Hidden 401(k) Fees Exposed: Fee Games & Vendor Tactics

[0:00] JD: Welcome, welcome, welcome, everybody to Retireaholics, episode number two, five, six. [0:08] Chad: I think I told you. [0:10] JD: We've had some confusion over that. But episode 28, we are here, believe it or not, in Chicago with a live audience. [0:21] Chad: See, we didn't even have an applause sign up. [0:23] JD: That is not editing. That's a real live audience back there at the PSEA 70th annual by the Way conference at the Drake Hotel. The first thing I did when I got here, because it's an old cool hotel, is I decided to Google the Drake Hotel. Haunted, Intelligent. It was a bad move. Stuff came up. Apparently there's like a woman in red. Lady in red. Anyone sitting on the tent floor, be aware. There's all kinds of stuff going on. Who am I here with? This is Justin McNeil. I like to refer to him as a quiet one. I told him before the show he could just turn his mic off because he really doesn't talk a lot. This is Mark. He's the comedian. He tries to derail us at all times. Disruptor. And if you say the word. [1:12] Dave Fritz: Let me just say something real quick job. [1:15] Chad: Great example done. [1:16] JD: This is Chad Johansen. He's the nerd of the show. I think he's got notes on him somewhere. He does lots of prep. And you were in Aruba for the conference, by the way. He flew in last night because he was at a John Hancock conference in Aruba because he sold so many plans last year. There's another thing of a weird industry I enjoyed a few days because he sell plans. Conflict of interest. I don't know. Let me first. Before we dive into the first topic, I'll let you know that I thought this event kicked off great. Oh, sorry. Yeah, we have totally forget we have four glasses. We've never done this before. There are four glasses right behind these beers that are half full of Smirnoff ice. And we have a word of the show, which is going to be. I'm going to say it this time and then stop conference, which I don't [2:11] Dave Fritz: know if you know, if you realize [2:12] JD: you already said it once. I know. That's why it reminded me. And so if anyone says that up here, they have to drink half of that event. The word for event that we're not supposed to say. This event kicked off great with Harvard MIT professor super stud talking. And I loved how he talked about the whole focusing on income, taking DC plans and kind of making them dbsque, if you will. I thought that was great. But what a great conference to start. [2:45] Chad: Boom. I knew we Were going to have an auditor up here. [2:51] Dave Fritz: By the way, if we miss it, [2:52] JD: please yell it out. What a great event to start with an MIT Harvard distinguished gentleman and finish with this. [3:06] Chad: And to that we drink. [3:12] JD: That hurts. I mean, you have covered the entire spectrum with that. Okay, so 401k fees, 403b fees, retirement plan fees. It's a funny little game. And let me first preface that I don't think any of these things we're about to talk about are bad alone by themselves. I just think in the wrong hands they can be bad. The retirement plan sales world is an aggressive place, right? These people have quotas, bosses and bosses of bosses pressuring trips to Aruba, on the line, trips to Aruba. And so there's a lot of pressure. And so they are going to try. It's a dog eat dog world, I guess is what I'm going to try to say. And so they're going to. They're going to. Some people in the wrong hands will manipulate things to try to increase their chance to close business. And that's some of the stuff we're going to talk about today. The first one on those fee comparisons, those spreadsheets. [4:09] Chad: Not sure how much longer I can wait. [4:11] Dave Fritz: I'm just curious about this beer that I'm going to be honest. [4:14] Chad: I feel like I need to open this up. [4:16] JD: I do this all the time. We also on the show have a beer of the episode. This time we have a beer from Potosi, who by the way, you all have beers with us. [4:25] Chad: Thank you. Potosi. [4:27] JD: Potosi. And we have a guest, Dave Fritz from Potosi, from the Potosi foundation, who's a guest on the show. He's super mad at me because I forgot about him. [4:38] Chad: Come on up here, Dave, if you still want to. [4:46] JD: Thank you, sir. Thank you, sir. [4:49] Dave Fritz: No beer for you. [4:50] JD: Yeah, right. [4:51] Chad: He's had one too many already. [4:52] JD: This company, this brewery has a really cool, very unique history. Tell us a little bit about it. [5:00] Dave Fritz: I really appreciate being here. And when you think about what you guys are here to do in your profession and if you're successful, when people retire, they do not have to drink cheap beer. So they drink good stuff. So I'm president of Ptosa foundation, which was formed in 2000 and it was formed to resurrect the original Potosi Brewing Company building that was built in 1852. And the brewery continuously operated in Southwest Wisconsin until 1972 and then it shut down at the time when There were about 80 breweries left in the United States. And in the late 1800s, there were approximately 4,150 breweries in the United States. At the all time low, it got down to about 70 breweries in the late 1970s. And that's why history is important, because obviously if you followed the craft beer renaissance, you have seen us get to the point where there's now an excess of 6,000 breweries in the US so it was a wonderful thing. But anyway, the building, once it shut down, went into a state of ruin. And we refer to it as looked like a bombed out building in a war torn country. But following a $7.5 million renovation to that building, we reopened it in 2008. And while we were in the process of figuring out what we were going to do with it, we needed to come up with something to put in it. So the American Burriana association, which was the largest collector group of brewing history in North America, was looking for a home for their national museum. And they wanted a Midwest location. So we thought, why not? I mean, why not? Potosi got a good story, so we threw a hat in the ring and they narrowed their search down to three good beer communities. And so Potosi obviously made the top three. Now, what are two other communities in the Midwest that might be in the running? [6:55] JD: Any guesses? [6:56] Dave Fritz: Milwaukee. All right, there's one. St. Louis. [7:00] JD: Yes. [7:00] Dave Fritz: Wow. They did a lot of quiz earlier and these guys only got one out of the two. We just drink it. [7:08] Chad: One of us might have. [7:10] JD: You. [7:10] Dave Fritz: Yeah, they do something. California more than just drink beer, I think. But anyway, we were actually awarded the National Brewery Museum. So if you registered trademark, we have the National Brewery Museum. So that was really the anchor. [7:21] JD: Hold on a second. St. Louis, what was the other one? Milwaukee and Potosi. And you guys come out victors. [7:32] Dave Fritz: We were the victors. And again, we had a plan. We had a business plan. If we would have had a good business plan, we would have never started because it was actually something that came. We didn't really understand all the expenses, but we made it through and we're still going. But we're formed as a 501C3. And so to the best of our knowledge, we are the only not for profit production brewery in the United states. And in 2010, we took beer to retail. We had to form a separate entity called the Potosi Brewing Company, which is the sole shareholder is the foundation. So it's a very unique structure, but very similar to Newman's Own and the Newman Foundation. And since the early 1980s, they've given over close to $500 million away. And our goal is if they can do it with pastas and salad dressings, we should be able to do it with beer. You can do billions. Billions. [8:21] JD: Yeah. [8:22] Dave Fritz: Literally, if things go well, we could be giving millions of dollars a year out of charitable causes. [8:27] JD: Any connection to the psca? [8:30] Dave Fritz: Oh, how did that get here? That's an interesting one. [8:32] JD: I think you drove. [8:33] Dave Fritz: Well, I did drive, actually. [8:34] Chad: Good for you. [8:35] Dave Fritz: Yeah, I drove a truck with beer in it. So that would a be a beer truck. [8:38] JD: Okay. [8:38] Chad: Okay. Which is where we're hanging out after. [8:41] Dave Fritz: Well, yes, I'll set the back. I valet park. So who knows in Chicago what happens when you valet park, But I'm quite sure the vehicle will come back. But anyway, Potosi is famous for a couple of things. And one, it has the longest main street in the world without a through street, according to Ripley's Believe it or Not. And we, we also have a lot of great people that are raised there. And Tony Verhan. Tony. Tony's sitting over here. And anyway, Tony came into Potosi and found a young lady by the name of Shelly and married her many, many years ago. Not too many years ago, but anyway, so Tony's wife is from Potosi and when there's only 700 people there, you know, you've got to be pretty lucky to find. Find somebody. But that's what. [9:24] JD: Wow. All right, Dave, where'd you find? Let's move on. That's a compliment. That's the Chelsea brother with that. [9:30] Chad: What are we drinking here? [9:32] Dave Fritz: We're drinking good old Potosi, which is the golden ale, and then our Snake Hollow ipa. Potosi used to be called Snake Hollow and we kind of use a lot of historical names. It also used to be called the Valley of the Drunken Men, but that was way too much to put on a beer label. And then we have our Cave ale, which is an English style amber. Alex. [9:49] JD: Alright, well, if you got one, put it up. Cheers to Potosi. [9:52] Chad: Thank you, Potosi. Keep doing. [9:55] JD: Thank you very much. [9:56] Dave Fritz: I'm just curious, show of hands, who's been to Potosi? [9:59] Chad: Done all the time. [10:00] JD: Three hours from here. Yeah. Tony, there we go. [10:04] Chad: One man. [10:05] JD: I suggest you go check it out. All right, Dave. [10:08] Dave Fritz: Yeah. We've got a great brewery tour. The museum is absolutely unbelievable and the exhibits turn over every six months to a year. So if you've been there, you get a new experience over and over. And so it's a really good plan. And it's all run by volunteers. We have a paid stock staff, obviously for the restaurant brew Pub and the brewing operation, but the museum and our board of directors, everything is 100 volunteers. So thank you very much. [10:33] JD: Thank you very much. [10:33] Dave Fritz: Thank you. [10:34] Chad: Thank you. [10:35] JD: Cheers. Thank you, sir. Appreciate was really hard. He was going to say, I just got to get out of here while we. The ship goes. You just said it, by the way. There you go. Oh, nice. [10:48] Chad: Wow. [10:48] JD: Good call. Okay, so as I jumped to before, a lot of plan sponsors, whether they realize it or not, are influenced by a fee comparison. Think spreadsheet because it's a normal human instinct to try to put things side by side. I sure know it's your instinct. You know, just because he loves spreadsheets. Do you know that? Do you know what percentage of plan sponsors the fee comparison is crucial in their decision making process [11:18] Chad: or a real legitimate percentage? [11:19] JD: 83.6% of plants. It's a big part of their decision making process. I made that number up. But it's something close to that. Something close to that. And so it's important for them to understand how those things are built. Well, one of the things in a fee comparison is an expense ratio, right? And many times the expense ratio of a fund or an investment can be a large portion of the fee that you're looking at and you're comparing how you represent that number can be manipulated or done in different ways. You can have an average of all the funds that are available in this new product that you're looking at. You could have an average of the proposed core menu. It could be a mapping from fund to fund from the incumbent to the new proposed thing. It could be a prorated based on where the assets are going to go. [12:16] Chad: There's lots of things what they get from the provider, right? You reach out for a proposal from a provider based upon the lineup or the product that they're representing for you. You get a sample expense ratio in their proposal for you. And if you don't have someone that really understands the ins and the outs of how they came to that percentage, you could be way off base. [12:35] JD: Know that some of those providers have several of those types of fund lists. Some of them are designed to be very low cost. So they've taken a passive approach. [12:47] Chad: Right. [12:47] JD: You see a ton of Vanguard. Others are trying to play the performance game. So they've built in the performance. There's lots of. [12:53] Chad: And if you're not reading the fine print or have a consultant to look through how it's being represented, you're not going to get an apples to apples comparison. Some will weight it. They'll say 80% are going into our target date for and 20% into the core menu. And even that mere weighting of the plan assets is going to create a different representation of that expense ratio. Others will come out, say it's a linear average. Others will come out and load it heavy with a target date suite or Vanguard Funds or passive, whatever it may be. The difference is it's not apples to apples. [13:24] JD: That's what I was going to say. Usually what I find upsetting about it is what one column is not the same as the methodology for the other column. And that's where a lot of games can get played. So your existing menu could be chocked full of some actively managed funds and have some passive where the proposal is all passive. There's another thing and we're going to talk about a little later when we talk about fixed investments or fixed accounts. I've even seen some of those spreadsheets where they include the fixed. And what's the expense ratio of the fixed account? They claim that it's zero and therefore it drops the average. And we're going to put a pin in that talk a little bit that a little bit later. But I just want every plan sponsor out there to know that when you see a number on a sheet, you have to ask yourself, what's the methodology behind that number and has it been manipulated in some way? I have even seen advisors go to their lab and run all those kind of scenarios and then pick the one that makes them look best to go in to increase their chance for sales. Now, is that right or wrong? That's up for debate. But I just, I want the consumer to understand that. [14:31] Chad: Well, and the hard part is, and I chat with you guys often when you reach out, when you're going through an RFP or request for proposal or benchmarking, if you're not taking the time to read through the fine print of what you're getting from the providers, it's nearly impossible to break down which representation you're looking at. And when you're getting 6, 7, 10 bids, it becomes quite the task. And we do this each and every single day. And at times, it is difficult to make sense of what you're looking at as a room of plan sponsors. If you don't have a consultant that's doing that for you, it's going to be even more difficult. You wear many hats. You have many responsibilities. The folks who do this each and every day at times will still struggle to make a true representation of that. [15:11] JD: So buyer beware on those. The Second area I want to talk about is target date funds. Obviously, target day funds are huge. There were several breakout sessions. [15:22] Chad: Give us a fake statistic of how much of an asset portfolio is going to go into target date funds. [15:27] JD: 80. [15:28] Chad: 80. [15:29] JD: Wait, sorry. 82.1. [15:31] Chad: Okay, now you're high. [15:32] JD: More likely, 80 was better. No, target date funds are huge, and so they deserve a ton of scrutiny. But what I want to talk about is many times target date funds can influence the overall price. That is, if it's a proprietary target date fund. And again, remember when I started this, I'm not suggesting that that's a bad thing. I'm just saying it influences the price. And as someone who's run a ton of proposals in my life along with these guys, that's a big deal. You get a different quote from a vendor if you're using one of their competitors. Target dates versus their own. So the decision makers have to understand that when they're making those decisions. [16:11] Chad: Let's talk specifics. Is it a bad thing? Because that's a question we chat about. [16:17] JD: Not all the time. So if it's a great performing list [16:22] Chad: of funds, it's prudent to have something like that. [16:24] Dave Fritz: But if it's going to be something [16:26] Chad: that is not performing great and just [16:27] Dave Fritz: something meant to lower the overall cost [16:30] JD: breakdown, that is very. [16:32] Chad: Because as an industry, we've made the thought of having proprietary funds in your lineup a bad thing. And so that's the question I pose most of the time. Is having proprietary funds a bad thing? If so, for who? And you know how passionate I am about this. Having proprietary funds is a bad thing if you're forced into them. Having proprietary funds when you still have options and allowing it to lower the cost for the participant is not a bad thing. We keep looking, as a sales staff, everyone tends to look for a way to get in the door, a conversation to have. And the proprietary one has been that conversation for eight, 10 years now, it seems like. And I think if we took a step back and we said what we're all trying to do is do what's right for the participant. If you're saying we can lower plan costs by using proprietary funds, then we shouldn't throw that out the door just by saying it's bad because as an industry, we've tried to put them on [17:22] JD: the stake, I think that's a decent argument. But I think that's a tough argument in that there's so many target day funds available and they take some many different approaches in terms of their glide Paths and whatnot. To miraculously line it up that your record keeper fits the ethos of your companies perfectly with their target date strategy seems a bit of a stretch to me, but I guess it can happen. And the point is that you need to look at that and you need to balance or figure out the net cost. Doesn't make sense to get that price reduction because we're using their own baked goods. [17:58] Chad: Then often again, going back to the last point, if you're not analyzing the proposals that you're receiving specific to how they're constructing their plan costs, you might not even notice there's a number of them out there that will say, here's our lineup cost, here's our rap fee, billable or asset based. And it is all predicated on the fact that you're using the target date. [18:18] JD: Well, this will take us to the next area which is like a feature fixed account or a gic. And it comes under a lot of different names. But think of the fixed account on a core menu lineup and it's kind of the same story in a sense. So it ties into the target date, but the target date gets such a spotlight on it. The fixed account is like the red headed stepchild of this whole thing. And I apologize if you're a red headed stepchild. I didn't mean to offend you. Sorry Mark, don't have red hair. For the last time, the fixed account, the fixed account kind of just goes along with everything. Oh, that's the fixed account and it pays 2.5% or whatever it is. But the reality is that the fixed account in many situations is an area of great revenue for the vendor. [19:05] Chad: It is the area of great revenue [19:06] JD: for most of them. That's a bold statement. [19:08] Chad: I feel confident in that one. [19:10] JD: And we know that if you tell a vendor that oh, a ton of this money is coming over into the Fed fixed, that can impact the pricing in a big way. Does the consumer, does the plan sponsor understand that? That's. I don't know. We should ask, and I brought this up earlier, what's the expense ratio of a fixed account? And a lot of people in the industry are like, oh well, it has none, it's zero. You know, in a sense they're right. It really doesn't have an expense ratio. But that's total BS because when they tell you that you're getting 2.5%, their actuaries have run the numbers they've figured out that they are going to take and I'm making up these numbers 1.25% is revenue and therefore they're okay giving out 2.5. That's a freaking expense. That's called a fee. That's a cost. If you dig into prospectus and you look at all the stuff, you can find it. But I can tell you in the day to day workings that that stuff's getting missed. [20:02] Chad: And going back to the essence of this topic, when you're looking at benchmarking your plan and you're trying to make a true understanding comparison so you can make a confident decision as to whether your pricing's reasonable or you need to make a transition somewhere, this is a big game that's played by representing a zero expense ratio, pulling down total costs, even pulling in additional fees from wrap or billable, as I mentioned a moment ago, by the revenue that they're going to generate on that fixed account. [20:30] JD: And we're doing it on time. [20:31] Chad: We get it, we're fine. We get it every time when we're requesting, requesting a proposal for a large plan, anything north of 50 million, you're going to get the question how much money is in the fix? How much money is in the fix? That's what they want to know every single time. For a while. And I'll finish with this on the topic for a while. We started running the RFPs by saying we want to map all assets to one fund, one fund that generates no revenue, no juice for the firm that's bidding on it. [20:55] JD: That was your trick to get put [20:56] Chad: it all in a vanguard S&P 500 fund so I can get an honest quote of what it's going to require for you to do your job. And that's how we got the best apples to apples comparisons out there. [21:07] JD: Okay. One other thing I want to cover that's done a lot is say you're looking at that fee comparison and the new proposed vendor advisor team, what have you, is offering you 5 basis point reduction in costs and your $100 million plan. This is a common thing and I'm not saying this is bad or not bad, but that advisor or team may go back to their table, their drawing board and say 5 basis points on 100 million, it's $50,000 of savings. Like this isn't enough to win the deal. So what do they do? They say, well, let's show them the savings over five years or 10 years or 15 years. So then I take that five basis points and I say, hey, over five years you're saving like 350,000 plus instead of 50,000 because I use compounding and Rate of return, hopefully a decent one. Then I go well over 10 years, you're saving a million dollars if you, you move to our program. And how could you not move to our program if I'm saving you a million dollars? [22:04] Chad: Pockets. [22:05] JD: These are dollars in your employees wallets that you could save them. It's a very common thing to try to win this business. And again, I'm not saying it's wrong, but it's a little weird. [22:18] Chad: It is. It's a play on a play on the numbers. And as I thought about this topic, my initial thought regarding compounding out is, hey, it's true savings. The biggest headwind to returns right now is expense. Right? So it's true savings. I'm fine with representing the savings even over a five and ten year, but when you start mixing in compounded earnings and the interest and the growth of [22:38] JD: that now you're trying to dart it off. The longer you take it out, once you got to 10 and 15, you're looking into the future. Man, you got crystal ball. You have no idea what they would have done in their original, like what [22:49] Chad: they taught you in civics in high school. Right. You put a dollar under your mattress every single day. Eventually it's going to be a really large number regardless of how minimal the savings might be in your initial representation. Push it out a number of years. Yeah, it's going to be a big number. [23:02] JD: So let me kind of wrap that concept again and we'll move on to the quiz of death. Yeah. [23:08] Chad: Why do you think I'm trying to delay this? [23:12] JD: It's not that these things are bad. Again, given in the wrong hands and with the wrong intentions and they're absolutely bad. But all those things we talked about, I don't want you to label them as evil. I just want you to be aware of them and be sensitive to them and make sure that you look at all conflicts of interest, you look at all methodologies. How are these numbers built? Why were they built? What are the intentions behind them? And I think that's what we always do. And that's going to get you to a better place to make a decision that you can be comfortable and confident [23:46] Chad: about and question the status quo. That's what we often say in the office. If we're saying as an industry that proprietary funds are not appropriate in a lineup, ask yourself why. And the end result is we're trying to get to what is prudent, what is right for the end participant. Right. That's where we're trying to get. So question what we as an industry are telling you and find out what your belief is for sure. [24:07] JD: Okay. All right, Chad, let me get this little box over here for you. [24:11] Dave Fritz: I'm so excited because I don't even know what this is. [24:13] JD: I've got a couple questions. You know, we came up with several ideas to hurt you that we thought might terrify the audience. So we didn't want to use those. I don't want to get blood on anybody. [24:25] Chad: I did say that eating something is completely out of reason for me, so [24:31] JD: I wanted to go back to the old Joe Rogan, you know, Fear Factor show. But Chad's not into that stuff, so just. [24:38] Dave Fritz: He has a reputation to me. [24:39] JD: Be careful when you reach into the box. But reaching the. Oh, I gotta ask you the question. All right, Chad. I've never seen him this thrown off. Three questions. What is the largest sunken ship? There could be a puppy in there. In Aruba, where you just traveled and where you snorkeled. [24:56] Chad: And where I just snorkeled. That was. So it is the S. S and [25:00] JD: T. Ding, ding, ding. There you go. Got you one. Way to go. Way to go. Now's the real one. On the IRS 5500 short form filing. What line are corrective distributions? Like a failed ADP test? What line are they represented on? [25:17] Chad: That's not that bad. [25:19] JD: I don't know that it could be worth. [25:20] Chad: Well, that's because you don't look at 5000 500s. We spend half of our day. [25:24] JD: I do a lot of search, actually. [25:27] Chad: Maybe it is that bad. [25:31] JD: You want me to open the box? [25:32] Chad: It's eight. No, no, no, no, no. It's 8E. It's just. Yes, it's 8E. [25:36] JD: Okay. It is 8E. Congratulations. [25:40] Chad: Wait, wait. That's two out of three. [25:43] JD: No, three. I eat all three. Three out of three, Chad. When have you ever gotten all three? Yeah. You've never gotten this. [25:48] Chad: Well, that's what I said. Inevitably. [25:50] JD: So while you were in Aruba working on your tan. And by the way, check the Instagram of retireholics sometime in the next 24 hours, I'll give you a picture of Chad on the beach in Aruba. We had a speaker. Right behind the keynote was a Jelly Vision founder, right? Harry G. I can't pronounce his last name, so I'm not gonna. And he created this tool. Alex, You've actually seen it before. In principle, I think they ran you through the employee education technology, where it's like a walk through the. [26:21] Chad: It's a virtual response. [26:22] JD: Yeah, it's awesome. Kind of like getting the feeling that [26:25] Chad: I needed to be in that presentation. [26:27] JD: Absolutely. I mean, you can take a guess at it. And he said the vanguard had a stat that the average percentage in a company of people doing 10% or more in deferrals was 7%. Okay. Actually, 7%. Then when they used the Alex app tech process, it grew in a big way. How much did it grow to? So basically what I'm asking is, can you name a random number that happens for the presentation that you missed someone else and the audience knows. Oh, they're helping you. Oh, can I phone for a second? Can I phone a friend? She was just giving you the number. This isn't the wife's rights. I'm watching you. Don't you want to see him get hurt? [27:16] Chad: 11.4%. [27:17] JD: Not even close. 33%. [27:19] Chad: What? Wait, it went the deferral rate? [27:21] JD: No, no, no, no. The percentage of people doing. You got it wrong. No wonder you got it wrong. You didn't even understand the question. Were you listening? Okay, yeah, I was sitting in the room. Be very careful. [27:35] Chad: Is it alive? [27:36] JD: No, it's not alive. Go ahead. It's over there. God forbid, if it was set up. It's right here. Just grab it, buddy. There you go. [27:47] Chad: Seriously? [27:48] Dave Fritz: Where? [27:49] JD: Are you afraid of that? [27:50] Chad: Yeah. [27:50] JD: So, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait. Look at that. [27:54] Chad: Where is this going? [27:55] JD: Last time you did this, this was a mousetrap. This is a rat trap. [28:00] Chad: Oh, really? I couldn't tell by the size. [28:02] JD: And I tested it earlier with our producer because I worry about you. I want things to be okay. And it snapped the pen in half. Oh, you didn't test it on yourself, so that's not gonna work. That's gonna work for you. I got these little guys. You gotta put them out there. I wanna do a double. Can you help them out? Mark, I wanna do a double. [28:23] Chad: Oh, they're pinned down. [28:24] Dave Fritz: How do you actually do that? [28:25] JD: One just broke. [28:26] Chad: No, it was pinned down. Dang. [28:30] JD: Oh, yeah. You remember how to do that? And then we're gonna jump into a recap. [28:35] Chad: See, I think at this point, I would have rather been bit by a dog. Maybe I can't do it. [28:41] JD: I guess it's pretty bad. You're setting up your own trap. Yeah, when you set up your own trap. We've tased him before. We ripped hair from his leg. I could probably hold it short. Shot him with an airsoft gun. These are the kind of things that you can't really test before the Event. This is the stuff that gets edited [29:01] Chad: out when we're filming. [29:02] JD: But I did come back from the hardware store with that one, and Brandon, our producer, looked at me and goes, you can't do that. His finger. [29:11] Chad: I am an employee, by the way. I feel like I have a claim set up. [29:16] JD: Yeah, that's a bummer. [29:17] Dave Fritz: We don't have workers compensation. [29:18] JD: No, I have not had Chad sign any. The deeper you go in, the easier it is. [29:24] Chad: I say you do, the less you're so worried about. Am I going fingers? Two fingers. [29:28] JD: Yeah, two fingers in. [29:29] Chad: Wait, single fingers. Single finger seems like a bad idea. [29:33] Dave Fritz: That's why we want you to do it. [29:34] Chad: Brooke, dial 9. 1 and get ready for the third one. [29:37] JD: Child's wife is here. Brooke. [29:38] Dave Fritz: Here. [29:39] JD: You got this. You got this. We won. [29:47] Chad: I'm down on that, too. [29:50] Dave Fritz: Oh, gosh. [29:50] JD: Careful. Son of a guy. [29:54] Chad: Now I went to the nail. You're right. The deeper you go. [29:58] JD: Sorry. It helps you out. Okay, now on to more professional things. [30:02] Chad: Jeez. [30:04] JD: As I mentioned, this conference kicked off. I thought. Oh, thank you. I knew that was a bad idea. [30:22] Chad: Yeah, he should have to do the rat trap. [30:25] JD: This event on. You can't. Hiring event. You change the word. This. This get together started off really well, as I mentioned, with the mit Harvard. We get the point. Do some recap, man. Just. And then followed up with the Jelly Vision guy, which was awesome. And he brought D1. The record easily hang off. I scooted out into different breakaways. I was really impressed by Thomas Clark, the ERISA attorney. He. He did a fabulous job. I really get into it because he gives me a little taste on what it's like to be an ERISA attorney and goes through the different cases, and he's really excited about it and very passionate about it, and I just super enjoyed that conference. Boom. He's the only one that's gonna have a. I'm like, subliminal because I wouldn't even use that word there. While you're drinking that. [31:33] Chad: Real quick. [31:33] JD: While you're drinking that. I just have a bone to pick, and I think I see some. Oh, okay. Laura, I was trying to win this leaderboard, and I don't know how you have two more points than me. You got close. I was so close. But I also have a bone to [31:51] Dave Fritz: pick with Pat Jarrett. [31:53] JD: In his breakout session, he said the Easter Bunny wasn't real. I saw. [32:00] Chad: Those were your notes. [32:01] JD: I saw three. My takeaway. This is not the event's official statement here, but I saw three big takeaways for me while I was here. One moving away from focusing on the net asset value, the value of the accounts, the value of the plan assets, and shifting to the income at retirement and the streams of income and how you're going to make a real retirement work. And I think that's a great direction for the industry for a variety of reasons. [32:30] Chad: You said it earlier, almost converting a DC to a db, a defined contribution plan to a defined benefit plan. And if you talk to someone who has been lucky enough to reach retirement with a pension in place, or for me, I come from a family of law enforcement, essentially someone that has a pension, they look forward to that. That's fun to them. Their retirement is. [32:53] JD: They see it, they know they love their pension plan. And if you would have been here for the conference, it was kind of an underlying theme. Yeah, that's exactly what Professor Merton, I think I can call him that said, was that people love their pensions. [33:09] Dave Fritz: Don't worry, we have reinforcements. [33:11] JD: Line it up. No, no, no. [33:16] Dave Fritz: Just fill them all. [33:17] JD: Another thing I liked was sitting in Thomas Clark. I'm watching my words now, Thomas Clark's presentation. He talked about all the litigation and everything. And he said, he actually gave me some comfort that a lot of this stuff hasn't really come to fruition. There's been some settlement. Sure. And he also mentioned that it's very expensive for attorneys to go after and attack these plans. And many times it's a no win typ type of strategy. But the takeaway I got from it, and I think it's a good general takeaway from the conference and we've heard it before, but [33:56] Chad: I think somebody else is going to have to start taking that is. [33:59] JD: I do like all the talking. This is a benefit of not talking. I mean, Justin's never going to lose. [34:03] Chad: You made up the word, by the way. [34:07] Dave Fritz: So happy with that. [34:08] JD: Justin's never going to lose. Was about to be here all night to document and I've heard Fred REICH say it 10 years ago, but I like this, this flow of getting really serious about having those review meetings, documenting those decisions and creating that protection for you. [34:26] Chad: Procedural prudence. Say it all the time. [34:28] JD: No, this was something we've heard a million times before. [34:30] Chad: Makes you excited every time. [34:31] JD: But that was the takeaway for me. And then there was a third takeaway from this get together. Oh, God. [34:37] Dave Fritz: Well done. [34:38] JD: Thank you. And are we going to continue this game in future episodes? Because I'm going to lose. This was your idea, by the way. The third one I saw was. And it kind of ties into what we're doing right now as we wrap this Is Fun is having fun with retirement plans. And I saw it in the Jelly Vision presentation. I saw it in different, other things that I went through and talked to people and having conversations. And I think that's an initiative for the industry is whether through technology, whether through like we saw with Alex, whether all these new innovations that we're seeing out there that we can start to make this fun. And yes, I know the word engagement, I guess, but I like that possibility for the future. I see it in lots of other industries and I don't see it as much in ours. And I think we'll see more of that. [35:29] Chad: I think we need to see more of that. Right? I've said for years, and it was someone far smarter than I that taught me this years back, is that retirement is essentially the longest vacation of our lives. It was not. You could try, though. Essentially, retirement is the longest vacation of our lives. How much time did I plan for that trip to Aruba? Significantly, we had to get the kids to Missouri. We had to get our flights down. I mean, there was a lot that went into. It sounds rough, yet I spend very little time and I'm in the industry preparing for my retirement, our retirement, and looking at my deferral rates. I spend very little time doing that. And I do this for a living. Imagine what the average American is doing. And so if we can identify what retirement is, make retirement look fun, it is the longest vacation of our lives. Find a way to engage in that avenue. I think we'll see deferral rates go up. You'll see people participating at a higher level. [36:18] JD: Very well said. One other thing, as a kind of summary takeover takeaway from this get together, that's my go to word, is that plan sponsors, no matter how many conferences they go to, son of a gun. No matter how many events they go to, [36:46] Chad: If you've not had one of [36:47] JD: those events, I just feel bad for you. [36:49] Chad: They're terrible, by the way. [36:51] Dave Fritz: They're so bad. [36:53] JD: No matter how many of these they go to and go to these breakouts and learn about all this stuff, whether it's from an ERISA attorney or an advisor or a record keeper or musicians, [37:04] Chad: four guys drinking beer on a couch [37:05] JD: or four guys drinking beer on a couch, it's never gonna be enough for them. So they're gonna have to rely on their professionals. And I had a conversation with an advisor that was here at this event in the hallway, and I said these very same things to him. I said, it's you, the advisor, the consultant, the professionals that the client has hired. That is such a crucial role because you're the one that's going to translate this stuff to them. You're basically their savior in understanding these fee comparisons and these fixed accounts and the games that are playing and everything that goes along with it. So that role is so important that my big takeaway from this event. Oh, smooth, right. Is you got as a plan sponsor, you have to engage and hire someone that is a stud at this stuff, is an absolute expert and lives, breathes and sleeps this stuff. And then in addition to that, that's not even enough. You have got to hire and rely on someone that is full of integrity and honesty and is going to put you, the committee, the plan sponsor, and yes, the plan participants, act in their best interest. Put them first. And I would say, whether you're a billion dollar plan or a 500 million or a million or a 500,000, that is something. You have to check that box, get that person to help you, because keep coming to this conference, keep coming, go to those things, learn. But it's never going to be enough. You got to hire the right professional. Okay with that. We are the retireholics. We are changing the retirement plan industry. One beer and lots of seven or eight shots of Smirnoff at a time. Thank you very much. [39:04] Dave Fritz: Thank you.