Hidden 401(k) Fees: What Really Needs to Change

[0:00] JD: The month. No, wait, the. The third Thursday in the month. So this is the experimental version of Retireaholics. We've done a conspiracy show. We did a kind of random topic show we did, which was fun. We did a no plan plan show. And today we're gonna dig deep into the archives and look at some older retireholics episodes. Each of us has chosen one. Play a little fun clip so you can see kind of from the old days and. And then that'll kick off a topic discussion that will kind of talk in the current modern day. In doing this research for myself, a couple of fun facts. I realize that there is 216 retireholics videos on YouTube. The first one was published to YouTube on June 4th in 2015. It was filmed, I believe, because there's a Christmas tree in the corner. In December of 2014, I am claiming, and I think rightly so, that 2025 will be the ten year anniversary of Retireaholics. Wow. Really cool. That's great. Pat yourself. [1:23] Chad: That is cool. [1:24] JD: Awesome. However, as I also went back and looked at a lot of these episodes to kind of find one that I wanted to go to, I was astonished at how dog most of them are. Like, there's some bad, I mean, in [1:39] Justin: the beginning days or we're talking the entire spin. [1:43] JD: Choose any era you want. There's a lot of dog in there. You know, there's some. You're stepping on some if you're trying to wade through those waters, but somehow through just pure stupidity or whatever, like, we're still doing this. I got some plans for 2025 that I'll share with everyone towards the end of of this show. But let's see. We started off maybe Chad, Chad, if I was to ask you, I'm sure people have asked you. When we decided to film the first Retireaholics, like, what was the genesis? Like, why were we doing this? What was the purpose? [2:23] Chad: Well, initially, I think we started with 401k Academy and we had a segment in it, the Good, the Bad and the Ugly. And we had good content, good reviews on that session. And then you and I would meet often and we would walk away going. If an advisor could listen into that conversation, what we're talking about for this week, what we experienced, what we learned, what we didn't know that would be incredibly valuable. And I. That was in my mind, part of the genesis of it is saying, let's just figure out a way to sit on a couch and talk about retirement plan that people will enjoy. [3:00] JD: Right? [3:00] Chad: And you can Actually gain value from you. [3:02] JD: Combine that with the fact that Brandon had been whispering in our ear for a long time that, like, hey, we should do video, you know, so instead of having to, like go out and do like a seminar at a local steakhouse or whatever, we were thinking, wait, we can just film this, edit it, and then make it available to anyone at any time. It seemed like a really, like, forward thinking concept back then. Now it's like it was so. It was also our version of like, okay, this will be our marketing. Like this, you know, sorry, plug. Like, we'll market our firm through this thing. The years evolve and we end up doing some live shows, which was never the intention. And I just jotted down a list. I may have missed something here, but we end up doing live shows on stage for audiences at different industry conferences in Chicago, Las Vegas, San Diego, Nashville, Palos Verdes, right where Tiger drove his car off the road there. Orlando, Washington, D.C. somewhere in Texas. I forget where we went in Texas. Dallas or Austin or both. I don't know, both. Scottsdale, Portland, Oregon, and believe it or not, on the. Not on the beach, but pretty much on the beach in Waikiki, on Oahu, in Hawaii. And I've probably left some out, but holy. All those places to do those shows. What's that? [4:26] Chad: Nashville. [4:28] JD: Nashville. So that. That to me was kind of my favorite part of the evolution of Retireholics is those live shows because they're a lot of fun. I'm. For my clip tonight, I'm referencing a live show that we did that I think was like our first one. And I was watching the clip and I remember being nervous and we'll talk about it later because I fuck up on our guest or whatever. And I actually remember being nervous on stage. And I feel like I can hear it in my voice, but maybe I covered it up. All right? I don't know. The Wheel of Ice used to be if. If no one's been around since the old days. Nine years ago, the Wheel of Ice was this stupid, dumb parody joke. Not parody joke. This just a stupid, dumb joke of like, we'd spin this wheel, which originally was like a piece of cardboard, and it would always land on Rogue Guy, no matter what. And it evolved into different wheels. And so I missed those days. And this is the last thing I want to say to you guys as I think about what our audience or our community would want from retireholics. And I'd love to get feedback from people out there, like, what would your dream episodes or shows look like? Like what could we do to tweak or make it better in this coming 10th year of doing this? I look back and I think we were a lot more fun back in the day. I feel like we've matured way too much. I'm looking back at situations where Chad had a. Had a 12 pack curtain on his head for a portion of the show and we would put his. His hand in mouse traps and. And sting him with. With things or rip hair off of his body. And Rogue Guy would be so drunk. We'd have to do like these after show things with Rogue Guy as he's literally like passing out. Like, we used to like really rock and roll that. And now I just feel like we're so corpo man. Like, [6:19] Chad: yeah, I was gonna. I would agree, Jasmine. It's hard when we're not all together. JD The. The catalyst of fuel that comes when you're feeding off each other's energy in person is a big difference. [6:30] JD: You kind of bring up the next era, if you will, like, if we could be like Taylor Swift. The next era is what Justin said was covet hits. And we go, okay, let's do this online and let's do it twice a week. And that had its own vibe, you know, with everyone kind of coming together as a community. And so, yeah, that, that was kind of evolved. And then we get to where we're at. But whatever, we'll keep it going. It's kind of fun to look back and you all. We'll get to look back at some of them tonight on. On this episode. So let's. Let's take it away. The concept here is I challenge each of you to look back through past episodes, find one that you wanted to reference, give the clip to Brandon, he'll play the clip, and then we can kind of kick it off as the topic of conversation. Yes, go. [7:15] Chad: I was gonna say you have. You have to add that it's supposed to carry some sort of value because there were so many clips I wanted to send over that were hilarious and fun and I'm like, no, I can't do that. You have to have something that leads to content. [7:28] JD: I wanted to. [7:29] Mark: To get the. The. Get the clip of JD Running off the stage to take a poop. [7:34] Chad: To go poop. Your little live show. [7:36] Mark: Yeah. Oh, it's bad. [7:37] JD: That's a low point for me. All the, all the stress leading up to that was really bad. I thought I might. My pants. [7:45] Mark: What about the. [7:45] Justin: On that note, sorry, I gotta bring this up. What about the episode that we Were actually. It was this version where you were in Hawaii and you took us in the urinal so you can go pee. [7:55] Chad: Yeah. When you're in the airport. [7:57] JD: It's in the airport. Yeah. It's. You know what? It's so pompous and so narcissistic, if that's a word, when people talk about their own past podcast episodes. So I apologize to everyone listening in, [8:10] Chad: but it's fun still. [8:12] JD: We'll do it a little bit tonight. [8:17] Chad: I do miss. I do Ms. Tahoe. [8:19] Mark: J.D. [8:20] Chad: tahoe. Chad Tahoe. Justin Tahoe. We need a little bit more of Tahoe. You've had some Tahoes recently. [8:26] JD: Thank you. Thank you. I've been. I do it for the show. I literally do it for the show. Yes. Chad's beard is off the chain. And Tony Davis said earlier. I did. I love that. What was the segment we do where we go to people's rooms, like, their [8:40] Chad: houses and the Webby room rating. [8:43] JD: Room rating. And I felt like Nevin Adams. Like, I was really creeped out by his house at the first time I saw it. I guess the lights weren't on. Nursing a Coors line. I'm going at it. I'm already into the second little space age bottle here. Who's gonna go first? Let's. Let's go with rogue guy first. Robia, I don't know if you want to set up your clip or Brandon's just gonna play it or how you. It's up to you. [9:13] Mark: I'm not really sure what Brandon's about to play because I. I forgot to do the assignment last night, and I woke. I woke up in a panic on the couch at 11:30, and I. I emailed him something from my phone, which I. I think I did. I'm pretty sure, unless I was sleepwalking. So. Brandon, take it away, man. What did I send you if you even got mine? [9:36] Chad: Getting ripped off, especially in the early stages of the plan, which John Oliver's was, or in a sales process, inevitably, what ends up happening if a plan is getting ripped off, meaning fees are too high, is they've been in one stationary complacent position for far too long. With a program that doesn't tear down their costs with growth. They went from a $1 million plan to a $20 million plan, and there's been no concession in price pricing. That's an issue in my mind. [10:02] Mark: Okay, so now I can tee this up a little bit. The clip probably won't do it justice, but that show, which was. God, that was a Long time ago. Guys. We were discussing that video from John Oliver who was basically ripping to shreds, like 401k fees. Ripping the shreds. Advisors and took people through the process of like, when they just decided his show, decided to set up their own plan and going through it and uncovering fees. [10:37] JD: And Hancock was a record keeper, right? [10:40] Mark: Calling out Hancock by name. The funny thing is, is they didn't mention the broke. They called him a broker or him or her a broker. They didn't name the person or the firm that they were with. I hate that word. But they did say after that they were going to move to a different advisor and then move to Vanguard. And so they were basically pushing this agenda of like, this is too expensive. You should only be using index funds. You shouldn't use an advisor unless they're a fiduciary. Like, and bringing up all these concepts, which I think like back then was, you know, at the time when he was saying all of it, like, I think it gave pause to a lot of people and it opened up a lot of conversations. It gave people the ability to look at this at a different way and start maybe asking questions that they weren't or talk to their advisor. Just it kind of, again, good and bad. But I also think, like, you flip forward to now and I still think that that discussion is incredibly valid. I don't see, you know, a lot that is changed, but we can all agree that there have been attempts at change. There have been ways to reduce costs for startup plans. There's been government, you know, changes to enforce tax credits and all these other things. So I just think it's like, I would love it if John Oliver, I don't even know if he does that show anymore, but almost did like an update like, oh, yeah, how's your Vanguard plan doing? Or how's everything now? Because you were such a proponent and a negative person of. Or sorry, he was such a negative person about everything about this industry. It seems calling advisors effectively fake saying, you go just get a piece of paper and you're one too now. [12:22] JD: That was it. [12:23] Mark: And so all, all that, again, it was a smack in the face to a lot of people and professionals who do this. And I again, I still think we're fighting that fight every day of people still thinking it's supposed to be cheap and there's no fees and a lot of things even on that video. And again, I'm blabbing now, but no, it's good. It gets the juices flowing again because, you know, again, we're, we're still having those same conversations, but the, the narrative has changed maybe just a little bit in our favor, but not a whole hell of a lot. So there I've teed that up. [12:59] JD: That's good. I always like to think of that. And that John Oliver thing was big. Like that thing carried a lot of weight all across the country. There are a lot of people talking about it. I think it came out later that I think Hancock released that, that, that plan that he was referring to is literally like sub 50k or something with like, yeah, 12 people. It was a very small plan. And if you, if you put that into context, a lot of the fees and things that he was talking about, if you actually analyze it, I'm pretty sure Hancock like divulged something. They like, they put it out publicly and it was like, this is not expensive at all. So there's that fact. Just like if you were to debate John Oliver, like for that plan and the size of assets and what was being delivered from not. I mean, I'm not here to defend John Hancock, but just definitely defend the industry was like pretty affordable for like all the services that were being given and rendered. But here's how I like to think of it, that, that continued challenge and hopefully this doesn't come off as cheesy. But to me, it's an opportunity to really embrace transparency. And I think that you can win new business if you can walk into plan sponsors and let them know that you're very aware of this kind of hidden fees and conflict of interest and all these things. But the proposals that you're putting in front of them, you've X rayed them, you're popping open the hood for them and showing them every little nook and cranny, how the fee structures are where the conflicts of interest exist. And to me, that's the opportunity is be the do gooder in this, in this marketplace. [14:35] Chad: But let's be honest with each other. We're talking about startup retirement plan costs. In this discussion with John Oliver, we're talking about that being a constant battle. We're also talking about businesses that for generations have refused to set up a plan because they felt that it was going to be too expensive. And that cost is two grand a year, three grand a year. And how is that too expensive for the business? The business owners, the people who are making these decisions that you're talking about educating and lifting open the hood for J.D. they don't know and they won't understand the things that you're talking about and honestly they don't really care. What they do is they need people that are going to be accountable that are going to say this is the right and best solution for you. And I can confidently say especially during that stretch of time for a startup retirement plan going John Hancock that was going to have an institutional level share class of investments and only an asset based expense was a super good way to launch a startup. [15:40] JD: Right. [15:40] Chad: Asset based expense on a plan that's going to flow $50,000 a year is freaking nothing. Guys. You're doing free work. [15:47] JD: Yeah. [15:48] Chad: Proprietary stable value account that you're going to end up putting two grand in is not going to create enough margin for them. So we have to balance education and still making sure we do what needs to be done which is get a plan in place for those employees. [16:02] JD: Do you feel like we. Or am I being conspiracy theorists as usual? Do you feel like after 40485 and 4B2 and as products all the record keepers started come out with institutional share class of of funds there was this really heightened. Heightened interest in transparency and kind of blocking out. The TPA gets this, the advisor gets this, the record keeper gets this. Where before it was all this kind of behind the curtain type of thing. Is that still the course that we're on or have we started to kind of turn around and head back the other way a little bit? You guys would know better than me [16:45] Justin: not. Yes. Is there still aspects of it? [16:49] Chad: Yeah. [16:49] Justin: And I think. I mean there's still. Now you're. I don't know about you guys but I'm hearing more. Was not whispers. But yeah, it's happening a little bit more to where advisors are getting upfront kick now again. And it's. That used to be taboo. [17:02] JD: There you go. [17:02] Justin: You know to where now they're getting 1% on the upfront transfer and it's like wait a minute. I thought we were moving away from that. It's not happening a lot but it definitely is out there. [17:10] Mark: Yeah. [17:10] JD: One. [17:10] Chad: I don't mind that by the way. [17:12] JD: One in 25. One in 25 on a. On a $3 million takeover back in the day that was like classic. [17:20] Chad: Okay. 1 in 25 on a 3 million dollar takeover. That that's. That that could be a little outrageous. What I mean is there's extra work in year one. Why do TPAs charge a takeover cost? Like there's a lot of work that we do in migrating that plan and restating the document. Same for the advisor and I'm not problem with them Charging something in that capacity. [17:38] Justin: But it leads, it can lead to confusion. [17:41] Mark: Right. [17:41] Justin: If it's not, you know, if it's not, you know, accurately displayed or you know, shared to the client or maybe the client's like, wait, why are we doing this? You know, and that's kind of what we're trying to get away from and simplifying everything, are we not? [17:54] JD: I think we are. I, I thought if you would have asked me then when we were sitting in that brewery right there, I, and I knew that things were moving towards institutional share class, I would have told you that if we sat here in 2024 that like every product, whether it was a startup or a $5 million takeover or got a for sure it would have to be a 50 or 100 million dollar plan would have institutional share class, very clean. Like no conflict of interest, no revenue sharing. Like I thought that's the path we were going down. [18:26] Justin: Right. [18:27] JD: And from what I've seen, I would have been wrong. Like I see better to this day doing deals with my clients that have everything to do with the revenue they're going to get from this investment option or these target date funds or this fixed account or whatever. [18:44] Chad: Yeah, let's, let's be very clear, JD Pretty much every product is an institutional level lineup. Pretty much every single one. There's a couple of fun families that are selling their own widgets that are not. But everything else is institutional. [19:00] JD: Now that's one area that's cleaner. [19:02] Chad: Now that's one area which used to be a big def differentiator for some products. Right. They think of nationwide. Nationwide want a lot of business being institutional long before anybody else did. But when you talk about the other things, and let's remember these are for profit businesses. Someone had mentioned. Oh yeah, they're nonprofits and joking up top, they're for profit businesses. They've had a large margin for decades. They're not all of a sudden going to get skinny and display to a client what they actually need or are making. And so they have to find a way of hiding it in some ways. And that hiding it comes through proprietary products, right. It comes stable value, fixed accounts, their own target dates because they make very large spreads on those investments that I don't think really is ever going to go away until they find another way to monetize clients. And that other way we've talked about many times is going to be getting participant data and selling them other. [20:07] JD: Well, I am a capitalist. I think people, companies should be able to make money. I just like the Idea of living in a fiduciary world where the laws of ERISA govern things and we have to make decisions that are in the best interest of the planned participants. And therefore, I think to make those decisions, whether you're the advisor counseling a client, or you're the third party administrator is involved, or you're the record keeper, or you're the plan sponsor, you want to be armed with all the facts. And so I'm not against people making enough money. I just think it should be very clear. I don't like the days when it was like they'd ask an advisor how much they made and they'd say, oh, it's. [20:54] Chad: Shut up and sign a fucking form. [20:56] JD: It's built into the product. It is what it is. It's. And instead of saying, oh, I'm the Advisor, I make 25 basis points on your $5 million. This is what it equates to heck, even if you're like, my broker, dealer takes a sliver. Not that the client cares about that. So this is how much I walk home with. This is your TPA. They bill you $3,000 a year. These are the fun companies. These are the share glasses is what they make. I thought that was just a great way to go. And I feel like we're muddying the waters again, which I don't think is. Is the best thing. [21:31] Chad: J.D. and, and we can transition if that's what you're ready to do. But I, I have to remind you of this story. I was six months into the industry. I knew nothing about the space. We went and saw an advisor in the East Bay. I won't throw a name out there. And the two of us sat on the backside of his desk. When we were escorted into his office and he moved over to the table and he immediately said, you guys should be better than that. If I'm sitting at my desk when we meet, I'm going to be distracted by my computer. You need to get me over to the table on the side. We're like, okay, interesting. And then we started to chat a little bit. And he was very clear in saying, why do you care what I make? Talking about a client. Why would a client care what I make if I'm giving them a 5% rate of return? And he just used 5% as a number. And he's like, if John and Sally and I are all getting 5%, why do you care if I'm making 9% off the investment versus if I'm making 1%? And you and I both sat back and went because we would rather gain the other 8% on our rate of return versus you making 9% in there. And it was mind blowing to him and it was mind blowing to me that as a community we thought it was okay at that stage. [22:43] JD: Well, you know where that comes from. [22:45] Chad: It comes from the annuity play and the margins on life insurance at that point. Like, I think that's where it came from. [22:53] JD: I was going to say it comes more from like the wealth management world of Wall street, which is like, look, if my client wants to get certain returns and I can get them for him or her and I take the leftover for my profit, who cares? I'm doing the job. But that doesn't live in erisa. That's not, that's not a okay thing. [23:10] Chad: It shouldn't necessarily live in private wealth management either. [23:15] JD: Right. [23:16] Chad: Like that's an absurd amount of money and spread to take off a client. But I guess I'll leave it at this and say we have become so much more transparent. It is much easier to analyze cost nowadays than it was in the past. The only thing that really continues to throw a wrench. Two things. One is proprietary products and the margins they're making and what many providers still won't let you even strip them out. So it's hard to know what it is they need to do their work when you cannot sell the plan without proprietary product. And the other is JD Shelf space is back in. Remember when shelf space went away back, you know, 10, 12 years ago, it's back in mutual fund families. You want on our platform, give us massive kickbacks, we'll, we'll lower participant costs. But what we're really doing is retaining that to create more. [24:06] JD: You know, we've never really dived into that on this show. Like, I guarantee you there are dark boardrooms where deals between record keepers and mutual fund providers. This kind of like revenue share that's below the table, you're kind of pay to play that you're, that you're talking about the shelf space concept and it never really gets discussed. But I, I know that those deals exist out there and they should also be part of the, the mix. But those there, there's a little, there's still these, the dark web of that stuff that doesn't really get talked about. I remember when everything we used to do on the show early on was like, okay, how could an advisor use this? And so I just want to say it one more time to that point I made earlier is if I was a financial advisor, I would be damn good at understanding all the relationships between all the different parties who's making what. Whether that's fair and prudent and in the best interest of my clients. And I'll get really good at being able to communicate that to my prospects and my clients. And really good. To Chad's point of like being able to put it on paper to, you know, some analysis to show everyone because I think that's a great way still. It was back then and to Robi's point earlier today, it's. It's still true. Like I think that's a great way to win people's trust and, and deliver valuable services for them because there's a lot of advisors still to say that don't quite understand all the. The details that go along with all that stuff. So yeah, that was at the Half Moon Bay Brewery and remember we had the owner, the brewer himself sit on the show and go through some that [25:45] Chad: he had in a weird turn of events. Now his son in law is our loans and distribution guy. [25:54] JD: That's. I don't even know that. [25:56] Chad: Eric Topman. Eric Topman. Yeah, that's his. The owner of Half Moon Bay Brewery. And yeah, that was his. That's his father in law. [26:06] Justin: I didn't know back when we used to introduce a beer of the episode. [26:09] JD: Yeah, beer, the apps. That's right. That's right. Oh, diving in. Oh, you'll see it on my clip later. We. I forgot that acro sin. I didn't forget, but I was reminded that acrosan was something that our community had given to us. The concept. [26:22] Justin: Yeah. [26:23] JD: Used to have a word of the episode and we'd have to pick a new word every. Every, every time we do a new show. Um, let's go to. Let's go to Chad's. Let's go to fucking Chad's. So Chad, you take it away. Do you want to set it up? You want Brandon play it? What do you want to do? [26:39] Chad: Go ahead and play it, Brandon. I don't think it needs setup. You mentioned that you have benefits side 401k side. I obviously follow you. I love reading some of your stuff. You talk about wealth and health. My question for you would be twofold. Number one, I've been waiting years to see an advisor who quantifies for their client kind of a total compensation package. [27:06] Speaker E: Yeah, we do that. [27:06] Chad: Feel like, okay, we do that. So expand on that. All right, so we do. [27:10] Speaker E: We did this for a client that was, it was a private equity backed client. So companies that are owned by private equity are pretty much interested in getting as much EBITDA as possible. [27:19] Speaker F: Right. [27:20] Speaker E: And so we had gone in, done a lot of stuff on their employee benefits program, Kind of stripped some companies cost out without really increasing the cost for the employees. Move them to a new record keeper, reduce the cost of the 401k so giving kind of reduce the tax rate on the employee, let's call it that. And we had shown and then this company was pretty benevolent. They had a safe harbor match. So if you put in five, you're getting four. They were fully funding the health savings account in January. So getting either $1,000 or $2,000, which is really rich at the end of January, which is very, very unusual. And so what we did is we showed these employees and we broke it out. We said, look, if you make $57,000 and you live in Mississippi, which is where half the company was based, and if you put 5% in your 401k and you defer $1,000 into your HSA, your taxable comp, it went from 57 to like let's say it was like 52. Right. So this is what you need to live off of. And then if you add back in your deferral plus the deferral or the deferral on the 401k and the HSA plus the match on the HSA and the 401k, your actual total comp is like 59,000. It's like that's pretty badass. [28:28] JD: I feel like you and Eric could be like long lost brothers speaking my language right now. [28:33] Speaker E: But it's great. And it's. And the employee population was really kind of. They were braced. The HR team was. [28:40] JD: Are you playing the entire episode for us? [28:42] Chad: It's like three minutes long and a [28:44] Speaker E: lot of the employees afterwards like leak out. [28:46] JD: Like this is pretty awesome. [28:47] Speaker E: You know. And so we've continued to do that as much as we can. A lot of cross pollination. [28:53] Chad: Yeah. Wait to hear and see some like that. [28:56] Speaker E: But it doesn't. I think a lot of people are close enough with their benefits team or the benefits team that's outside of them. And then number. [29:04] Chad: Yep. [29:04] Speaker E: And then number one, you know, the benefits just don't care. Want to communicate with the fa. [29:10] Chad: Yeah. Yeah. [29:11] JD: Well. [29:11] Chad: And that's why I think it's awesome that you guys are on both the benefits and the well side. The second part of that. Don't play the second part. B. There you go. [29:22] Mark: Why am I getting lit the up in this chat? [29:25] Chad: Your man spreading, bro. [29:28] Mark: Hey, at least I have a beer in front of it. Okay. [29:30] Chad: Jesus. [29:34] JD: Oh, I forgot Justin's got flip flops on too. They're both just doing that. [29:38] Mark: Cal. [29:38] Chad: Hey. We were sitting in your house, which was warm and it was in San Diego and it was beautiful out. [29:44] JD: What? [29:45] Mark: Why do you have to cross your leg? I'm just so confused. Like why can't I sit? [29:49] Justin: It's always been a thing. [29:51] Mark: I won't. Yeah, I won't cross my legs if everybody else is because I hate doing what everyone else does. So. [29:58] JD: So this is a Aaron Potter chin for those of you out there who. But this is like what, five, six years ago or something? And, and he's talking about what Chad, like not just doing 401k but measuring all benefits and what the participants choice is. Like, should I be in this group health selection, you know, or should I put my money into the 401k or. So this is what you want to discuss? [30:24] Chad: Yeah. And it wasn't so much the, the tie to the 401k as it was we as an industry are trying to encourage people to save. And the conversations around matching have gotten better over the years, explaining the free money, but still the aver employee thinks I can't afford to, which is why automatic enrollment has taken over and it's been so effective. But they still sit back and go, yeah, I'm living paycheck to paycheck, I can't save. And a Ron is sitting there going, I'm going to prove to you how much money you're leaving on the table if you don't. And even beyond that, he's going in because they're on the benefit side saying, well, let's look at what your benefits cost to your employer and let's look at the other things that they're providing to you as an employee and let's create a total compensation packet so that you understand what it is that you make as an employee here. And to me, and I was thinking about that and yes, Tony, this is the pick I picked. And the reason I did is because to this day still not seen a single other company doing this. [31:32] JD: No one's doing it. [31:33] Chad: Not one other company doing it and not us. And I think too to, to even at plan design and I think of all the wonderful benefits we have, the safe harbor and, and the, and the group health, long term care and the life insurance. [31:46] JD: You mean you haven't seen a plan sponsor do an employer? [31:50] Chad: Well, yeah, because I tie this to. Not your typical advisor, but I understand this is A this is a shit ton of work on an advisor that's not on all aspects of the benefits. But why have we not seen a good technology that does this? Why, why haven't we seen plan sponsors embrace this? Why haven't we seen more advisors use this as a differentiator? Is it because it's too difficult? I don't think so Justin. I really don't. [32:14] Justin: And I, I agree with you with that. I doubt and you might have mentioned this and I didn't hear it but the other thing, I loved what he was doing about it. Doing with that data was not just for the participant but he was also measuring when anytime there was changes year over year, let's say in participant part, you know, deferrals or participation overall. And since he was on the benefit side he would be able to point to oh well, you change your health benefits and it added more cost to your employees so they started saving less. And I loved how he used all that data and I think it was yeah, brilliant. [32:43] JD: I've seen new advisors, I've seen experienced advisors starting a new firm that this was their business model. They wanted to do exactly what Aaron was talking about. I kind of poo pooed it at the time. When they told me it was this many years ago I'm like you should just focus on 401k. Like I don't know why you're trying to get into all this other stuff. But I will also tell you now that this is definitely happening in the big space, right? Like the One Digitals, like the corporate One Digitals and the Aons and the big companies are working with their larger clients and absolutely trying to get control over all benefits. And the obvious way for them to do that is to execute on what pottery chains talking about here and what you're a big fan of. [33:28] Chad: We, we had it. [33:30] JD: Justin, if you, where is a A Ron right now? [33:36] Chad: If, if you remember back to our Vail Resorts days, remember we were there in 0708 and and it was a tough time in the world and Vail Resorts was struggling. They were not providing pay increases and they came to their full time good employees and they said we'll give you an option you can get. At the time I want to say it was like a dollar fifty more an hour, two dollars more an hour or you can get stock options and they quantified it for us. Like the release that they gave to us was here's the value of the Vail Resort stock. This is what your actual take home pay looks like. When we quantify that out over the course of a 12 month period, I, being the dumb guy, am took the $50 an hour instead of the Vail Resort stock. But that was the only time in my working career I've seen it and it was impactful. They showed what the group health costs were. They showed what my time off was. [34:30] JD: How do you guys feel about this? And maybe I'm, maybe this isn't accurate, but I think it is. When I provide group health benefits for all my employees, if you are single, without dependence, without a family, you're very cheap. For me as a line item, you're welcome. [34:52] Mark: Or if you don't use them because I'm on my wife's insurance point. [34:56] JD: Great. And that's actually a valid point. [34:58] Mark: Or if you've declined, I'm saving you thousands, J.D. [35:02] JD: for sure. So would you like to see employers like me go, well, wait a second. I should look at each employee and kind of have a budget for benefits like what I'm willing to spend. I mean, you couldn't do this in the 401k space, right? I couldn't give just in a bigger match because he cost. [35:19] Chad: No, but couldn't you, couldn't you adjust the, the salary you're providing people in that exact same scenario? While we're on the doctor. Yeah. [35:30] Mark: Why don't we have this conversation right now? [35:33] JD: Let's move on from this. Chad. [35:36] Mark: Your whole if you want to raise, [35:37] Justin: sell more just went out the window, buddy. [35:41] JD: And by the way, everyone in the chopper. I know this is a bummer for you. We've heard this on a couple of the experimental shows, but there's no acrosin, there's no wheel of ice, there's no. You don't even have to drink if you don't want to. I almost was just gonna like eat some. [35:55] Justin: Mark is on a cleanse. [35:57] JD: Yeah. So God bless you. You don't. You don't have to. So don't. Don't be pressuring us to drink more or do whatever this is. This is a mature experimental webinar. [36:06] Mark: We just lost 2, 000 people. [36:14] JD: Okay, yeah, yeah. I. Again, if you're going to try to take value from this conversation for a 401k pro, it should not be a 401k pro. [36:26] Chad: Let me make that clear. [36:27] JD: I was going to start there. To at least be dangerous in those areas would be a good skill. So let's say you're not even trying to generate revenue from those other sides, but at least understand them and know them. Be able to communicate with employees about what their choices are. It's a great first step. But if you really want to like build your business and get more revenue for yourself and do more good for your clients, you should still consider getting into these other things and providing a all in resource for the human resources people, for the CFOs, for everyone at your clients to really help those employees. And by the way, I'm sure the employees would love to go to one person or one firm that like, I can't believe I'm saying this out loud, but I'm sure they would love that, like the guy that can help them with their health insurance decisions as well as their 401k. [37:13] Chad: And I'm not. Let me make it clear. When I look at that topic and the reason I chose it and what I was hoping to get out of it, it's not so much to tell an advisor that this is what they should be doing or that they need to be doing this. It's that I think as a whole businesses should be doing it. And I think it would carry a great deal of value to the employees and it would create a much happier, healthier working staff. And so if an advisor could use that as a differentiator to then get in there, they don't need to become the group health guy in order to get it. You just need to be able to have the support, the tech and gather the data in order to show a full compensation package. I don't think that's too far out there. [38:01] JD: Devin asked if you can scale it. You talk about right now, some of the challenges. I've, I've gone on a soapbox many times about this and you've all heard my gas station analogy of, you know, adding the, the car wash, adding the Quickie Mart, adding the auto body shop or mechanic shop, you know, to, to not just sell gas and make more revenue. And so I say this again, if you're an advisor, in my mind, you're an entrepreneur. And if you're an entrepreneur, you should always look at how can you maximize revenue, not in an evil way, how can you maximize revenue and value for your clients? And so yes, this is scalable. And how dare you think, oh, I only know 401k, there's no way I could help people with benefits beyond that. Are you a fucking idiot? Like, it's not that hard to learn that shit and add it to your business model. [38:56] Chad: Let's be honest, Nobody only knows 401k though. There's not a single advisor that Specializes only in that. [39:03] JD: Well, they're out there. But no, no one. What I'm not asking you to do is sell financial services and then also asking you to like sell them computer equipment or something. No one's asking you to do like multiple things. I'm just saying in your genre, which is financial services, you should be providing this council and this advice and making revenue in other areas Besides just the 401k. But we've, we've talked about that forever. Okay. Less I'm excited to see. I mean, we don't have to leave my clip for last. Well, I'm going to go, I'm going to go last. I mean, I'm going to go now and then Justin can go last. So my clip comes from what I think was our first live show, which was at the Drake Hotel in Chicago. We were there for the. The plan Sponsor council of America's 70th annual conference. So this was an audience of, of plan sponsors. And if you guys remember, we had a guest coming up. Once again, we did this thing where we get like local breweries and we had a guest from the brewery and I totally forgot to even ask him to come up on stage. Like, I was so nervous. I forgot about them in general. But I had a topic which was 401k, hidden fees. Like I was trying to teach this group, this room of plan sponsors, the tricks of the industry and how people were hiding things from them in terms of revenue. So Brandon, play the clip. And it's not three minutes long, thank God. [40:38] Justin: Directors, everything is 100 volunteers. [40:40] JD: So thank you very much. Thank you very much. [40:42] Chad: Thank you. Thank you. [40:44] JD: Thank you, sir. Appreciate it. [40:49] Justin: He was going to say he's got [40:50] JD: to get out of here while we the ship goes. You just said it, by the way. [40:54] Chad: There you go. [40:55] JD: Oh, nice. Wow, 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, 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 [41:15] Mark: know, and because he loves spreadsheets. [41:17] JD: Do you know that? Do you know what percentage of plan sponsors the fee comparison is crucial in their decision making process [41:26] Chad: or a real [41:27] JD: legitimate 83.6% of plan spot. 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. All right, so I got A list here. I'd like to kind of go back to this topic again. And fee comparisons was the one we brought up right there. So let's, let's start it with that one. This is still a thing. I see this in the proposals you guys do. I see this with advisors that I sit down and chat with where I think the industry would call it a spreadsheet. I didn't look at any of these chats about what was going on up there. But I do think Justin does look pretty pimp dog and his blazer and stuff over there. I, I, so I know that people are spreadsheeting things. And one of my concerns is when you spreadsheet fees from, let's say it's an incumbent, like it's a takeover plan. You're saying, okay, here's your current fee structure and here's an option that I want to show you. One of the numbers is the expense ratio is the cost of the investment options is the fund. And I was trying to tell this room full of plan sponsors that, well, you really better trust the person that's putting that number on that spreadsheet because there's a variety of ways that you could calculate that number. Whether it's 80 basis points or 75 or 1.25 or whatever it is. Is this still happening today? Are you requesting proposals from record keepers? And in the very proposal itself, it's saying this is the average cost of the investments. Is that still happening? [43:16] Chad: Oh, 100% of the time. [43:18] JD: And so let's be clear to everyone, [43:19] Chad: listen, well, that's not true. Fidelity does not even give you a list of investments. They don't tell you share class. They send you nothing. They just show what their, their build expense will be. [43:31] JD: That is it for the pros out there. You all know, for the kind of people that are just getting into this business or haven't been in that long, there's so many different ways that I could show that expense ratio. It could be weighted, you know, across assets. It could be just an average of what I've chosen. What I don't like is imagine you're going after a. Or I say, I don't like this curious what the chat bar things. And you guys, let's say you're going after a three million dollar plan and that three million dollar plan has actively managed funds for its core menu, okay? For whatever reason, that's what they got. And those funds may be average 1%. They're A shares or R3 share equivalents or something like that, okay? Like it or not. And then you come in and show a similar share class. Okay, let's assume you're going to show our 3A shares as well, but you're going to show index funds or passive funds. And so your average expense ratio is going to be. Should have gone institutional, make it easier for everyone. But sorry, so there's is at at 1 1.10 or whatever and you're going to show yours at at 75 or 70 or something. Okay, this is to me, apples to bananas and a slight of hand. You're, you're, you're telling this client that you're a lot cheaper than they are, but it's because you're offering to sell them something entirely different. Is this good or bad in your guys's viewpoint chat bar, everybody? [45:04] Chad: I'll answer. I have no issue with it whatsoever. If the advisor is a believer in passive and is going to support that reasoning. [45:13] JD: Good answer. I would just prefer that that advisor then state that in a transparent way. [45:18] Chad: Yeah, let's, let's open up, let's open up the doors to everybody here in jd. You've been a little removed from this side of it for a few years, so maybe this will come as a surprise to you. I was gonna say it. [45:32] JD: That should be a clip. Brandon, go back. [45:36] Chad: What do we do at pdc? Because we do a great deal of supporting advisors in a feasibility study and benchmarking this stuff I have taught the guys and correct me if I'm wrong fellas, that we don't take what is on the proposal because most of the time they're going to show seven basis points as the expense ratio. But we have determined that on an institutional share class of investments, which is what pretty much everything is, that an average fund lineup of passive and active is going to average somewhere around 21 to 25 basis points in that range. And so when we tend to benchmark, or at least I do, I usually show each of the providers at the same investment expense ratio, 21 to 25, somewhere in that range. [46:28] JD: I am seeing a halo appear over your head right now as you speak. [46:32] Chad: Does it benefit us most of the time? Now this is the dirty part. Yes, it does. Because when we're looking at the current lineup, most of the time their institutional based lineup is, is heavily passive or sorry, heavily active and it ends up being in that 42 to 44 range. Do I sometimes feel guilty stepping in there because they could have the same 21 basis point lineup in their current program? Do I feel guilty showing them at 40 and us at 21. I do, I do. But the truth is I shouldn't because the advisor is going to line up as a 21 basis points. [47:12] Justin: Yeah. If they have an advisor that is paying attention or feels passionately about that lineup and that's fine. That they're there doesn't mean that you can't show what you guys can do. [47:21] JD: I think the right thing then would be to you could kind of like sleazy do this where you're still being like truthful is where you. Seems like an oxymoron there. I just said. But if you say to that client, because the client doesn't really get it, but you say, look, your current structure has a lot of actively managed funds, I believe as a theory in 401k in index and passive funds. And so the funds that I'm showing you are more affordable just by their nature. And so then you're being honest, you know, instead of kind of making the. The fib that Chad's worried about is you're kind of saying your current record keeper has a product that's too expensive. And the reality is. No. That current record keeper could use the very same funds that you're offering in most cases. And so it is a bit of sleight of hand. So I might do. [48:11] Chad: I will say, JD we have evolved a little bit. Some of the record keepers, especially in the micro space, are forcing their own proprietary target date funds. And some of them, they've come full circle, have only active managed target date funds. And so if we're trying to compare two different lineups and one is using a BlackRock TDF and one is using an actively managed TDF. I don't show that vendor at the same 21 basis points because we know the TDFs are going to be in there and it's going to raise. Raise the average lineup cost. [48:46] JD: It's funny you bring that up because that was the next part of this segment was where else does wrongdoing happen? And for that audience there in Chicago, I said that it was, I said it was target day funds. But I should have said, and I'll correct myself today is like proprietary requirements. So this is another game that still happens to this day you just mentioned. It is I may have my own target date funds that I'm shoving down your throat, whether active or passive, irrelevant to me. But this is revenue for my firm, the record company, the record keeper. I may also have the GIC or the fixed account that is my own. And I've seen this recently. I'VE seen this actually for large clients where they are forcing that client. This is, this is $150 million client where they're forced to have the proprietary gig in the program. And I know that a lot of revenue is being generated off that. So this is my next question is in terms of games that are played and transparency and where advisors could provide value is in the analysis of proprietary requirements, target date funds, as well as fixed or GICs and those types of. I don't like that stuff. I, I feel like the clients don't understand it and so it's difficult for them to make decisions around it. [50:15] Chad: Why do you think they do it? [50:17] JD: Why do they do it? Well, so you're gonna, you're gonna say it's okay because they need to make revenue. [50:23] Chad: I'm not gonna say it's okay. I'm gonna say they do it because clients don't understand it, which is what you just said. And they need to create revenue because everything's getting thinner on the recordkeeping side. [50:34] JD: See, I feel like the answer should be no, no, no, no games. You have to tell the client how much do you need to make on this plan per year? You know, like I. [50:48] Chad: And in their mind, Let me, let me, let me defend them, jd because in their mind that's what they're doing. But what they're saying is our product only offers this gick. This fixed account, the stable value. Therefore, this is what we need because this is your only option we're going to make spread here. So this is what we need over here. If they had the option of we're not going to, we're going to allow you to have an outside stable value or fixed, then I, then I get it. That is a fair conversation to have. What you have not seen, which guys, I don't know if you have recently done any, and I'll throw it out there, One America proposals, but they will actually say my required revenue is 18 basis points. And when you dive in to the 18 basis points, what it actually is, is we need 25. But we're expecting 200,000 to go into our fixed account, which has no asset charge on it. And since there's no asset charge on it, then our, our, we're expecting our average asset charge as a whole now is 18 basis points. That to me is super dirty. [52:06] JD: Yeah, I agree. [52:06] Justin: They're still charging the 25 bips. [52:09] Chad: You said 25 to everybody else. But the people who go in the fixed are getting no asset charge, therefore they're representing their average at 18 one more time. [52:19] JD: If you're a newer advisor out there listening in later here on the recorded show on YouTube or whatever, I think you need to understand this stuff and I think you need to be the client advocate that can show your prospects and clients how this works and win their trust. Because there's a lot of dirty little games going on like that. And. And I don't like it. I think me personally, you need to know I. I'm pretty transparent with what I need to make per client. You do a lot of custom deals, Chad, where you come to me. And that's exactly what we say to the advisor. We need to make X amount on this plan because of its size, because of its complexity, because of whatever. And then we deal with revenue share in terms of, hey, if revenue share can cover part of that, that's great. Then we can bring down the fee. But that they. Record keepers should act the same way I'm acting in this situation. As I'm explaining it, they should be able to say, we need to make 40k and we're gonna. We anticipate making 18k from the. From the fixed account. So when you make the rest of it over here, like, it should be clear like that as opposed to underneath the. The water, the surface, you know, that's just my take now. I felt very good about telling this room there in Chicago these little tricks. And when I looked into their eyes, I saw them, like, really interested. I remember the day, like, like, oh, my God, this guy's kind of popping open the hood on how this industry works. Marcus, Marcus have so much fun on the show. He's just gets to read the chat bar. I don't get to see any of this. [53:59] Mark: I'm sorry. Yeah, I've zoned out for like 10 minutes just reading all these comments. [54:03] JD: It's the best part of the show. So, yeah, it was fun to be in Chicago. It's funny to think that I was nervous because I don't feel like I get nervous at all anymore on those things. I guess that just comes with time. But that was like the first time I'm like, what are we doing on a stage, like, with mics and lights on us and curtains behind us? Like, I didn't. I didn't know. We. [54:27] Mark: I guess that was our first ever with an audience. [54:30] JD: I think so, yeah. [54:32] Chad: And I think it was our first big in person. [54:36] Justin: Well, no, because we had done, I guess. Yeah, yeah, that was our first in front of an actual audience. We had done wealth of work and stuff like that before. But it wasn't an actual. [54:45] Chad: I don't think so. [54:46] JD: No. [54:46] Justin: Both of work was. [54:47] Chad: Yes. Yeah, that was the sca, I think was the first one. [54:51] JD: This is before [54:54] Mark: fact check Justin, right? [54:55] JD: Yeah. Okay, let's go to Justin. How do you want to do it? What do you got? What do you got for us? [55:02] Justin: Well, I'd be honest, I don't know how long my clip is, so I'm gonna stop. I guess I will. I will preface it with the. We had a question. This was the. The Disneyland conference that we did. Or not. [55:19] JD: That was a show, Ari. [55:21] Justin: Well, dude, I mean, I had just gotten over Covet the world shut down like what, four days after. [55:27] Chad: Yeah, like two. Two days after we flew home. [55:31] Justin: So many people canceled. Felt terrible for Ari because nobody was there. But anyway, so there was. We've talked about it. [55:39] JD: Debbie was there. [55:40] Justin: Webby was there. [55:41] JD: I think so. [55:43] Justin: I don't remember. Anyways, so we talked about it. Over the years, it's come up in just in conversations, meetings and stuff like that of our own, but the question was posed, what's something that you. You dislike about our industry or something that the industry needs to get rid of? And every one of us kind of had our own. Our own thoughts on the matter, I think, except for me, actually. You guys had taken all mine. By the time we got to me, I was the last one to go. But play, Brandon, we're going to talk about. [56:13] JD: We're going to come up with something that we don't like about our industry and that we would just want to get rid of with Chad's words. So, Chad, the start. What do you want to get rid of, you pessimistic turd in the punch bowl. [56:27] Chad: This came about from a debate in Texas as we were prepping for a show. This is supposed to be quick. What I want to get rid of is cross testing, profit sharing. [56:36] Mark: Done. [56:36] Chad: I think there should be a minimum gateway. If you give the employees a percentage, then you should be able to max out whoever you want to max out. I don't think there should be more for older owners, less for younger owners. [56:47] JD: Your turn, Mark. [56:48] Speaker F: I agree. [56:48] Mark: I'm so excited because you just said it. I'm not stealing this from you. They can attest I said it very via email. TPA revenue sharing. [56:55] JD: You want to get rid of it? [56:56] Chad: Yeah, clean. [56:56] Mark: Cut it out. [56:58] JD: Raise our. We'll just have to raise our fees. Our clients, buddy. [57:00] Mark: Yeah, but it would even the playing field. I would have to explain. Oh yeah, Some people claim to credit it back. [57:05] JD: No, you Don't. I wrote a blog post saying the [57:08] Chad: same sound kind of passionate about that. [57:09] JD: If I had to choose and this is not as sexy as your guys's ones but I would get rid of this March 15 deadline coming in five days or at least push it back. So as distribution as a third party administration for corrective distributions it's almost impossible to in a period of what's really not three and a half months because I may not get census till February or middle of February. [57:35] Mark: March. [57:35] JD: God forbid. Yeah, March 14th. To to process corrective distributions, run those failed ADP tests get the message to. It's ridiculous that we have that short of time to do it. That's what I would get rid of Justin. What would. What would Your turd in the punch bowl. So we're calling this segment. [57:57] Justin: By the way I'm kind of with both of these guys. I, I go back and forth. I know it's just one but revenue percent. [58:03] JD: So you don't have any original ideas of your own? [58:05] Justin: No, I said them. You know just your answer should be [58:09] Mark: you want to get rid of all of us. [58:11] Chad: Well it be should be noted that Justin was on the other side of the debate regarding keeping the ADP and [58:16] Justin: I go back and forth on it but yeah, I not a fan of. [58:23] JD: All right, [58:26] Chad: we're going to move on [58:26] JD: to the next subject. [58:28] Chad: Wait, you're not going to give Ari a chance to answer that. Like he may have. [58:32] JD: I guess he is the original turd. [58:33] Speaker F: Yes, exactly. The ot. [58:37] Mark: Exactly. [58:39] Speaker F: I have to get a shirt like that. To me, to me I think it's always been the ADP test and you know, and I live in New York and, and based on taxation and all that stuff, I can't believe somebody in New York or even California or in Massachusetts at 125000 is really a highly compensated employee. [58:56] Chad: Good point. [58:57] Speaker F: To me more. 150. 175 and you know that obviously would affect the ADP test which I think is kind of silly in the sense that obviously if you make more money you could be able to save more. And if we're really truly caring about the retirement crisis we kind of maybe go to a universal availability requirement like they have with 403B plans or do something where it, you know, the reality is is that you know, when we live in, you know, like I said a high tax state, you know a buck and a quarter isn't exactly somebody who's really highly compensated employee. [59:27] JD: Yeah, same is true in Cali. [59:28] Mark: Buck and a quarter. [59:30] JD: Ari's trying to put me. [59:32] Chad: Thank goodness. [59:33] JD: I feel like if Ari gets what he wants, there's. There's no need for administrators anymore. Like, if you just simplify all that, [59:40] Chad: we're going down that path. J.D. all right, consultants. [59:43] JD: Is this. Is this what we're trying to do now is we get to, like, what's the new one we would do or same one? [59:48] Justin: Well, yeah, I guess I pose it to you guys. Like, do you guys still feel that that is your number one or with the. [59:54] Chad: That's been insecure changed. [59:56] JD: I got one. [59:57] Chad: Go first. [59:58] JD: I got one. That's not gonna be a shocker. [1:00:00] Chad: Justin goes first. [1:00:02] Justin: I'm a gentleman. I'll let you guys go and see if any of mine are left by the time we. [1:00:05] JD: You're just gonna use our ideas again. [1:00:07] Justin: R D, I. [1:00:09] JD: That was a very nerdy one that I did. But it. There's a lot of, like, truth to that. The whole March 15 deadline for corrective distributions for our failed ADP test is totally unreasonable. If you think about the administrators, whether bundled or unbundled, TPA or not, that are the ones that are actually doing those tests and trying to figure out which clients have failed those tests and then make those corrective distributions in that short period of time. You also have to understand that not every client's giving you census on January 1st. And so it. I really feel like the government should relook at that and kind of push that out. It makes no sense. But I realize most people think, like, what is he talking about? That's super boring. So my new one is easy. If I could get rid of anything in this current. We all know what it is. I would just lop the head off of Pepsi. Literally off. And then I would piss and all over it. Severed head on the ground. That's mine. Who's next? [1:01:18] Chad: M. Oh, Chad. [1:01:20] JD: What? [1:01:21] Chad: Go ahead, Mark. What are you getting rid of? [1:01:25] Mark: I'm gonna go ahead and this is. I think this is fun time because I could do something that's actually feasible or maybe could happen in five years. [1:01:34] Justin: Sorry. [1:01:35] Mark: Yeah. [1:01:36] Chad: Good work, Samson. [1:01:38] Mark: I'm gonna go back in time and I'm gonna. I'm gonna go to the secure act changes and I'm gonna get rid of the long time. [1:01:46] Chad: Long term part time. Yeah, [1:01:51] Mark: the auto enrollment features. [1:01:53] Chad: Oh, I love the auto enrollment feature. [1:01:56] Mark: I. I'm saying that sort of jokingly just because it's like, you know, right now people are a little bit frustrated by especially new clients who are setting it up. But yeah, that long term part Time stuff. I would just cut it out solid. [1:02:08] JD: That's a good. [1:02:09] Chad: With you. When I. When Justin sent that out, my immediate thought and I'm sticking with it. Individual annuity contracts in old 403Bs. They need to be gone. Every single one should be wiped off the face of the earth and modernized into a current day product. [1:02:27] JD: Did you recently run into like a 30 million dollar prospect that you can't get the assets to transfer or something? [1:02:32] Chad: Oh my God. Dude. It's not. It's not even. It's not just one. It's another one. I went into a group. My God, you guys. I went into the Special Olympics and I'm meeting with the Special Olympics who are currently set up with tia And I had to break this news to them. They had. They had no idea. And so we reach. Sorry, it's with Fidelity. [1:02:55] Mark: I lied. [1:02:56] Chad: It's with Fidelity. And we reached out. Can you modernize them to. At least Chad won't be involved. At least get them onto a new product where we're not tied down by all these individual annuities. And felony came back and said, nope, not a chance. You're stuck where you're at. Good dealings. See what happens to you. And these guys. They didn't enter into it. This relationship started in 1994 with fidelity. And they're just screwed. And I feel horrible. [1:03:25] JD: I was gonna say your idea is kind of boring and dumb, but you're right. Like it's kind of like illegal. Like it feels like it's illegal. It's like a. It's a contract thing. But it's like it's not. Right. [1:03:39] Mark: Right. [1:03:39] JD: Like if government. [1:03:40] Chad: Well, and so jd, Just so you know, what's happening behind the scenes is we have. We have engaged a very passionate ERISA attorney who is gonna. She's gonna go to battle with us on this. The. If you look at the contracts, the contract state, you cannot allow a trust to trust transfer of assets because this is not a group plan. Right. [1:04:06] JD: Per individual. [1:04:07] Chad: And they're. Then they're also fighting that this is a group relationship that was entered in by your plan sponsor. But you have signed individual annuity contracts. Right. [1:04:17] JD: I like that legal path, but her stance is you. [1:04:21] Chad: You can't be both. Like, if you're saying this is an individual contracts, then you need to. Sorry, go ahead. [1:04:29] JD: I'm sure the odds are really good that they'll win that suit. I heard Fidelity has no like legal backing. Like they don't have any attorneys that over at Fidelity. [1:04:38] Chad: Well, the. The point that she's trying to fight here is you should allow a group level transfer. You shouldn't need every participant to sign off on this. And, and in which case we can allow a clean buyout from a new record keeper because all assets will move. [1:04:54] JD: You would be able to. [1:04:55] Chad: That's the issue with the individual annuity side is you can't get all assets to move. Therefore the new record keeper won't help buy out and you get assets right now. JD that one has a 10 year surrender. A 10, 10 year from most recent deposit. [1:05:11] JD: That's crazy. And the fact of the matter is that it is. Decisions are being made as a group by an employer. You know, it's not really individual accounts. You can make more of that argument which is where this comes from. Where if you like you had 16 different options to choose from. But again, even when you look back at those meaning if you're a participant, you can choose from 16 different carriers to put your investments. You know, this happens at hospitals and schools and things like that. This is where this kind of comes from. But still when you look back at all that like that was poorly designed. Like we should have allowed nonprofits to just have 403 plans that are like 401k plans that don't have an ADP, DAS and don't have top heavy and have a universal availability and, and just leave it at that. Like why do we have to create these weirdo contracts with insurance companies with deferred charges and all this stuff? But we were supposed to be creating solutions that were easier and better for them, like more safe and instead we've done the opposite, right? [1:06:20] Chad: Well, we, we have moved into a much more modern world. But to, to Webby's point up top, remember this relationship and potential particular started in 94. It was the wild wild west until 2009 in the nonprofit space, right? So now things are more modernized. But the fact that this provider won't even move them to their newer product, that's upsetting to me. It's like, look, I get it. You want your money because you entered into this. We're not even trying to move the plan. You can get your money, you can keep the assets, but at least get them into a program that is more reasonable for a modern day offering versus these old shitty annuities that are doing nothing for them. [1:06:59] JD: Oh, I got news for you. That lawsuit's not going to work. [1:07:03] Chad: It's not a lawsuit, it's essentially a letter just trying to get the assets to transfer. And the other component of it is if These are individual accounts or if they're group accounts, depending on which way you want to battle it. When a plan does move, that nonprofit should be able to transition those assets into an Iraq so that they can get it off of the 403B. [1:07:25] JD: Right. [1:07:26] Chad: And they can't at this point. [1:07:28] JD: I remember this same conversation happening 15, 20 years ago with PLANT and people saying we need to get some, you know, attorneys involved and send them a really scary letter. And that was a long time ago. [1:07:41] Chad: Now you know why I want to remove it. That's my remove. [1:07:44] JD: That's a good one. Out of here. Justin, it's your category. So. So now I like what all three [1:07:50] Justin: of you said, so I'll just go with that. Serious. [1:07:56] Chad: In all seriousness, long term part time [1:07:57] Justin: employees was my one but I. The other one was it's really just stop passing so much legislation complicating the out of our industry. For all of the plan sponsors, you know, we got the starter K that just came through with Secure 2.0. We have all this. That is we're supposed to be making it easier for everybody. We're trying to make those advances with, with you know, fee disclosures and all that over the years. And I feel like we just kind of went backwards in many cases long term part time employees, you got obviously what I already said there, there was another one too. [1:08:31] JD: It's a good one. I mean not Roth. [1:08:35] Justin: I guess you can kind of say Roth employer contributions like Jesus, we were not ready for that. And employees still aren't. [1:08:42] JD: Yeah, you know, aren't ready for it. [1:08:44] Justin: Employees aren't. [1:08:47] JD: Everybody knows all these new provisions have these like, like legal like deadlines or that they're effective. And then you go to clients and you're like yeah, you can do that now you know, it's 2024. And then you guys have priority witnessed this. You realize. Well the record keepers aren't ready to do half of this. [1:09:04] Chad: No, no. [1:09:05] Justin: Well, employees don't understand what like Roth is going to do. Right. Roth employer contributions and catch ups and all that are going to do to [1:09:12] Chad: on a simple, an easy one is Roth inside the simple options. Right. I'm still telling clients that or prospects that are considering a move from a simple to a 401k that you don't get. Roth and a simple but by definition in law you can. But no, I haven't. I've only come across one which I sent to you guys this week. Simple provider that is offering Roth as a deferral feature. So it's not really There. Even though it's legally there. [1:09:40] JD: Would you guys have a question for you and then we'll wrap it. Would you blow up secure 2.0 to get rid of these things you're bitching about and lose the tax credits along with it or would you? [1:09:54] Justin: Not at all. But just don't pass these rules. [1:09:58] Chad: Well that's the problem, Justin. They're gonna shove everything else in there. You want one thing passed, there's going to be 14 others that somebody it's on somebody else's agenda and it's sneaking [1:10:07] JD: in because the tax credits is just the bomb. Right? Is that you guys, you guys should be fishing in a barrel, right? Shooting fish in a barrel or whatever the term is. Like we you can run around everywhere and tell people their their startup. [1:10:20] Chad: I I I'll leave I'll leave you guys with one thought. Justin and Mark, I have not shown this to you yet but I altered our some of our comparison materials today to try something new and I like the way it flows. Simples converting to 401ks that don't have access to the tax credit because they've had the simple in of years. I'm showing all build expenses and then articulating a tax deduction on it. And then I'm showing a net projected build expense based upon the cost after the tax deduction. Never done it in 15 years. I never felt like it was the right thing to do. But with all the credit conversation I feel like we're there. And I used a simple decay conversion to do it on and it went over really well in the point of sale. [1:11:09] JD: Nice. I love I love that Harlow's back in the action. And he's so right. I I I botch every little saying all the time. Like gotta get your it happens man. Make sure you get your pigs in a row. Supposed to be ducks. I always do that first. Okay. I would do we do in chapter two. I was trying to remember I don't think we do this one bucket it it if it was definitely not chap bar. No no. Chat bar champion. I get 500 points to Kush for getting here early. [1:11:44] Chad: Hey, it's Kush on the big TV again. [1:11:46] JD: Oh I'm sick of me already. [1:11:48] Mark: I got Kush Flash. [1:11:57] JD: What is G G D J D mean? I don't know. God damn it. [1:12:02] Chad: God damn. [1:12:04] JD: So we will see you in the first of the next month the first Thursday of the next month with a normal retireholics which I promise y'. All. I plan to be up before it even starts and oh, who's our guest? [1:12:21] Chad: Yeah, yeah. And what's our date? [1:12:24] Justin: 6th. [1:12:25] JD: I'm waffling between two guys I'm gonna keep secret for now, but it's a. They're both brand new. Never been on the show. 2025. I want to share this. Oh, yeah, thanks coach. Call me on it. That's my son. That's what happens when you're a good parent. 2025. I am starting now reaching out to conferences in 2025. We are. My wife will be recovered from cancer and all will be great and we will be heading out on the road to do live shows again in 2025. And I would like to cherry pick seven to eight of the biggest and best ones. I would love for y' all to let me know where you'd like to see us and then if you're sitting on those committees, let them know that 2025 will be the 10 year anniversary of Retireaholics. And Bren and I are bringing smoke machines and fire cannons and like on stage. It's a show that you will never believe could exist. I don't want to rise and grind anymore. [1:13:35] Mark: I want to rise and then like lay right back down. [1:13:40] JD: Like, I'm not even joking. We are going to spend so much money on these live shows, it's going to put us into debt. It's going to be ridiculous. The we do on stage and, and so for those conferences out there, get in line, line it up, get us booked. Let's do it for 2025. [1:13:58] Mark: Suck when they all say no to us. [1:14:02] JD: And then. Yeah. So big, big conference tour, new show that Brandon and I are working on, which I'm actually going to discuss with you guys at our meeting later this month. You fancy folks are going to come see me here in Southern California and we're gonna hang out for a couple days, the four of us and I will talk more about that 2025 tour. Five of us, huh? Five of us. Five of us. [1:14:31] Justin: Dev. [1:14:31] JD: One, two. Devin. Yes. Sorry, Devin. All right. It's been a another episode of Retireaholics. We're changing retirement plan industry one beer at a time. There are 216 past shows on YouTube. Approximately 185 of them are total dog. Go out there, sit through this one and see if you can find the good ones. All right everyone, thanks for tuning in. We'll see you next time. Peace out.