Managed Accounts vs. Target-Date Funds | Phil Troyer

[0:00] Mark: It's that zoom makes you click that extra button that says share screen. And audio. It's that audio. [0:07] Chad: I did that. [0:07] Phil Troyer: Problem is, I did a new headset and forgot to. [0:12] JD: Are you starting over? Are we going? [0:15] Phil Troyer: Nah, just go. I'll fix it. [0:18] JD: Welcome, everybody. And sometimes those are the best intros, the ones that completely go wrong. Welcome, everybody, to another episode of Sheltering in place with the retireholics. And we got another fancy pants guest with us here today. Mr. Bill Troyer, ARISA attorney extraordinaire from Resources. Do we call you guys Resources these days, or do I have to say the whole thing? Resources investment advisors. I'm not sure. Straighten me out. [0:46] Phil Troyer: Well, so we go by Resources, but, you know, it's better than what we used to use was Ria Resources Investment Advisor. So, you know, advisors would say our Ria is Ria, which sounds really ridiculous. [0:58] JD: That's confusing. I like Resources, and Resources is a great group of advisors. We'll talk a little bit more about that down the line here, but hopefully a few of them will be tuning in. So if you have already, welcome. And for the rest of you that have tuned in, thanks for being here. We appreciate it. We've been on a little bit of an ERISA attorney kind of run lately. We've been having quite a few of them on here, and I've come to an epiphany. [1:26] Mark: Oh, boy. [1:28] JD: ERISA attorneys are a lot cooler than I think the average consumer thinks. Right. I'm kind of feeling like they're a bit like the rock stars of the 401k industry. And if that's not true, I'm gonna make it true today, and we're gonna start that trend. Erisa attorneys are the 401k rock stars of the industry. Agreed. Mark? Yeah. [1:54] Mark: You need a hashtag, JD what's it gonna be? [1:57] JD: Oh, I have to figure that one out. [1:59] Mark: Come up with something clever. [2:00] Chad: All I'm gonna say, J.D. is maybe you were the only one who inadvertently stereotyped them as not being rock stars, and some of us already thought that, so maybe you're just a dick. [2:11] JD: I don't think that's true. I don't think that's true at all. Blake says I don't know many of them, but I surely wouldn't want to f with that guy. Yes, he definitely has some hobbies outside of Orisa, which entail rolling around on the ground with other men and hurting each other, but I wouldn't want to mess with him either. [2:29] Mark: But he is wearing a body suit right now. Those aren't his real arms. [2:34] Phil Troyer: It's like that Jason Mamona, you know, episode. [2:36] Chad: Oh, that. [2:37] JD: Phenomenal. [2:40] Mark: It makes me feel gross. [2:42] JD: That's the best super bowl commercial, bar none. I think I used to also think that ERISA attorneys led these exciting lives, but I got an email from you, Phil, and you said, what a week. We're in the midst of a routine SEC audit. I finalized our responses to the initial information request yesterday. Given that was off my plate, I spent the morning drafting our form CRS parentheses ADV part 3, which is the equivalent of asking us to specify everything a client would need to know about our operations in two pages. So that's what your day to day is. Life sounds exciting, bro. Yeah. [3:24] Chad: Yeah. [3:25] Phil Troyer: Welcome to the typical day. [3:26] JD: Yeah. Not what I had imagined. Not nearly as romantic as I had imagined it. Let me do a little bit of housekeeping if you're not already in gallery view. I think you should do that. It's the best way to look at it. It's a little hover over icon up in the top, right. Please chat with us if you're not already. And when you do, chat to the attendees, not just the panelists, because we want everyone to see your questions and comments and chat about anything, man. If you haven't been here before, let us know if you got a question. Let us know what you're drinking. Let us know, you know, what you think of Mark's stinky robe. I mean, anything. Throw it out there. And then again, thanks for attending. If. If Reese, What Mark's got on his hat? Is that what you're asking? [4:12] Mark: Yeah, I'm trying to figure out what's on the front. What's on your snapback there, Mark? [4:15] JD: Is it a sponsor? [4:17] Mark: Oh, yeah, it is a sponsor. [4:20] JD: New sponsor. [4:21] Mark: I thought that was supposed to go on your ass. [4:27] Chad: Well, first off, it's offensive that she sent them so small, so apparently she [4:32] Phil Troyer: doesn't think I have a big ass. [4:33] Chad: But secondly, I'm sure she's probably wondering if she's ever watched Cindy's at all. Why isn't on your robe yet? Well, just quickly. First off, I don't know how to sew, okay? [4:43] Phil Troyer: I don't. [4:43] Mark: I've never tried. [4:44] Chad: I never will. So then I thought today, like, oh, that's perfect size. So genius. [4:50] Mark: It looks clean. Well done. I can show it for you if you need me. [4:54] Chad: To your Internet with scotch tape. [5:00] JD: Just so you know, Mark, your Internet sucks. And then again, I want to thank everybody that's out there, not just the people. Is he Breaking up on you or just me? [5:13] Mark: Me too. [5:15] JD: Not just the resource people that are in the house, but all the other advisors, TPAs and industry peeps that joined us. Thanks for being here. Word of the episode, prohibited word of the episode. I did not come up with one. And I've learned something. Last week I like having someone else choose the word of the episode. So I'm going to throw it out to our attendees. Yes, it didn't work so well last time. No, I'm going to pick one. [5:45] Mark: He's throwing it out to the attendees to give him enough time to get through a little bit of the episode without having to drink. [5:52] JD: No, no, no. I'm going to pick one straight up. I'm going to call out. No, it's definitely not going to be you, Matthew Jackson. I'm going to call out Bryant Lester right now. You come up with a name and if you screw it up, it's all your fault. Type it in there, Bryant. You've got 10 seconds to figure it out. And you know how this works, Phil. Once we know what the word is. If you say the word, you must drink from your nasty drink. And hopefully as you're cruising along, you're sipping from fireball. Phenomenal. Phenomenal. [6:29] Phil Troyer: And I got a shout out to drinking a little whistle Pig tin. So this is for you, Brent. [6:35] JD: In town. I got a little margarita and then I'm gonna be sipping from tequila, which usually gets me in trouble. Nothing from Bryant yet. Did Bryant bail on here? [6:46] Chad: Am I breaking up again? [6:49] Mark: Yeah, yeah, seriously, here. Yeah. J.D. bryant's not even here anymore. He balanced. [6:54] JD: He bailed. [6:55] Mark: He balanced on you. [6:57] JD: We'll go with. We'll go with Michael Rosenthal. We'll go with the good old fashioned advisor. Last time I said it. You see it again, you got a drink from your drink. Thank you, Michael, for the very creative prohibitive word of the episode. We've only done that one about 20 times before, but it's a good one. Let's dive right in. [7:15] Phil Troyer: What's the word? [7:16] JD: I gotta. [7:16] Phil Troyer: Yeah, what is it? [7:17] JD: I didn't say a D, V, I, S, O, R. Great. [7:22] Phil Troyer: Let me check my audio now. [7:24] Mark: Good bait. Still quiet. [7:27] JD: B. It's quiet. Might want to ramp it up. Let's dive. I want to dive right in. [7:31] Phil Troyer: Are you on Mark's WI fi? [7:32] Mark: Brandon, [7:35] JD: I want to jump right into subject number one. [7:38] Chad: Just because I've never had one issue. Just going to say it. Never one. [7:43] JD: Subject number one, managed accounts. And I've got a history with managed accounts and it's probably come a long way since I was first in involved with them in the 401k space. But we used to do a lot of nationwide. Nationwide Financial is a TPA shop. And so 15 years ago they came out with this manage account service deal and we started partnering with advisors to sell a lot of it. And the concept back in the. [8:12] Mark: Oh geez, graphics already up. [8:15] JD: All right, just can't keep that one. Keep speaking. I'll hit this here in a second. And everyone was really excited about it. Now at the time they were excited for two reasons. One, they felt like it was really something better for the participants, but at the same time they were getting paid a little extra too back in the day. And so anyways, it was pretty successful. [8:37] Mark: It sold a lot in full transparency. Who else was getting paid a little, a little bit more Back in the day? [8:43] JD: The TPA got a little sliver. It wasn't a lot, but. And then the firm that was doing it, there was another firm that was an intermediary. Anyways, my point is I ended up speaking with a lot of participants along the way. And the common question was always like, well, why the managed accounts versus the tdf? In a way, and I'm sure Phil's very experienced with this. They almost didn't see the difference. Right. Because both investments felt like they were turning over the keys to someone else. And the concept back then was that, well, in the managed accounts you were going to answer some questions and we were going to be able to drill down a little deeper on what your true risk tolerance was. And that was the advantage. Now over time I tended to see like performance struggled at times. The company that was doing struggled. But is that still the same story today with managed accounts? And we'll go to Phil first, but then to you guys. Are you seeing it out there? Are you dealing with a lot? Because I know it's a big deal at your guys shop. [9:47] Phil Troyer: It is, yeah. You know, and to me I just saw it as a natural progression. I'm a big proponent of managed accounts simply because my dad was a blue collar worker. He, you know, worked in the mobile home industry. And you see a lot of guys like him that, you know, blue collar workers and you work at the same company for, you know, 20, 30, 40 years and you have a 401k, you can build up a really big balance, you know, some six, maybe sometimes even seven figures. And, and you're asking guys with high school educations to manage an investment portfolio worth seven figures and they're just like, I don't know. Just tell me what to do. I can't pick them. So to me, there was this natural progression of [10:27] JD: what's going on now. [10:30] Chad: It's not me. Not me. [10:33] JD: Justin, did you bring your vibrator? Sorry, Phil. [10:40] Mark: That was Brandon trying to figure something out. [10:42] JD: Are we being zoom bombed? We're being zoom bombed, perhaps. Yeah. I got you, of course, participants, this natural progression. [10:51] Phil Troyer: So you know, you had pensions and everybody loved pensions, especially if you're the recipient. But if you're the employer, you hated them because all the risk was on you as the employer. And so then 401ks came along and they're like, oh, hey, great. Will transfer that risk to the participants. So it was great for the employer. Now the participant though is like, guess what? We're going to give you this basket of funds. You got to pick and make an allocation. And like I said, a lot of them were just like, I don't know, somebody just tell me what to do. So then you had target aid funds. And target aid funds are fine. But the problem, it was an advancement. But the problem is that target date will treat everybody who's expecting to retire in the same five to ten year window exactly the same. So if you're 55 years old, you're the CEO of a company, you've got seven, maybe eight figures in your plan and you're set, you're going to be treated exactly the same way as the janitor who's just starting out and needs to be a lot more aggressive than his retirement goals. So to me, that's the pitch is just like you said, JD And I think now record keepers are a lot more sophisticated. [11:55] Mark: What they can pull off, that's not [11:57] Phil Troyer: only age, gender, income, how much you have in your plan, how much you're deferring if you answer questions, what other accounts that you have, things like that. So you can really drill down and personalize the portfolio for that person. [12:17] JD: I was about to text. Sorry, Chad. I was about to text Brandon. I'm like, why am I texting him? Brandon, I think we might be picking up some of your audio or something. [12:24] Mark: Yeah, we are. [12:25] JD: Okay, go ahead, John. [12:27] Mark: I was just going to say is that portfolio that gets created, that takes a little bit of risk tolerance in their personal situation and couples it with perhaps their age or horizon. Is that really any different from a management perspective than creating a target date fund that embraces some risk tolerance questionnaire and just puts them on a path and keeps on going? [12:55] Phil Troyer: It really is, you know, and I can't remember how many different variations we have, you know, as a result of. Because all the different things factor into it. It's not just your age and you're on a glide path depending on when you intend to retire. But you know, if you look at two 55 year olds that could have completely different investment ranges. And so that's one of the good things about it. It really isn't that one size fit all. That's all that you get with a target day fund. [13:24] Mark: Here would be my. Well, we'll go combat. Here would be my combat to that. [13:30] Chad: You're done, buddy. [13:31] JD: Be careful. [13:33] Mark: Phil's got me to ground and pound right now. On that note, real quick. [13:38] Chad: Come on. [13:40] Phil Troyer: Shannon did. Or was it Shannon? Rear naked choke. [13:44] Mark: Somebody wants to know. Phil, who would you be scared of? Of the retireholics to. To go toe to toe with. [13:50] Phil Troyer: Of the retireaholics. Yeah. [13:52] Mark: Who'd you be scared of Face in the ring most. [13:54] Phil Troyer: You know, it's, it's I, I got to go with the bald guys. You know, we're the badasses. [13:58] Mark: So the bad choice. That was a smart choice. [14:04] JD: A bad choice as in you think you'd kick his ass or something or [14:07] Mark: what's going on in the hospital pretty quick. [14:11] JD: Let's. I think, I think we can all understand that participants struggle with choosing their own investments. And so anything is an industry that we can create for them that helps them to proper risk tolerance and proper diversity and proper asset allocation. I think everyone thinks there's a thumbs up on that. We all agree that that's good. So. And to what degree you can do it and who can make the better widget. Like that's all up for debate. And that's great. We can all go out and try to sell our own products in that space. But let's talk a little bit more about the revenue since we've got an attorney. Is it okay and I'll just pick on your guys firm. Even though I'm a massive fan of what you guys do. Is it okay for an advisor? I'll drink for that. One, is it okay for a financial professional to sell a client a 401k but then also be selling them in a sense their own investments in a way. I know I'm stretching the truth there a little bit. You know what I'm talking about you is one, is that okay? And then two, is it also okay to make more money if you're doing that? And I don't even know if that is the structure that you guys have. [15:20] Phil Troyer: Yeah. And so it's complicated. I mean, the answer is yes, but you have to be very careful about how you do it and to show you kind of how crazy a risk it is. So the way we do it is we have the participants enter into a contract with us that say we're going to act as your investment manager. Then we have our proprietary CITs that [15:39] JD: we use [15:42] Phil Troyer: to then create those allocations. But we don't charge anything. We're the investment manager to those CITs, but we don't collect any fee on that. So we're only charging the participants, taking nothing on the actual investments that we're using. If you flip that, and even if the amounts are the same, let's say we're charging the participant 35 basis points. If we flipped and say, you know what participant, we're not going to charge you anything, but we're going to collect 35 bips on the CITs, then it's a prohibited transaction, even though we're collecting the same amount of money. Because now, and I've seen firms do it now in that scenario, we are using our position as the investment advisor, investment manager to increase our, ah, increase our compensation, which is obviously a prohibited transaction. So. And where it gets even more complicated is if you're the investment manager to the plan. You know, if you're just a 321, then you can recommend manage accounts to the plan sponsor. We always have the plan sponsor sign off on it. But if you're the 338, you can't use your authority as the 338 to implement managed accounts. What you have to do is you have to go and sell it to the plan sponsor and say, look, I'm not coming to you as the investment manager. I'm coming to you as a salesman and saying, I think you should purchase this product from me. And if you do, I'll add it on. But it's your choice, not mine. [17:17] JD: Yeah, full disclosure, whatever question. [17:19] Mark: That was interesting. [17:20] Phil Troyer: Do you guys have any studies or [17:22] Mark: studies out there that show how managed accounts perform net of fees in comparison? [17:27] Phil Troyer: Yes, we do. And actually it's a lot of the firms that have come up with it. So Schwab, or excuse me, Empower, has a lot of them out there. We use Morningstar. So there's kind of, you know, the reason it takes. Yeah, I've been pushing this since I joined the firm in 2014, but it took a while to get to it because, you know, you can say, hey, I'm going to offer managed accounts, but okay, I'M offering you managed accounts. How can I actually do it? Well, I have to either have your password, go in and manually make trades, and then to bill you for it, I'm gonna have to manually bill you unless I can partner with a record keeper. And that's where we started making strides, is starting to partner with record keepers like Empower and John Hancock and Schwab to be able to offer those where they'll actually allow us to go in and do it in an automated sense. But Morningstar has a lot of data on it that says yes, they do perform better. And it's not just from allocation standpoint that the funds perform better, but it's the if you know that your account is being managed, you're less likely. I was just talking to Jamie Batmer, our CIO today, and he said it's proven true just in this last downturn that people who are in managed accounts were less likely to bail out and make bad decisions at the wrong time, as opposed to those that were even in a target date fund or especially those that were managing their own, their own funds. I got to do something about these lights. [18:54] Mark: Here would be my comment regarding managed accounts and what I'd like to see us do as an industry. And we've seen this over the past. We saw it with Stadium, we saw it with CLS years ago. I think that traditional in the way I see it with many of these record keepers, managed accounts versus a TDF or a TDF risk tolerance hybrid does not, does not distinguish much in terms of performance. There's an additional cost on the manage account and there's not enough benefit in my mind on that side. Now, CLS and Stadium, some of these others that they've done in the past, what they've created is a sliver of that portfolio. This will be tactically managed. So this 20% is going to be looking at what the market's doing. How volatile is it? What do our metrics tell us? Do we need to move this extra 20%, sole cash or fixed account? Do we need to be aggressive in stocks and equities? I think that that is the future of managed accounts. That is great value for a participant who, as someone mentioned in the chat, we're trying to save them from themselves. Saving them from a TDF isn't a huge differentiator between a TDF and a managed account, but saving them from a tactically managed account and a TDF I think carries a lot of weight. [20:09] Chad: Wouldn't want to argue that they already think that that's happening. [20:12] Mark: Absolutely. 100%. 100%. [20:16] JD: We can't make those arguments. [20:18] Phil Troyer: Yeah. [20:18] JD: That we have to do things for them, Mark. They don't necessarily understand all these things, but we got to do it in their best interest. But I agree with you. [20:27] Mark: If you say managed account, my mind thinks you're managing my account, not creating me an asset allocation and saying, get out there and be somebody. It shouldn't just be a one time thing, it should be an ongoing managed account. [20:40] Phil Troyer: And it is. It is. And so, you know, that's why we partner with firms like Morningstar or Stadion. So we'll come up with the CITs and we'll say, you know, these are the kind of the buckets that we have, these six, they're three accumulation, three de accumulation models. And then a firm like Stadium or Morningstar, they take it, use all those other factors and then also have a glide path that goes along with it. So they're constantly being rotated in and out as their glide path says you should become more conservative, but everybody's not on the same glide path. [21:15] Mark: But does anything within that mix have to do with current market conditions or economic conditions? Or is it. Here's what it is. And you're staying that path. [21:24] Phil Troyer: No. So that's one of the things that, you know that our company that hope I'm not giving away the secret sauce here, but you know, once again, Jamie Batmer, who's our cio, what he came up with is those three buckets and there are two versions, one on accumulation, one on decumulation. So we have one that's an equity bucket, one that's a debt or a bond bucket. But the third one is a risk mitigation bucket that's designed to, when the market crashes that it smooths that out. And so that's been a great test during this time period. And I will say I have my own a 401k account in our managed accounts. So it's not just like, I'm not eating our cooking. I do. And that was one of the things when I saw we had that, I'm like, great, I'm going to become more aggressive. And when it came back and had me in a kind of a moderately aggressive, because of my age, I said, no, I want to be very aggressive [22:18] JD: because I think I can, I want to take a small fun break, but I think we can revisit this and our next subject. So I want to kind of talk a little bit more in depth about what we talked on stage with you in the LA area. You know, Over a year ago or. Yeah, yeah. I don't. Was it a year ago? So I want to dive a little deeper in that. And that's the whole kind of schlichter and selling additional things to your participants. But before we get there, because that'll help me dive into these fees on these managed accounts a little more before we get there, let's play a game. And Mark, even though your Internet sucks, you're in charge of the game. What is it? [22:56] Chad: I think I've got it figured out. [22:58] JD: You seem okay. You seem okay now. [23:00] Chad: All right, bandwidth, guys. [23:02] Mark: Bandwidth. [23:03] Phil Troyer: That's all it was. [23:04] Chad: All right, game time. Game time. Jd, I didn't know where you were going. I thought you were gonna make me do the Wheel of Ice, so. [23:10] JD: No, I'm mixing it up. [23:12] Chad: Okay, Phil, every episode, I'm sure you've watched many of them, we play a little game. It's called lame or game. I have a series of questions. Either your game or you think it's lame. I will say I'm going to throw curveball a little bit for this episode because I feel like I have some better questions to ask yourself. [23:37] Mark: Arc's always got a curveball. [23:40] Chad: So you ready? [23:41] Phil Troyer: I'm ready. [23:42] Chad: All right. I love it. My first lamer game question is talking on your phone, utilizing the speaker function in public. So not like on your headsets, not on, you know, whatever. Walking around the store, just blabbing away and you can hear the person like, oh, yeah. [24:04] JD: Yes. Last week I was at the doctors [24:07] Chad: and he removed this thing off me. What are your thoughts? [24:10] Phil Troyer: Lame. Lame. [24:11] Chad: Okay. Chad. [24:14] Mark: Lame for sure. [24:17] Chad: Justin. [24:18] Mark: Hate him almost as much as I hate Karen's. [24:21] Chad: Always bringing Karen in the mix. [24:22] Mark: Karen games gotten strong. [24:25] JD: Is there anybody that thinks that's game for that? I don't think so. I mean, obviously I don't know. [24:30] Chad: People do it all the time. [24:32] Mark: Why do people do it? Yeah, Guy definitely does it. [24:37] JD: I only do that if I'm like doing big million dollar deals and I want everyone at Starbucks to hear what a baller I am. [24:43] Chad: Right. All right, so because the lamer game piece to this, I feel like I'm always. Some of the questions just don't. Weren't interesting enough to me. I wanted to give some more hypothetical type stuff since again, going back to the resources conference from last year, which by the way, where the robe was born. Okay. Thanks to that conference, the robe was born. [25:03] Phil Troyer: That's right. [25:04] JD: That's right. [25:05] Chad: I also had the amazing ability to watch your video that you made challenging schlichter to the. To the brawl, if you will, with utilizing a three six Mafia song. So that, that really spoke to my heart. So I wanted to keep it kind of like fight related, you know, I think it's a good thing to do. So let me ask you this. If you had to go one round, three minutes, one round with Floyd Mayweather Jr. Right now, okay, for a million bucks, okay, that's your payoff here. But caveat, if he knocks you down, not out, but down, you cannot use your phone for an entire year. Are you stepping into that ring to potentially win a million dollars? [25:55] Phil Troyer: Yeah, that one's tough. I will say that one as a. Just so everybody's clear, I am not even say, oh, you know, our COO is a cco, is a MMA fighter. I've never gotten in the ring. I'm not that crazy. A million dollars would be tempting, especially Mayweather's pretty defensive. He's not known as a big puncher. But, you know, the other thing I'll say is I'm gonna go for it and say yes, because, hey, my background, if I had my actual background here, you would see I grew up among the Mennonites in Amish. If I can't go without a phone for a year, I'm just not living up to my heritage. [26:38] Mark: All right. [26:39] Chad: I love it, jd. [26:40] JD: Oh, this question's for all of us. [26:43] Mark: They're getting lawyers. [26:46] Chad: Yeah. [26:47] JD: I'm not going in the ring. [26:50] Phil Troyer: Okay. [26:51] Mark: Chad? I'm going for sure. I could help my family for years. Knock me out, kill me. There's insurance. [26:58] Chad: You just can't run back and forth. But, Justin, I'm doing it. Okay, now, sticking to the fighting theme of my questions, I need each of you to pick one fictional character that you want to beat up. Phil, I'll start with you. [27:19] JD: She's fictional. That's tough. Mark, [27:23] Chad: I'm just going to tell you this. I stole these questions from elsewhere, so don't worry. [27:28] JD: Fictional character. You want to beat up Bart Simpson, I'll go. What everyone else thinks, and that just came to my head, is just that asshole guy in Beauty and the Beast, like the guy that runs around the neighborhood. [27:40] Mark: Gaston. [27:41] JD: Gaston. I'd kick Gaston's ass. I don't know why I came up with that one. [27:46] Mark: That's a good one. That's a good guy to. [27:48] JD: Look, you're up somebody. [27:51] Chad: Chad, you're next. [27:54] Mark: The first thing that came to my mind was Pinocchio, because I want to break a lion nose. [28:00] Chad: Damn. [28:01] Mark: And I need an easy fight. [28:02] JD: I just spit all over my screen. You're gonna be a kid. [28:07] Chad: Okay, [28:10] Mark: this got worked by Floyd Mayweather. Are Karen's fictional characters? Yeah, Karen's. [28:16] Chad: Okay. Phil. [28:18] Phil Troyer: Yeah, man, I gotta go. I'm gonna go. Jim Carrey and Dumb and Dumber. [28:23] JD: What? [28:25] Mark: Oh, my God. [28:27] JD: Hasn't he been through enough? [28:29] Chad: Oh, my God. [28:31] JD: You and Chad. You and Chad. Pinocchio and Dumb and Dumber. Not cool. Not cool. Those are innocent bystanders. [28:39] Chad: Sticking to the theme, since Brad kind of stole a. Kind of a part of my question from earlier, I'm gonna. I'm going to go a different direction. If you were to fill. Now, this is just for you. If you're happening to be in a professional fight, you're going to say, screw it. I'm going to train. I'm going to go for MMA boxing, whatever it is. And you got to pick one of us four retiredaholics to be. Not your trainer, not anyone important, but your hype man, the guy bringing you out, maybe even saying something on microphone. Who's that going to be? [29:10] Phil Troyer: I got to go with the main man, jd. [29:12] JD: Oh, yeah. Wow. [29:14] Mark: I would have said rogue guy. [29:16] JD: Mark, in your face, Mark. I knew he was gonna say that. I want to make JD feel better because he hates. Yeah, right. Go hang out with your best boy, Fred. [29:26] Chad: Last one for all you guys. If you're. If food, any food, drinks, food for the rest of your life. Had to be hot or cold. [29:33] Phil Troyer: Pick one. Go. [29:34] Chad: Jd, you're first. [29:35] JD: Cold. I regret it. I regret it. [29:38] Chad: Yeah. Spoke too soon, buddy. Phil. Chad, [29:46] Mark: I'm. I'm weighing these ones. I think I'm going hot. [29:49] Chad: Okay. [29:51] Phil Troyer: Yeah, Hot. [29:53] Chad: Okay. [29:53] Phil Troyer: Perfect. [29:54] Chad: Well, you know what they say. [29:56] Mark: You know what they say. [29:57] JD: Mrs. Brandrup. Mrs. Brandrup says cold. Chad's working on his king haircut. All right. We do talk 401k on the show occasionally. So let's get back to. We had you on stage while ago. That was a lot of fun. And we were only able to broach a subject, you know, talking about how Mr. Schlichter, the 401k boogeyman, is really upset with this selling other services to participants. He's referred to it as whack a mole now, where he has to constantly figure out where the industry is bobbing and weaving to make money next. And he's not a big fan of it. It's been part of his lawsuits. You back then stood strongly against that concept. I'm assuming that you still do. Any updates on that and how you feel about selling things to the Participants. [30:55] Phil Troyer: Well, you know, like I said at the time, I don't think that Jerry Schlichter and I are actually that far apart. So I think what he's upset about is if you're a plan sponsor and you just sign an agreement, say with a record keeper and you don't realize that as part of that agreement, you've just given that record keeper the ability to contact your participants to try and sell them products. I agree. Shouldn't happen. [31:19] JD: So it's a disclosure thing. It's a disclosure thing. [31:21] Phil Troyer: It is. But on the flip side, you know, we've won several plans, you know, once again with blue collar workers, where the plan sponsor I think was very mature and said, look, you know, we want somebody to come in and help our participants and they need that help. So one, you know, we have a program. You talked to Brandon Cutler at our conference, who's our main, you know, almost said it, our main mentor in that program. But you're providing financial advice, you know, maintaining a budget, you know, reducing debt, those type of things. They thought that was great that we had that. But the other thing they did is they said, well, look, so we don't want to just help our participants when they're in the plan. You know, these guys are rolling out their construction workers, they're rolling out, you know, when they retire in their mid to late 50s, seven figures in their profit sharing claims. And we don't want to just throw them to the wolves. So we want you guys to agree that you will handle their rollover accounts at a reduced fee as part of that. And I think that was great. You know, so you've got a plan sponsor who is, you know, actively involved, not just signing something, not knowing what they're doing, but has a reason why they're. They're going to give somebody, they've made that conscious choice and it could be us, it could be the record keeper, it could be an investment company, it could be a third party investment company. I don't care. But I think, you know, plans are going overboard, Plan sponsors are going overboard. Whether it's taking a hands off, nobody can touch our participants. And I get that, you know, when I'm negotiating contracts with them, I'm like, that just doesn't make sense. [32:49] JD: It's so funny that this, I guess shouldn't say funny, but this definition of fiduciary and not the fiduciary rule, but just the concept of a fiduciary, how somehow now these lines are drawn that we're not allowed to as an industry create better, more efficient, more successful products and solutions for our participants, which is really what the industry is supposed to be tasked to do, is it not? We're supposed to help people retire. And so if we can let companies create better, cooler ways to do that, it's a bummer that they want to stand in front of us and not allow us to. [33:29] Mark: To do it and. Go ahead, Phil. [33:32] JD: All right. [33:33] Phil Troyer: What I was going to say is that, you know, and I can say this now that she's no longer in her position, but I used to tell our financial professionals that every morning when Phyllis Borsey woke up, her first thought was, you know, these financial professionals are out to screw participants. These guys who are working in the 401k industry. That's their main goal. That's just not true. And that frustrates me that that was the position. And I think, you know, you're seeing some of that with the plaintiff's attorneys. And once again, I'm a former plaintiff's attorney myself, so I get it, but it's just. Yeah, I understand there's a. There's a reason for it, and I think that they do play a role, but I wish they would kind of get away from this idea that the people in this industry are just out to do what they can to screw over participants, because it's just. It's not true. [34:17] Mark: There's two thoughts come to mind. Number one, JD Years ago, started having the conversation of, as an industry, we need to be more vocal. We need to be more out there on social media to show the world that we are not out to get people, because we hide behind our security protocols as companies. We don't necessarily get out there and communicate who we are as individuals. And how do we break down that wall that we're actually out for the right reasons to help people? We've got to be more social and more out there. So first thing. Second thing, we said in the last conversation that what we need to do is stop participants from harming themselves. You could take that same conversation into this topic and say, we need to help participants help themselves. And I look back to. I look back for an example to my dad's situation. My dad passed at age 35 with no insurance. I wish his 401k advisor had shook as well. His pension advisor drink. I wish his. His pension professional had grabbed his shoulders and said, look, you're 35 years old, you're traveling, you got four kids, you need insurance. Because that would have meant a lot for our family. But my dad didn't have access to that kind of resource. The vast majority of people have access to that financial professional through their plan. So that person should be able to guide them down the right paths. Now, if they're selling a product, that's different, but they should be able to advise them and send them down the right path if they know that. [35:43] JD: Nevin, you have failed all chat bar rules. That is far too long of a chat. How am I supposed to read that while focusing on my tequila and sorry, Phil, go ahead. [35:55] Phil Troyer: I was gonna say. So that's the. I understand completely. The story I always tell in that regard is I worked with a guy in an insurance company once and he was a high level executive. And our company was purchased by ge and so they offered a number of them early retirement. And he took it and he said, well, I decided what I'm gonna do. And I'm surprised GE was never sued. Their 401k sucked. I mean, it was just awful. They had their own mutual funds that were terrible. The only thing that for the most part made money was GE stock. He took all of his retirement money, put it in GE stock, and this would have been in like the mid 2000s. And if you know about GE stock, it went, just cratered. And it's like an investment professional would have told him, no, don't do that. That's a horrible idea. You have to diversify. [36:41] JD: I think this subject also starts to get very modern when we talk about data. You know, of course, Chad's situation, offering other services, I think that's all really relevant. But we're also now talking about data. And we're talking about a technology world where, you know, Elon Musk can fly his own ship into outer space. And so the things that we could do with 401k could be just phenomenal, right? I mean, in terms of through someone's phone or an app or their access and delivering them to things that they didn't even know they needed based on the data that they were gathering from that. And I know that's a very scary thing. You know, you hear about with Facebook and Twitter and the whole deal, Google, Amazon, but it really is kind of where we're heading. And so that, to me is the next biggest bummer is I feel like that that data could be used in so many really cool ways to create the next modern day 3.0, 401k, which I think we're in desperate need of. You know, we've been selling the same crap for 20 years, you know, so to really move forward and do something new would be fun. But apparently Mr. Schlichter's not a fan of that man. [37:55] Phil Troyer: Well, that's what you kind of tie it back to our original topic we were talking about. One of the things that really opened my eyes is, you know, as the ERISA attorney, they don't drag me to many of the client conferences. But, you know, I came along once on an early one and we had done a demographic study. It was a hospital system. So when they had this. On this demographic, they had plotted by age and how aggressive people were in their investments. And you had 20 year olds who were 100% in cash and cash alternatives because they didn't trust the markets and people in their 60s, 100% equities. Just like if you leave it up to the. [38:34] JD: Let me give you guys a personal story here and then we'll jump into another game. My son just turned 16 and he came to me and is like, dad, I want to start an investment account. So I set him up a brokerage account, you know, what do you call it, a custodial account or whatever, because he's not old enough to do it, but set it up and he's got his own money and he pumped in some serious money into there and he's all fired up to invest. Well, he jumped on because he talks to his buddies on the phone. He's 16, they're talking investments. And I sit him in the hot tub and I talk to him about diversity and asset allocation and all these types of things. Sectors. Well, he's going straight after stocks. He wants nothing to do with mutual funds. And he dives in on Delta, the airlines, because he's like, dad, look at the graph. They've been crushed. They're going to come back to their normal. And I'm like, go for it, buddy. You know, rock and roll, man. [39:31] Chad: How's that today going for him? [39:32] JD: Then he comes back to me. Well, Mark, he comes down the stairs the next day flapping his wings because he crushed it. This was several days ago. And he's like, check me out, I just made 10% today. What'd you do? And then so he decides to buy some United. He's like, dad, I'm buying some United. I'm like, okay, buddy. So first of all, you realize these are both the same sector, right? He's like, I know, but this is the thing. So now he's got United, Hawaiian and Delta. Those are his three stocks. This is my son, and he sleeps till about 11 in the morning. And I was watching the Dow absolutely fall from the sky today, and I can't help. I had to walk into his bedroom and say, buddy, the markets are a shit show and you're not going to be excited. Check it out. Anyways, he got crushed. So, Brannon, can we play or. Phil, we're going to play a little game. Brandon, if you're ready to queue it up and you've. And you're. Audio stuff's working. All right, everybody cross your fingers. Cross your fingers at home, too. We're gonna play a game called who Is that? We're gonna play some audio clips, and you need to guess the person, the movie, or just anything that it is, you know. All right? Brandon? [40:47] Mark: Yeah. [40:47] Phil Troyer: You apparently didn't put one of the new cover sheets on your TPS reports. [40:52] JD: Oh, yeah, I'm sorry about that. I. I forgot. Yeah. [40:57] Mark: You see, we're putting the COVID sheets on all TPS reports now before they go out. [41:02] JD: Did you see the memo about this? Yeah, yeah, yeah, I have the memo right here. I just forgot. But it's not shipping out till tomorrow, so there's no problem. Yeah, if you could just go ahead [41:17] Phil Troyer: and make sure you do that from now on, that would be great. And I. I'll go ahead and make [41:22] Mark: sure you get another copy of that memo. Okay? Yeah, no, I have the memo. [41:26] JD: I've got it. [41:26] Phil Troyer: It's right. [41:29] JD: Any guesses, Phil? [41:30] Phil Troyer: Yeah, it sounds so familiar, but now I can't think of it. [41:33] JD: Did Nevin really get it right, Chad? Is that it? Nevin's guess was office space. All right, you're over one, big guy. We'll go number two. Number two. [41:49] Speaker E: I thought about this quite a bit, sir. And I would have to say, considering what's waiting out there for me, I don't want to sell anything, buy anything, or process anything as a career. I don't want to sell anything bought or processed or buy anything sold or processed, or process anything sold, bought, or processed, or repair anything sold, bought or processed. You know, as a career, I don't want to do that. So. My father's in the army. He wants me to join, but I can't work for that corporation. So what I've been doing lately. [42:19] Chad: These are long. [42:20] Phil Troyer: I actually use that quote when I do fiduciary training for Plan Sponsors because I say, Lloyd Dobler the movie, say anything would make the perfect Erisa sponsor because he would never engage in a prohibited transaction. He doesn't buy anything, sell anything, or process anything. [42:39] Mark: He's. He's fine. [42:39] JD: I think the Audience is being polite now. They're not putting in the answers. [42:43] Mark: I don't know if anybody else knew [42:45] JD: that one or they don't know. [42:47] Phil Troyer: Old enough to remember. [42:49] JD: Okay, Brian, we got one more. We got one more. [42:55] Chad: What do you like to do? [42:56] Mark: Whatever you like. [42:59] JD: What kind of music do you like? [43:00] Mark: Whatever kind of music you like. [43:05] JD: Look, I know what I like, and [43:07] Phil Troyer: I know you know what I like [43:08] JD: because you were trained to know what I like. But I would like to know what you like. [43:11] Phil Troyer: For instance, do you have a favorite food? [43:13] Mark: Yes. [43:14] JD: Good. [43:15] Phil Troyer: What is your favorite food? [43:16] Mark: Whatever food you like. [43:20] JD: You can just guess. Well, that counts. [43:24] Phil Troyer: It's definitely Eddie Murphy, but I'm guessing Coming to America. [43:30] JD: Very well done. Very well done. I'm a strong. A strong two out of three. And you're three out of three with the assist from Nevin Adams at the ara. So way to go. PPP has been something that's been front of mind for a lot of obvious reasons. We feel as though advisors should. Should help [43:58] Chad: their. [44:00] JD: Should help their clients understand if they could get it. And now we feel like we're in this stage of helping them understand how to use it properly. Right. So it can be forgivable. You mentioned to me that your crew of financial professionals is coming to you with lots of questions around this. What types of questions? What have you been stumped by? I mean, what kind of PPP action are you guys seeing over there at Resources? [44:25] Phil Troyer: So the first question I got was, can a Plan sponsor use PPP funds to use towards their matching funds for their 401 plan? And I have to say my initial response was I read the. I actually went and read the regs, and it wasn't clear. It didn't say anything about retirement plans, but it was actually. You said Nevin Adams was on, but it was on Napanet was the answer. So I was able to say, yes, you can. The one I got recently, though, was, can an employer use those funds to start a 401k plan? [44:57] Mark: That's an interesting one. [44:58] JD: Yeah. [44:59] Phil Troyer: My response was, I wouldn't recommend it because those are settler funds. And, you know, and I think it's bizarre the way Russa handles settler funds, but they say that it's starting. Any money used to start a 401k is designed to benefit the employer, not the employees. So I don't know for that reason if it would be considered legal. [45:26] JD: I'm not an attorney, but Chad and I had lots of conversations around this, and I seem to be fixated on the fact that they Wanted two and a half months or excuse me, you know, they wanted a full year. I guess it varied for different companies, but they wanted to see what historically what your costs were. Right. In terms of running your business and specifically to paying your employees and covering those types of things. And then they were very clear that they were going to give you this check to cover two and a half months of a time period. Right. To bridge this gap. That was the whole point behind the rules, this, this legislation. And, and so my answer to Chad was always, well, I don't think you should be spending that money on anything that doesn't match up with what you normally would spend in the course of the year and then prorated to two and a half months. It seems like that was a logical thing. My defense, my concept has been thrown out because two and a half months is now six months. So I can't really line those two ideas up anymore. Was I making any sense or was that just crazy talk from my end? [46:35] Phil Troyer: No, and the problem is it came out so quickly. I mean it was kind of like, hey, just get this money out here and we'll figure it all out later. So who knows? And I doubt they're going to come back and really do much to police it. We'll see. So unfortunately, you know, the other side of it that we've been questions we've been getting, unfortunately we haven't had very many of our plan sponsors go under, but we have had a few that have said, hey, because of everything that's going on, can we stop our match? And obviously there's no requirement unless it's a safe harbor plan. You don't have to one even have a plan or provide any type of a match and you could cut it off at any time. Obviously if it's a safe harbor plan, you have to give notice first. But you know, it's very clear you still even as a safe harbor plan, you can cut off the match if you need to. [47:19] JD: Right. And Nevin and his team is working hard to find future solutions there for everybody as well. [47:25] Mark: But yes, Chad, I'm super interested in the startup. Thought so it seemed like your mind went to using it to cover plan costs. I've not had this conversation yet, but I could see folks saying we want to start a plan and use PPP funds to cover the matching costs. So start it up right away and use PP funds to cover the matching costs. I haven't had that question yet, but as you were saying that my mind went well, if your amount that you claim for The PPP was dependent upon prior expenses and you didn't have a plan in place then. Hard to justify that. You could use it for that. But I haven't seen anything that says you couldn't. Right? [48:04] Phil Troyer: Yeah. [48:05] JD: I hate to beat the same old drum, but Chad and I were getting a lot of, we want to front load something, you know, like we got this fat check from the PPP and we don't usually put in this much, but hey, let's take a look at a cross tested profit sharing or let's pump in the match that we'd normally deposit sometime next year. We'll throw it all in tomorrow and that will be key. And again, even though my name's jd, I'm not an attorney, but I was telling people like, I think you should be following it based on the, the premise that it was created and that if you, if you veer from that, then you got to be prepared that your bank and your loaner and, you know, representing the SBA might come to you and say no. And I, and I've said this before and I want to repeat it for everyone listening. Think about how this actually tactically happens. Right. So when it comes time to reference what you think should be forgivable, it's going to be between you and the bank, right? They're going to have some type of tech. They're not going to allow you just to throw a bunch of paperwork at them and tell them what you think should be forgivable. They're going to ask you to fill out little columns and cells in an electronic technological app and that may or may not say, hey, what was your entire profit sharing contribution for the year? So you're going to be screwed altogether. You're going to have to work through their app. That's, that's my thoughts at least. [49:35] Phil Troyer: So, so you're saying you're going to go back to that quote, the first quote I was stumped on from the office space. [49:40] JD: Yeah. [49:40] Phil Troyer: I'm going to need you to fill out this form. [49:45] JD: It's not even a form that allows any leniency. You're going to have to, you're going to have to put in the numbers they're asking you to put in. And so if you think you're going to call your bank and then say, yeah, but you didn't ask me about where to put my front loaded match that I put in or my process of profit sharing, I think you're going to be sol. I don't think they want to sit there and work through it with you. Although maybe I'm wrong. They might. Might. Yeah, Chad, you're right. I was gonna bring that up. The 2 million we did hear from. What's the dude's name is Trump's finance guy Mnuchin or whatever? Am I getting this right? He said they're gonna investigate everyone. Everyone north of 2 mil. North of 2 mil. [50:26] Mark: The PPP that they got was worth 2 mil? [50:29] JD: Yeah. North of 2 mil. You will be investigating. [50:31] Mark: Interesting. [50:32] Phil Troyer: So one of the other questions I got. I'm going to get the fireball ready here because I'm going to mention the prohibited word, but the SEC came out and said, if you're an investment advisor, you took PPP funds and you're going to have them forgiven. You have to disclose that. And so I had a number of our individual IARs ask me, hey, Phil, do I have to disclose that? And the answer is no. They're not registered entities. It's only one an entity like US Resources, and we didn't take any PPP funds. [51:02] Mark: Fair enough. [51:03] Phil Troyer: But if you're an individual and you took it, you don't have to make any disclosures on your U4. [51:12] JD: Sherry Fitz. I'm so glad that you're getting your bangs cut tomorrow. Good for you. That's awesome. Thanks for. We've said this over and over again to financial professionals. I just want to reiterate it. We thought PPP was an insane opportunity for you two months ago, or whatever it was. Was it three months now? Two to three months ago. I still think that right now it's an insane opportunity for you to be reaching out to prospects, people that are not your clients. In the same way, we advise you to help them get a ppp, you can advise them to use the PPP properly, and that's a great way to establish new relationships. Do it pro bono. Do it out of the kindness of your heart to set up meetings for future. That's my thoughts. [52:02] Mark: Yep, 100%. [52:04] Phil Troyer: I got to throw a plug in there, JD. You know, you may have known, we were purchased in January of this year by one. [52:09] JD: You are a one digital company. [52:11] Phil Troyer: We are a one digital company now. And it actually has been great. And one of the things that has really been helpful is through all of this, they're an employee benefit shop, and so they've done tons of outreach to. [52:21] JD: I've seen some of them. [52:23] Mark: Exactly. [52:23] Phil Troyer: And it's been great, and it's been very helpful. [52:25] JD: They did insane, like, webinars on PPP all throughout the process. Totally. I totally saw that. They're actually, I thought that was a great idea on my own. Like, oh, financial professionals should be talking about this even though they're 401k and I saw you guys doing, I'm like, it's not my idea. Everyone knows that. They should be doing that right now. Well, let me, let me finish this with a bigger plug. We were invited to do our show on stage for your guys national conference at a really nice resort. And I went there, to be honest with you, not really knowing what resources was all about. I then went to your webpage when you guys invited us to come and do our show and I looked at all the financial professionals that had joined us through and I was blown away at the names and the images, the headshots that I saw. I mean, just a stable of 401k pros from all across the country. So my first thought was like, wow. So okay, they're on to something here. Like all of these really intelligent, really experienced 401k studs have decided that they should be part of this group. Then when I got there I was able to do interviews with a lot of them one on one. And the theme that I heard over and over again was this teamwork vibe that they were literally from all across the country coming together with ideas, creative ideas, new ways to support their clients and sharing these concepts amongst themselves. I thought it was total BS until the end of the conference and I knew that it was true. And so I'm not giving this plug just because you came on the show, just because you guys had us on the stage. Everyone knows I tell it how I see it. I was honestly blown away. And so if you're an advisor and you're out there and you're listening to this, whether it's live on the show now or out there on YouTube or on our website later on months on the line. Check out resources, it's really interesting and try to learn a little more. It might be a good add on to your practice. [54:32] Phil Troyer: Thanks, I appreciate that. And I got to throw it back. So I will say that there was some hesitation when it was announced and Kerry Ohm is the one that brought you guys on. It's like not sure if you notice any conference, even ours, is like you're going to have a lot of people that don't show up for the meetings when you guys were on stage, everybody who was participating in that conference, they were there, they were bringing in their spouses. And I got so many compliments of having you guys on. I think we'd Love to have you guys on every year if we can. [55:01] JD: And you wore a dope shirt on stage. That was a phenomenal shirt. [55:05] Phil Troyer: I didn't know whether to wear that or this one, but I figured. [55:07] JD: And by the way, that little blurb, I did that little advertising for you guys. You tell Vince I want a $750 check sent to my office, pronto. All right. Thank you, sir. You are a wonderful guest. It's awesome to have you. We appreciate it. Everybody that tuned in, thank you so much. Let's check out that list of all these advisors. [55:33] Mark: I want to get there, too. I actually kind of enjoyed it. [55:34] JD: Let's do that. [55:35] Chad: Everybody. [55:36] JD: I appreciate you being here. I'm not going to call out your names, but what we are going to do is. [55:40] Mark: Brandon. [55:40] Chad: No, no, no, no, no. [55:41] JD: You were ending the show. [55:42] Chad: I wasn't putting it up to drink it out. [55:44] Mark: Yeah, you reminded him. [55:45] JD: Brandon. Brandon. [55:47] Phil Troyer: I want to say, JD we have great advisors. [55:51] JD: Brandon, spin that wheel. Spin the wheel. Brandon. We're gonna end the wheel of vice. The wheel of ice. Who's it gonna be? [56:02] Mark: It's gonna be Phil. [56:03] JD: It's gonna be Phil. It's gonna be Phil. It's Mark. Drink it, Mark. ShortAndFat.com brought to you by ShortAndFat.com by [56:16] Mark: the way, while Mark drinks that. Did anybody notice that I beat him in the Smirnoff Ice race last week? I was fairly proud of myself in that. [56:24] JD: No, I didn't notice, but congrats, Chad. That is good because he's a veteran. And as Mark finishes that bottle of Smirnoff Ice, so we too finish this show of sheltering in place. See you later, guys. Thank you very much. [56:37] Mark: Thanks, Phil. [56:40] JD: Next week. Next week. 401k. Jake. [56:44] Mark: Oh, nice. [56:45] Chad: Thanks, Phil. [56:46] JD: Bring your black hat. [56:48] Phil Troyer: All right. [57:00] JD: Put this festival on you Fosters with a lot of love. We left for one a year for you pigs. Are you want to break our walls down? Are you want to destroy them? Well, you got a. [59:58] Phil Troyer: Everybody here? [1:00:00] JD: Yes. All are welcome. Yes, indeed. I love them. Fun, nice life, youth, beautiful. I'm all for it.