now. It's like if. I mean, listen, most of the people in our business, I really think of the retirement industry are some of the best advisors in the industry because they, It's. It's a more technical space. And because it's a more technical space, I think they have to be better students to the industry. I think most of them could tell this story. They don't have to get as technical as I am, because I don't think it's necessary. But the reality is to sit in the room and say, hey, you know, fundamentally, you've done so much to help these people check the final box and make sure that they can. They never run out of money. And you know what I mean? And I think most, Most committees would go, I get it. You know what I mean? And by the way, it's a safe harbor. You're protected. Why wouldn't you just. [58:23] JD: Hey. [58:24] Scott Colangelo: And if a participant wants to opt out, then let them opt out. You know what I mean? [58:28] JD: I'll literally jump on your bandwagon for a second. And I don't think we're there right now, but imagine when we are there. Yeah. It would be a competitive advantage for an advisor to walk into a point of sale and say, look, everyone that's come before me has helped your people save for retirement and then just kind of kick them out the door. I'm here to help you. Not only help your people not only save for retirement, but actually live in retirement. And this is how I do it. So it can be a great, like, competitive advantage to an advisor that embraced this embedded right solution to do it. I, I totally get that this might [59:05] Mark: be a really stupid thing to say, and I'll go out on a limb here. The government is stepping in now with 2.0 to solve the coverage gap. Do we ever think years from now, in the future, that something like this could actually be required? Like, yes, actually in legislation, that this is now how retirement plans work? [59:30] Scott Colangelo: What if I put it a different way for you? Because I agree with you, that could happen. What if I put it a different way? What if we don't get this right? The government takes over retirement. Oh, okay. [59:40] Mark: Right. [59:40] Scott Colangelo: We don't get this pensionized fee. [59:43] JD: You mean Social Security? Is that what you're talking about? [59:46] Scott Colangelo: No, I'm saying that if we don't get 401k plans right, where we can guarantee income to these people, almost like we're pensionizing. [59:53] JD: Oh, I hear you. You're jumping on. [59:55] Scott Colangelo: When does the government come in and just say we're just going to take over this thing? [59:58] JD: Because you're jumping on Brian Kraft's side in this recent argument where the government's trying to create their own kind of mandated plan. You're saying that guaranteed income or retirement income could be another feather in the cap of showing success for our private retirement. [1:00:17] Scott Colangelo: Absolutely. And it really gives us a protection away from the government and that hey, we've proven. Let's just say that five years from now 10% optimistic. Well, no, let's just say, let's say that five years from now 10 percent of the industry has this option available and you look at those 10%. I am going to make the. By the way, Prudential had statistics on this with their Income Flex product which by the way Income Flex, who Doug McPherson designed at Prudential 12 years ago, is an awesome product and it was really well designed. It didn't do well, but it was ahead of its time. Ahead of its time. [1:00:50] JD: Right. [1:00:51] Scott Colangelo: He that product. Imagine. But they have statistics showing that those participants that are in the guaranteed product and with Income Flex did not get out of the market when the market was down. What is the biggest impact to participants? What is the biggest thing that happens that sets them back in retirement? It is absolutely, absolutely them getting out at the wrong time and then missing the recovery. And they can never make that back in their life. [1:01:17] Chad: Versus starting early, I say versus starting early. I, I feel like, and I'm, I just chatted back with Rob. I think the number one issue that we have and people are chim in on the chat bar about the solution not being great for someone who has a smaller balance. And, and you're taking into account people making emotional moves and, and not getting back into the market at the right time. I think we still have the issue which we're trying to solve of coverage and starting early. If we solve that then people will have meaningful balances at 65. [1:01:49] Scott Colangelo: Scott. [1:01:49] Chad: That's right. Income will be huge. It will be so good. [1:01:52] JD: Let me set you up. [1:01:53] Scott Colangelo: Awesome. [1:01:54] JD: Scott, answer two questions for me. [1:01:55] Scott Colangelo: Yeah. [1:01:56] JD: One, how do you, because this, I know you know that question. How do you feel about the argument against how like if the average plan has a fifty thousand dollar balance or seventy five thousand dollar balance for the participant, then why are we even talking about this? Because we can't anything real. And then the next question which kind of connects to that I want to ask you. [1:02:17] Mark: Is that even a question because yeah, [1:02:20] JD: he knows what I mean. Because we're micro market people. Are we also being naive in that? Look, this pride will never take hold in the, you know, two million dollar plan with 30 participants. This is way up market from us and we're just being weird. [1:02:38] Scott Colangelo: No, that's the great thing about these solutions are they're institutionalized, institutional type products that because they're institutional and because it's a thousands of participants, millions of participants on different platforms, they're going to get the same pricing that somebody else is with a much larger plan. So that's a benefit. But let's talk about the other thing. As far as, you know, as far as like, oh, it's only a person with 50,000 has 50,000 and they've made two bad decisions. They got out in 08 and they missed. They, you know, they got, they went down 45 and missed a 72% rebound from March 9 to November 9. [1:03:14] Chad: Right. [1:03:14] Scott Colangelo: Or October 9. I'm sorry. Now that balance could have been 100 something today instead of 45,000. So if, listen, is a hundred thousand enough? No, but if it helps participants make better decisions and they hey, I got a guarantee I'm going to stay invested, which is what the data shows then, then why? So to turn a blind eye and go, oh, don't use it. Who cares if they have 45,000? That is what we're supposed, that's what we're supposed to be fighting for as retirement advisors is the small guy, you know what I mean? The one that really needs the help. And so I think these products are extremely valuable to the small ones who are less educated. [1:03:52] JD: Okay, so then can I ask, this is another question I've had in the past. You just reminded me, are you saying that a solution like this could also be viable for someone who's 30 or 40 instead of putting someone in who's, who's 60. [1:04:10] Scott Colangelo: I, I think it's definitely makes a way more sense for a 50 year old. A 50 and older, I will say. But here's what I want to explain to the dynamics of the marketplace and the. If you guys think about it, millennials are the most risk adverse group with the exception of depression babies. Okay, sure. So if you could say to one of them, you can, you can invest in an aggressive asset class and have your money guaranteed. 30 year olds would select it. They're more apt to select it and it will help them make better decisions when the market goes down. You guys saw what happened during the, during the pandemic. 45 plus percent of people got out of the freaking target date funds when they got hammered. It's like, they're not going to make that money back, you guys. They're not going to make it back. And by the way, you know who those people were? You're freaking millennials jumping out. So I don't think. I don't believe that they should spend that money. I don't think it's worth the fee between us. From pure investment theory, it is not worth paying the fee for a young person. However, if it keeps them invested in a down market, it better. You. You bet your ass. [1:05:17] JD: If you. If you don't have the time to listen to Nevin and Fred, scroll to like the. Pretty much the very end and listen again to the. God. Fred Reich say something that I thought was really interesting. [1:05:30] Mark: Hold on, say it. Who's going to be on our show on Sunday? [1:05:34] JD: Thank you. Fred Reich will be on our show this Sunday live at I for. I forget the time look for doesn't matter. Yeah, it'll be in the evening on Scottsdale time, which is this where I am right now. So look for that, Fred. Yeah, we were looking forward to that. [1:06:02] Mark: But I have a really important question for Scott. Scott, you're supposed to go to a steak dinner tonight. [1:06:07] Scott Colangelo: Yeah. [1:06:08] Mark: But as it stands right now, would you rather have Taco Bell? [1:06:13] Scott Colangelo: Taco Bell. A gordita. Sounds awesome. [1:06:16] Mark: Right, Mark? [1:06:18] JD: Are you referring to that the booze would be speaking for him? Is that what you're saying? Yes, yes. [1:06:23] Scott Colangelo: I have a feeling this whole recruiting dinner is going to go to hell in a handbag. [1:06:27] Chad: No, this is when you work your magic. You're your best self. [1:06:31] Scott Colangelo: Right now at this point, I just want to rattle off like nine acronyms just for the hell of it. [1:06:38] JD: Now you are a true retireholic. Yes, Perfect. And by the way, if anyone's out there wondering like, is JD just so hammered he doesn't know that the show should end? No, I fucking acapella this shit. Sometimes we just wing it. Look, what time does Scott have to go to dinner? Do we know? [1:06:55] Scott Colangelo: I am half hour late. [1:06:58] Chad: There's your answer. [1:06:59] JD: Get you out of here. But my. What I was going to say to everyone is if you go to the end, Fred Reese says something really smart. He says, look, if you really think about it, the baby boomers are the first generation. The first, excuse me, 401k generation to actually experience retirement. You get what I'm. What he's. What he's putting down there. Like they're the first ones that used a 401k to save, and now we're actually in retirement. And he says something really smart. He goes, look, if they start to realize that they should have had guaranteed income and their shit gets up, their kids will pay attention, they will notice, and things will change from generation to generation. I just thought that was a pretty cool tidbit from Fred. So think about you guys. [1:07:46] Scott Colangelo: When my grandfather died, he was 62. Retired at 61. Back then, people retired and lived on average one to three years after they retired. I mean, that's. I mean, now we're talking about 30, 40, 50 years the way. [1:08:00] Chad: Longest vacation of your life, bro. [1:08:03] JD: I heard a dude on a podcast like a couple of weeks ago say that, like in the next 10 years, because of medical advancements and artificial intelligence and everything, we could. We could move beyond the hundred in terms of. We could go to 115. Could be the average age. 120. Could be the average. [1:08:24] Mark: True. [1:08:25] Scott Colangelo: Shut up. Oh, I believe that. Have you guys seen Bill Burr? [1:08:33] Mark: They don't take care of themselves. [1:08:35] JD: No, stop. [1:08:37] Mark: We talk about 401ks, not life expectancy. We're not doctors. People are gonna die. Stop it. Stop it, stop it. [1:08:47] JD: Mark. [1:08:47] Mark: You're not right, you're wrong. [1:08:49] JD: They will up themselves and then we will give them a brand new heart. We will give them two brand new lungs. [1:08:56] Mark: That won't work. They're not gonna want somebody who drank like you like. It's not gonna work. [1:09:01] Chad: Operate on people that old. [1:09:03] Mark: No. [1:09:05] Scott Colangelo: Okay. [1:09:05] JD: We're gonna let you go, Scott. We're gonna let you go. We're going to do Chatbot Champion. Two weeks ago, our chapter champion was Michelle Coble. C O, B, L, E. She actually. I don't know if we. I didn't know this at the time. She was one of our live audience chat bar champion winners when we were on the road somewhere. Oh, that's cool. Good for her. I sent her a live pony, so she now has a pony. I'm kidding. I was coming from the airport. I didn't do jack shit. Michelle, whether you're listening this later or now, I apologize. You are on our list with Will Hackler. Will Hackler's gonna get something very special. We don't know when it's gonna happen, and we'll get you hooked up sometime here in the future. But I'm sorry if anyone doesn't know out there. I was coming from straight from the airport to get here in this beautiful Airbnb, by the way. But let's vote for tonight's. Chapar champion. I'm gonna do something I never do. I'm gonna have you go first. Scott, tell us who your chat bar champion is tonight. And it can't be Todd Kating. [1:10:14] Scott Colangelo: I'm not saying Todd Kading. It's too much of a homeboy play. I'm not doing that. I thought that Gregory Greenfield was pretty good and so was Daniela, but I'm gonna. I'm gonna vote for Gregory. [1:10:26] JD: Gg. [1:10:27] Scott Colangelo: Yeah, gg. [1:10:28] Chad: Chad, you go Daniela. For sure. Her. And there were many that were good, but Daniela's great all night. [1:10:37] JD: I just have to say I feel like the gray goose in Colorado is a little gnarlier than California. [1:10:41] Scott Colangelo: It's pretty heavy Goose after gg, it kind of feels like he should win. [1:10:46] JD: Oh, yeah. By the way, you know what? [1:10:49] Chad: I. I like Scott. [1:10:50] JD: I like here. I like your. The lighting is. Catches a natural skin tone for me. I. I don't look red to you guys at all, do I? The more I do. Justin. [1:10:59] Mark: Don't know. [1:11:01] Justin: It's between both of them too. I'm gonna go Greg, because I know [1:11:04] Scott Colangelo: Danielle will get one more. [1:11:05] JD: Okay, two, Mark, Just for the. [1:11:10] Mark: Make this fun and to put all the redness in JD's face. There's two for Greg, one for Daniella. [1:11:16] Chad: Right? [1:11:17] Mark: Is that where we're at? [1:11:18] Scott Colangelo: Yeah. [1:11:19] Mark: I'll go Daniela. And so jd, it all falls to you. He's a bad guy, okay. [1:11:24] Chad: Until he picks Gary Allen. [1:11:29] JD: Here's what I should do. Greg is my homeboy from the beginning, from the old days, you know, the early retireholics days. Daniela took a call from me on my way from the airport to here in the pouring down rain, and I said, daniela, I'm in the rental car right now driving to the Airbnb. I'm guessing that's probably an acronym too, but. [1:11:58] Scott Colangelo: Sure. [1:11:58] Mark: We're just letting you slide. You're good. [1:11:59] JD: Okay. And I've got eight minutes to get to the house to set up for the show and get this going. By the way, I'm so glad this happened tonight. And she took the call, and as I drove in the rain, she answered questions for me about smart. So I'm gonna give it up for her for that. I'm gonna get. I'm gonna give it to Danielle. And she's a multiple time. [1:12:20] Chad: Oh, yeah. [1:12:21] JD: I mean, they're, they're. [1:12:21] Mark: They're both like hall of Famers, so you can't go wrong. [1:12:26] JD: All right, Scott, thank you so much for being with us here tonight. I actually. And I don't say this to guests often. You gave me new perspectives tonight. Like, I learned some things that I hadn't thought about. I would put. Would have put myself in the Nevin and Fred kind of anti retirement income camp a little bit. And you've kind of opened me up to really like, J.D. you're a dumb surfer. You haven't thought about it all. And I appreciate that. Chad, Justin, Mark, Brandon, I love you. I will be flying from Denver to Scottsdale to do another live on stage show with you at the fi360 Broadridge, whatever the they're calling their conference this year. I don't know what it's called, but we're gonna be there. We're gonna have Fred Reese on stage. We're gonna have Cindy Dash on stage. And that will be Sunday evening. Look to my LinkedIn for the exact time, but hopefully you guys can tune in. [1:13:29] Mark: Monday's gonna suck. [1:13:31] JD: What's that? I'm not gonna. [1:13:33] Chad: Monday is gonna suck. [1:13:34] JD: Yeah. [1:13:35] Chad: Yeah. [1:13:35] JD: I'm getting wasted at that one. [1:13:38] Justin: Scooter. [1:13:39] JD: Mark, I have a special thing planned for Fred Reese which could. Could be great for us or could be really bad for the future of our show. We'll see. We'll see. [1:13:48] Chad: Perfect. [1:13:50] JD: And. And thank you to all you guys out there in the audience. [1:13:53] Chad: Hey, appraised to Scott. You were a blast, dude. Yeah, that was awesome. [1:13:59] Scott Colangelo: That was a lot of fun. [1:14:00] JD: You guys did a great job. [1:14:01] Scott Colangelo: I'll see you guys in Scottsdale, whoever's gonna be there. [1:14:04] Chad: So we'll all be there. [1:14:05] JD: I'll be there. We'll all be there. And yeah, thanks to the audience out there. We love you guys. Appreciate the community. And yeah, another episode of Retire Alex. We are changing the retirement plan industry. [1:14:19] Mark: One Grey Goose, Colorado beers at a time now. [1:14:23] JD: And after show, I don't know. We'll see. But Scott, you go to your dinner. Get out of here. [1:14:29] Scott Colangelo: Yeah. [1:14:30] Chad: Good night, Scott. [1:14:31] JD: Yeah, play some music. [1:14:34] Chad: Ooh.