PEPs: Game-Changer or Margin Squeeze?

[0:00] JD: I definitely miss the originals. Back in the day when Mark would do like a drunk thing at the very end. It'd be like a secret thing at the end. Those are cool. [0:12] Chad: It's funny when you have folks that are dedicated to watching some music and suffering through it with us when they find those at the end of episodes. The responses that we were getting back in the day were fantastic. [0:25] JD: Those were great. Oh, man, we've matured since then. I guess we're just not as wild as we used to be. [0:32] Chad: I would say for those that haven't, go. Go back to like the twenties terms of episodes and just fast forward to the very end, the last two minutes. What you're gonna find is Mark hammered on a couch somewhere with his eyes halfway closed, talking gibberish. [0:48] JD: Nevin just goes, now that's a scary concept. This is supposed to be mature. This is mature. [0:57] Justin: I'll leave it to David. [0:58] Chad: Nevin always keeps us on track. [1:00] Mark: The only difference is that when we actually are all together, it becomes a little. It's a little different than it's all post show. [1:08] Chad: It's all post show. We go out and have fun afterwards. [1:10] Mark: It's not the post show, dude. It's the pre show where JD's pounding beers and it makes me want to. If you recall, two weeks ago. Yeah. Then I'm carrying around a bottle of champagne and I'm falling asleep in hammocks at places. [1:26] Chad: Back in the day when that was happening, we were secretly recording two episodes in a day. Changing clothes, recording two episodes and releasing. So when you drink as much as we tend to in one and then you stack another one an hour later. Can get a little interesting. [1:42] Justin: Yeah. [1:43] Speaker E: Yeah. [1:43] Chad: Those are brutal. [1:46] Justin: Glad we haven't done it in a while. [1:52] Chad: The beginning of pandemic. That was a lot. [1:55] Speaker E: Yeah. [1:58] JD: All right. [1:59] Justin: Look at that hair. [2:00] JD: A few minutes away. 4 minutes till. [2:06] Mark: All right, Mike, you happy? [2:08] JD: Blast off. [2:09] Justin: Thank you, guys. [2:10] Mark: I'm sorry. Not you. [2:13] Justin: Oh, there's the robe. Wow. [2:16] Mark: Yeah. [2:16] JD: Looks fresh. [2:17] Mark: It looks clean on the chat bar. I know sometimes I don't put on right away because it's just warm, man. [2:23] Chad: It's in it. [2:24] Justin: Yeah. [2:26] JD: Do you have. Do you have. Do you have genie's patch on there anywhere or. [2:30] Mark: No, not yet. No. [2:33] JD: What a loser. [2:36] Chad: Where you had it last time was. Was pretty key. [2:41] Mark: I have two of them. [2:43] JD: Yeah, well, I can just. [2:45] Mark: Maybe I'll just tape it on. [2:46] Chad: Be your collar. [2:55] Mark: Everybody can see the magic moment where I put it on. [3:01] Justin: Hey, Mark, is there. [3:02] Chad: You have that thing where you got [3:04] Justin: a Light shining right down onto the lens of your camera. Is there any way you can shade it? [3:10] Mark: I'll just turn the light off. [3:14] JD: It's like his artistic vibe. Brandon, he likes to do that. [3:20] Mark: The golf God staring down on me. [3:23] Chad: I was wondering, leading into today being day before a celebrated holiday, what kind of attendance we would have. Especially when I think for the first time ever, my inbox had less than 100 emails in a day. It felt really good to get through those. Through that. [3:41] Mark: Whatever, dude. 60 of them were probably from Justin. [3:45] Chad: 60 of them are from their grins. Reminding me to play more golf is what it was. [3:49] Mark: Yeah, like, I talked to Chad yesterday. Hey, when's your first round out there in Missouri? Friday morning. And then this morning, I wake up to a notification that says Chad's playing golf. [3:57] Chad: I'm like, hey, Brooke asked if I wanted to go play golf this morning, so I went and played. [4:01] Speaker E: The best part about his golf round is I get a notification on my Apple watch that says he just got done working out. [4:08] Chad: Hey, when it's 85 degrees outside and you're playing and it's 77% humidity, it's a workout. [4:17] Mark: Geez. [4:18] Speaker E: Oh, Brandon's gonna hate that lighting. [4:20] Mark: Mark, is that all right or no? [4:23] JD: Yeah, it's creepy dark, but it's fine. Turn it on. [4:25] Speaker E: Tilt the camera. [4:28] JD: You know, Mark, we've only done, like, fucking 26 of these. You think you'd get your shit together. [4:35] Mark: Hey, the last few times this thing wasn't happening. [4:41] Chad: Hey, Mark, I just saw your play on Peps and pepperoni pizza is yummy. I just thought you want a pepperoni pizza for dinner. Mark, look at my name. [4:51] Mark: Peps are lamer than a white claw than white claws. [4:58] Chad: Oh, is it plural, Nash? [4:59] Mark: Well, first off, please. [5:01] JD: Yeah, [5:03] Speaker E: that's how lame they are. [5:05] Mark: Ash, I'm gonna show you something real fast. [5:07] Speaker E: Oh, here we go. This is dangerous. [5:15] Chad: Does Brandon have an intro? [5:17] JD: Ain't no laws when you're drinking claws. [5:21] Mark: That was my Father's Day present from my wife. [5:24] Chad: That is amazing. [5:27] Justin: All right, I'm gonna kind of get it prepped up and go full screen. [5:31] JD: Okay, let the. [5:45] Justin: Guys can keep talking for a second. I just realized I gotta actually put it up there. [5:51] JD: I like the pressure of our silence. [5:53] Justin: Oh, yes. It's not very often this crowd silent. [5:57] Chad: What's up? Pch Ech is in my brain. [6:01] Mark: I put that. I put the thing paper over it, and it's still doing it. Here we go. All right, we're better now. [6:09] JD: Whoa. [6:10] Chad: Talking to Siri. [6:16] JD: All right, here we go. No, you can just sing it. Brandon. [6:22] Chad: Brandon, that beard's getting gray. Thank you. All right, here we go. [6:43] JD: Welcome, everybody, to another episode of Retireholics. Sheltering In Place. I don't know if I've told anybody this, but Brandon and I were working on a new name for the show because the idea was is that at a certain point, we would no longer be Sheltering In Place. And so we're coming up with ideas like Breaking out and yada yada. But out here in Cali, it looks like we're going back on Sheltering In Place, so we're just going to keep the name and keep going with this deal. We have got a guest with us. Thanks for being here. Mike Decenco from Newport Group. I've been picking on you on LinkedIn quite a bit, saying that we're going to go at it today. It's going to be a big debate. Feelings might get hurt. We may shout at each other. Who knows what's going to happen? But if you're tuning in, chime in. Let's do a little knock, knock, knock. Housekeeping. Housekeeping. Make sure that you're in gallery view. That's up in the top, right. That's the best way to watch this sucker. So you see all of us at the same time. And please chat. Let us know what you're drinking. Let us know if you have a question. Let us know if you've got an opinion, a joke, whatever. When you do that, make sure you do it too. All attendees, and not just to the panelists. And we're going to do a word of the episode. Mike, are you familiar with the word of the episode? You know how that works? [8:15] Justin: Yes, I am the prohibited word. So I have my topo chico just for that. [8:20] JD: Oh, let me also let everyone know that's tuning in that Brandon's trying a few things with the software and everything. So if. If he screws it up, just know he's trying some new things, so he might screw it up from here to there. Brandon, are you cool with a poll for the. Yes, you are. There it is. Okay, everybody in the audience, you get to play along. Let us know what word you think should be the prohibitive word today. And I think we get a vote, too. So I'm going with the F word. We'll wait for those results to come back. And you know how this works. You can sip on your beer or whatever you got going on, and then you should have something, some type of penalty drink. I got a little vodka mixer here. When we figure out. Wow. Nice. Very good, Very good, Very good. Michael, to bring you on while I wait for these polls from Brannon, I wrote a song for you. [9:19] Justin: I can't wait to hear this. [9:20] JD: I'm going to perform. The word of the episode will be the F word. I'm going to say it one more time. It will be fiduciary. That starts right now. That's the word. Don't say it or you'll have to. Yes, [9:37] Justin: I'm fighting with Mark. [9:42] JD: Oh, yes. [9:42] Chad: Hold on. [9:43] Mark: This is great, because this is live show, and I'm just going to talk to you about how we're doing this. [9:47] Justin: Hey, hit that one again. [9:49] Mark: When I hit that button, the fantastic button, it just stood there. It didn't do anything. [9:54] Justin: Oh, yeah, that one's short. Well, hit the last one you hit. Okay. You meant to do that one. Okay. [10:04] Chad: All right. [10:05] JD: Okay. So now everybody knows that Mark can have a little fun. He's got a little access to some stuff that we don't have, but he's going to be doing that. A song. I wrote a song for you. I'm going to perform it for everybody here today. I've got to read off my lyrics here, even though this is a pretty easy one. Mike. Mike and Peps sitting in a tree K I S S I N G First comes love, then comes marriage Then comes a little peppy baby in a baby carriage Sucking his thumb, wetting his pants Doing the peppy peppy pep dance. Yay. All right, that's what we're going to talk about today. Mike. Mike has this really bad, sick obsession with Peps. He thinks they're all the rage. He literally wrote me on LinkedIn and said, hey, man, we should talk about Peps on your show. And I think I wrote him back. And I said, why Peps sick? And he said, no, they're going to change the industry is what he told me. They're going to take over the industry. And I definitely, from the bottom of my heart, do not think that that is true. But let's start by Mike, if you can give us a little bit of a history of how we got to where we are with the secure act. From closed maps to open maps to Peps. I think most of the audience has a pretty good knowledge base on that, but let's just kind of catch us up to speed. [11:39] Justin: Yeah. Part of what the industry may not or people on the webcast may not know is probably the first MEP was written back in 1947, and it's written as a Taft Hartley plan. And so, yes, the good old days. So then we saw this evolve through ERISA and other. We saw that the MEPs were catching some fire in the late 90s, early 2000s. Then there was a bump when one map went bad because somebody had scounded with the money at about 60 million. And about 2012, the Department of Labor wrote a negative comment letter about MEPs. They were not saying that they were prohibited or you couldn't do MEPs, but they wrote this opinion letter which then kind of shut down the spigot or the interest in people doing MEPs. [12:33] JD: Freaked everybody out a bit, right? [12:34] Justin: Absolutely. From there, what we have seen is over time is we've seen that small and midsize employers have been reluctant to put retirement plans in place. We see that there is a retirement coverage issue in the United States. Even though people can get an IRA at their bank or through a broker dealer or through an advisor, they're not doing it. There is this coverage issue in the United States and our government has been trying to fix this for years. In fact, the state started around 2009. We're starting to talk about state retirement programs. Most of those. [13:13] JD: We got one here in Cali. [13:15] Justin: Yes, Secure California, Cal Savers. Yeah. Well, there's actually nine states that have actually implemented such programs where the state governors have signed off. Now, one are a payroll deduct IRA that is automatic enrollment. One state, Rhode island, is going with a map, and it's an open map. At this point in time. My guess is that may change to a pep. But with this, we saw the states take the initiative and trying to move retirement savings forward in their states by some with the carrot and some with a stick. Some giving tax incentives if you started a plan to those firms that did, others that there was a tax penalty if you didn't have a plan in place for your employees or didn't come on the state program. And so from there, we also saw that some exchanges per se were opened up where there was a selection of different IRAs across the states. [14:11] JD: Mike, when I asked you for the history, did I say a quick one? I think. [14:15] Chad: I don't remember. [14:17] Justin: Quick. Okay. I thought you meant in depth, in important. [14:20] JD: I think I left that one out. Continue on. Sorry, Continue on. Wait, let me get a spot here. [14:25] Justin: Okay, so here's an important part of this, which was under the Obama administration, the states were given an exemption from ERISA for these state IRAs. When Trump came in, one of his first moves in office was to take that exemption away. And so at that point Congress started to work on some things and Trump did as well. So you had the Trump executive order that was bringing the IRS and the Department of Labor together to try to create some sort of solution for small to mid sized plans. You had Congress through resa, RESA Portman Cardin Secure act as well as Senator Whitehouse's IRA bill. And so in this, as exciting as this, in September of last year 2019, Trump signed off through the executive order of the IRS and the Department of Labor changing the definition for closed MEPs from commonality to a bonafide group which now allowed companies from different industries to be in the same plan as one plan. Then what we had was Congress came through, which Trump signed Into Law on December 20 was the secure act, which then opened the road for PEPs which had less boundaries, less rules, which were much more open than the closed MEPs. And so that's where we are today is looking at these closed MEPs, open MEPs and the PEPs. [15:45] JD: Right. We were all focused on open MEPs as kind of getting the thumbs up. And now we get this new term, this pooled employer plans term, these PEPs, which gets rid of your one bad apple rule gets right, you know, really sets you guys up for clarity. And these suckers go live in 2021, right? [16:05] Justin: That is correct. January 1st. [16:07] JD: Okay. Okay. So that's where we got to. And so now everyone's fired up on this PEP because you've got clarity on how it works. What I'd like to do is kind of tackle this conversation two different ways. Let's first talk about it from the plan sponsors perspective and then we'll talk about. What I'm really interested in is from the advisors perspective. So, okay, from a plan sponsors perspective, Mike, why? What are the advantages of putting together a PEP and get ready because every time you say an advantage, I'm going to shoot it down and tell you why it's stupid. [16:47] Mark: No. [16:48] JD: So you've got a brochure, it's got bullet points on it. And those bullet points are these pros of having a pep. What's the number one bullet point? What's the first one that you guys talk about? [16:58] Justin: The very first one is operational efficiency. [17:01] JD: Oh, damn it. I thought you were going to say low fees. Okay. [17:04] Justin: No. Nice try. No. See, I knew you're good. So we're talking about operational efficiency, which is now somebody else is running my plan. All I have to do is turn in payroll. That is my only form of operation of the retirement plan going forward. And One of the things that I hear every day from plan sponsors is, man, I just love running my retirement plan. I can't wait to get out of bed and run my retirement plan. This takes them out of running that retirement plan because they don't want to do it. They don't even know how to do it. [17:33] JD: When you say that, you mean, okay, they don't have to sign a 5500. [17:39] Justin: Correct. [17:40] JD: They don't have to send participant statements to people, things of that nature. But they do have to submit the money into a system. They do have to run their payroll system. But you're just saying you're going to get set up on some 360 kind of dealio. So the data is going to come. [18:04] Mark: 316, what is that considered? [18:07] Justin: Oh, 316. That is an operational fiduciary. So that is a outsourced fiduciary or an insider. [18:13] Chad: Good bait. [18:16] JD: Nice. Nice, Mark. Love it. That was an uppercut and you had them stumble in there with that one. [18:25] Justin: Okay, I was trying to get around the F word. [18:27] Chad: And I'll say, just as in, one of the key points that you made in operational efficiency is something we talk about all the time and you know, I like to preach on this. In order for you to track eligibility and make sure that the plan sponsor doesn't have to do those, you need an appropriate waiting timeline. You need a full data feed from payroll. Make sure there's enough time to get notices out to pull that data. They want immediate eligibility or if they want, you know, 15 day eligibility, you're not tracking that, just as we can't in the traditional 401k world. So you still need a lot of. [18:56] Justin: That can be an issue. [18:58] Chad: Yeah, I don't think I's dotted in order for that. [19:00] JD: I definitely don't think it's fair and I think Mike would agree. I don't think it's fair to say that you're relieving them of all their duties. You're just taking some of the things off their plate. But here's my counter to you. [19:12] Justin: Actually. [19:12] JD: No, actually unique to a pep. [19:15] Justin: Actually, I would say yes. What it is. And it's unique to a PEP. Unless you're going to hire a 316 and a 402A name fiduciary, then yes. And generally those are going to be scattered. Generally they're going to be scattered. [19:27] JD: You owe us one. So [19:30] Justin: what I will say is this is from the standpoint of they don't have to track the eligibility, they have to track beneficiaries. They don't have to sign off on anything. They don't have to prove anything. They don't have to do any operation of that plan in any way, shape or form. They don't have to have quarterly meetings. They don't have to have a committee. These adopting employers don't have to participate in any of those activities that take away from them running their business and focusing on their business. And especially in this environment where these businesses are trying to grow revenues and profits some to stay alive. The last thing they want to do is run their retirement plan. With this PEP situation. They're out of running the retirement plan other than the payroll. And let's talk about that payroll file. When that payroll file gets set up in the beginning, okay? And that's when it's done is in the beginning. And yes, there are changes and there are errors that are fixed and there's warnings that are fixed by the providers, by us, Newport. And so in this it is strictly that payroll file. And the upfront cleansing is the real key as changes occur. Yes, there's gotta be cleansing there, but those are the few and far between. And so once this is running and that payroll file is set, things start to run smoothly. And there is that full 360 that can be either integrated with that payroll provider or Newport can do its own360 with any provider as a one off with any PEP. [20:45] JD: I don't think that's entirely true in the real world, but fair enough, I'll give that to you. But. But 316 doing all those services you said earlier, that's unique to a pet, but it's not. We can offer that type of service to a client in a regular 401k plan. In terms of all this, you can do everything for them. Sign the 5500, check their census feeds, deliver the statements. You can. That's What a true 316 can do. And that's got nothing to do with a PEP. [21:17] Justin: You're absolutely correct. You can do a 316 outside of the PEP. But what's great inside the PEP is it's all bundled in. It's all taken care of. You think it's all. [21:26] JD: I would prefer my 316 not to be bundled in. People come to us all the time and they say Mike, I'm finished. Where they say, hey, are you guys doing 316? And I just want to state for the record, I don't think planes I consultants should be a 316. I would like that to be an independent company outside of our shop. [21:46] Chad: Those that do that we have partnered with in 316 space. What do they do every year? They reach out, they request our fees and costs. They benchmark those versus other TPAs in the space as well as the record keeping. That's a duty of that named F word. [22:03] JD: We have a lot to talk about, so I apologize. We got to. [22:05] Justin: Let me stop you there on the 316. From the standpoint of that 316, one of the differences is the 316s that are not integrated, they're the ones that have the issues because they're not tied into the record keeping system directly. They're not tied into the administrative system, the trust and the custody directly. We are, we're a fully integrated holistic solution across record keeping, administration, 316 trust, custody and 402A. That's the difference is because it is fully integrated. [22:33] JD: Let's talk less about Newport solution and more about just Pepsi and generalities. And let's, let's move forward to. Because some of the guests are asking, let's go to what I thought was the number one bullet point. And I gotta say, I get caught by this one where I love this sales concept of hey, you're a million dollar plan, so you get million dollar pricing. But if you join my Pep, I'm going to combine you with 100 other million dollar plans. I'm going to combine you with 25, $5 million plans and 25, you know, $10 million plans. And therefore, I apologize for my numbers. You're going to get billion dollar pricing or whatever it is. [23:20] Speaker E: Right. [23:20] JD: You're going to get this reduction in price. And I have looked at a lot of PEP proposals. I am not seeing this reduction. And by the way, this is also not unique to a PEP. A record keeper can come to an advisor 10 years ago and say, hey, if you bring me 100 of your clients at $100 million, we will reduce our basis points by 10 or 15. And when I say I'm not seeing price reduction, I'm not seeing it from the record keeping side. And I want to ask you honestly, Mike. [23:56] Justin: Yeah. [23:57] JD: Is the record keepers. Are the record keepers out there? Is it an easier job for them in a PEP versus in their normal state of work in record keeping? Because I'm a believer that record keepers are a per head, per plan kind of thing. You're still going to have to service the hundred clients that are in the PEP, the 100hr people and their 50 participants in each of those plans. And the calls that come in. I don't feel as though the recordkeeping job gets any simpler in a PEP than it does standalone plans. Am I wrong? [24:29] Justin: Here's what I'll say. It depends on the record keeper systems. Some systems are built as divisionalized systems like ours, others are not. And so therefore there's a lot of manual work that has to be put together to pull these adopting employers under one plan. With our system it automatically does that electronically so it is efficient. So that pricing differentiation is based on the efficiency of a system as well as this. There's one 5500 for every member that's in that PEP. So there could be 100 different companies where you'd be doing 100 different 5500s. You're doing one audit for all companies that are in that PEP, not five different PEPs. Say if there's five groups that have 100 or more employees, you're doing one trust, one custody. So you are getting some tremendous efficiencies. And yes, we are seeing definite pricing differentiation between our pet products and and our one off standalone products. If you take a look, it's about a 15 to 30% decrease in our fees. [25:26] Chad: On the PEP, what's the average plan size in that? In your current met PEP setup? [25:31] Justin: Great question. And on the MEPs, and I can go from some of our recent clients that we've brought on board which are very large on the MEP side and closed MEP side, we're seeing 15 million, 20 million, $30 million plans coming into the MEPs. There's relations coming to close, MEP coming to close map, and that makes sense. [25:49] Chad: But if you're talking about a pep, the average plan size is likely to be smaller. So if you're getting a 15 or $20 million individual plan joining a PEP, they're going to be subsidizing for the smaller plan, just like the industry always has been. [26:02] Justin: We are pricing these based off of what is coming in initially, what the PEP marketing plan is. We do a marketing plan with them and we understand what the marketing plan is, what they expect to sell on an annual basis, what they expect to bring in in assets and what they bring in as participant headcount from there is how we are pricing these. So every PEP that we do is priced independently based on its independent nature of how large it is to begin with and how large it could grow too. And we have a number of scenarios on a nationwide basis where These are large RIAs, where they are wirehouses, where there are large benefit companies that are property, casualty and benefit companies, large payroll companies, they're all national that have contracts out right now. [26:42] Chad: Yeah, that's, that's. I think J.D. is going to get to it, but that's where I think this makes sense. We'll get to that. [26:47] JD: Yeah, we're going to get to that because believe it or not, I do think there is a space for PEPs. [26:52] Justin: You say that again. [26:53] JD: I do think there is a space for PEPs, but I think it's a small one and I don't think that it's going to take over the market but we're going to get to that point. But I want you to know I'm not, I'm not attacking Newport. [27:04] Justin: No, no. [27:04] JD: I'm looking at all these different record keepers offering PEPs. And I'll tell you where I'm seeing the price reduction. It's not on the record keeping side at least it's not anything that's massive. Where I see the price reduction is. And it's not even the admin because yes there's 1 5,500 but you still have to account for divisionally all those different companies. And by the way, prepping a 5500 is not hard laborious work. You know, it's not a big time suck to do with the right technology. Where I'm seeing the price break is in the Advisor. So I'm seeing most of these solutions that are out there. The only individual that seems to be showing this big reduction is for the advisors comp. And I've got some big, big issues with that. You don't feel that way. [27:52] Justin: We're not seeing that with the advisors [27:53] Chad: we are working with. [27:54] Justin: No. And here's something else because. And the advisor is gaining tremendous efficiency here. If for example a PEP has 100 plans in it, 100 employers, they're doing one quarterly investment review for all 100, not 100 different quarterly investment reviews. So they're getting great efficiency there which helps them to go further with their financial wellness with their work site planning, with their individual IRA rollovers and annuity rollovers, with their life insurance planning, with the holistic planning for those individuals and their families. This brings a whole new realm of actual business opportunity for those advisors that they did not go after before for two reasons. One, they didn't have the time because pulling together these quarterly reports for 100 different employers was time consuming. And going out presenting them was even more time consuming. Now they can focus on one of those per quarter for all 100 adopting employers and they can now focus on where they really want to grow the business and where they can really help people with financial wellness. And we've seen this whole industry moving toward that financial wellness. [28:57] JD: Again, again, sorry, I don't want to be a broken record on this. It's, it's not a which ones financial wellness. [29:03] Justin: I believe it's big out there. [29:08] JD: That's not unique to Pepsi either, Mike. So if I'm an advisor and I want to create an efficient model for my smaller plans and I want to put them all in the same type of core investment structure, there's plenty of record keepers that can allow me to do that where I can use those types of efficiencies. So I don't think that's a PEP thing either. You're just taking things that we already had, we already have the ability to do before PEPs even existed. We could create these things and you're just making them your bullet points. They're not unique to you and Pepsi. [29:41] Justin: Here's why. How many plans out there? What percent of plans out there have a 316 today? What percent of plans have a 428 today? [29:48] JD: What percent of plans are PEPs? [29:50] Justin: Well, none right now. Well, right now, none. January 1st will be different. January 1it will be different. But today you're absolutely right because they don't go live until January 1st. [29:58] JD: And what percent are open? What percent are open? MEPs. You know what is how many clients does Newport have? 300. [30:06] Justin: We have about 200 today MEPs and PEPs on the books that are open and closed. But from there what's happening is we have 18 contracts out right now on PEPs. And these are large national firms that are bringing blocks of business. And we already have other MEPs that are out there that are closed. And as you look at this, here's the difference. The difference is that it is an integrated approach as compared to a piecemeal approach. And as you know, we're selling add ons to a plan sponsor. Number one, first of all, doesn't even understand this plan. All they want is they want a plan to help retain, recruit and to reward their employees. They've got to have it to compete with their competitors in their marketplace. Most of them don't even understand what they checked off on that adoption agreement, what that means. I mean, as you guys know, we see out there every day plans that don't run as they have checked off in their adoption agreement. When their plans are giving loans where their adoption agreement doesn't say they can have loans. [31:03] JD: We're Going to move on to a fun game. We're going to move on to a fun game. Go ahead. [31:06] Chad: John, your thought is by having them be in a PEP where there's very little to no in person contact, where you're a fish in a barrel in terms of the number of people that belong or plans that belong within this larger plan that they're now all of a sudden going to understand their document [31:25] Justin: and their plan is. They don't have to. Here's why. They're not responsible. They're an adopting employer, they're not a plan sponsor under pep, they're an adopting employer. [31:34] JD: That's going to go wrong under the. [31:38] Justin: Listen, you guys can say that, but under pep they're an adopting employer, they're not a plan sponsor. And in that their only liability is turning in payroll and monitoring the PPP once a year, monitoring, benchmarking the ppp. That's it. That is our responsibility, duty, liability of running the plan. Now we go from there. Let's go to the other factors. So we've got. [32:02] JD: Can you mute Michael for me real quick? So the problem I have with that and I want to get to a fun game is me personally, I'm very scared of that path that you want to head down. Mike, I don't think that that's the right path for our industry and I surely don't think it's the right path for plan sponsors. We don't want to go down a path where they're less interested in their plan and we teach them that that's okay. We want to go down a path where we create better successful outcomes. Plan sponsors are involved, advisors are there helping them where we're doing more and we're making more. And instead you're trying to create a solution where you and you make less and you're heading, in my opinion, in my opinion, you're heading in the wrong direction. [32:48] Justin: Okay, no, you've misunderstood what I've said because what I said is the advisor, the advisor actually is going to spend more time on that individual so that they can actually create a successful retirement outcome. This is where it is missing in the industry today is advisors are not spending time with the individuals because they can't afford to. And in this situation of the pep, what it's going to do is allow those advisors now to spend time with those individuals and help them create successful retirement outcomes. [33:15] JD: I just want to say one more time, not unique to a pep, that strategy can be done. If that's the strategy you believe in, I don't I disagree, but that can be done outside of a pep if you have time. We're going to play a game. We're going to play a game. Mark, what's the game? [33:33] Mark: My game? [33:34] JD: Yes, your game. [33:35] Mark: I don't have that button on my thing. Brandon. There you go. There you go. [33:39] JD: He's got it for you. [33:40] Mark: All right, Mike, you ready for some fun? [33:42] Justin: I'm ready. Do I get shocked? [33:44] Mark: All right, the game is called are you game or is it lame? Okay, I've got some questions here. Some are just really dumb. They just come off the top of my head. They might not make any sense, but I just need to know if you're game or you think it's lame. And we'll just kind of go rapid fire here, and then at the end, I'll throw a little curveball at you. Okay, My first one, and I'm just gonna state it. Usually I don't give my answers because, again, it's my game. But I've. I've been going outside, walking quite a bit, and when I walk down the street and I see somebody driving, and again, we're in California, so it's a little different. But wearing the mask, right? [34:22] Justin: Yes. [34:23] Mark: Holy cow, does that drive me nuts. So are you game or do you think it's lame? And, Mike, I'll start with you about wearing your mask while you're driving your own vehicle. [34:36] Justin: No comment. [34:38] JD: You got to be labor game [34:43] Speaker E: only. [34:43] JD: Only if your windows are rolled down. I'm kidding. I don't do that. [34:49] Chad: Hey, Mark, do you think it's appropriate to talk about the. The correlation. The meme that I told you about someone who wears a mask by themselves in their car. Do they also do this? [35:03] Mark: Well, I don't remember now. Go for it. [35:05] Chad: Danny talks about us getting taken off the air, so I'll share it. Anyways, I was gonna say, you always [35:09] Mark: like to make it awkward. Go for it. [35:10] Chad: Oh, yeah. So I saw this meme that said, do you think the people that wear a mask by themselves in the car also lay in bed by themselves with a protection on, the condom on. That's fantastic. [35:24] JD: Okay, let's go to the next question mark. Next question. [35:27] Mark: Welcome, Justin. [35:29] Chad: Oh, lame for sure. [35:31] Mark: All right, now, Mike, next one. Standing up as soon as the plane lands. Are you game or is that lame? [35:42] Speaker E: That's lame, J.D. [35:44] JD: when you're in first class, you don't need to worry about it. You just take your time. Take your time. [35:51] Justin: It's inconsiderate. [35:52] Mark: Lame for sure, Chad. [35:54] Justin: Lame. [35:56] Mark: All right, this is more of just a kind of a general question. I'm gonna need some statistics from each of you. How many hashtags? And then I'm gonna say, you know, specifically to, like, a LinkedIn post or Instagram. I don't know how many hashtags is the right amount? Like, as soon as you cross that threshold, what's too many hashtags? So, like, I post a picture of my daughter, and it's like, hashtag cute. Hashtag, the best. Hashtag, I'm a dad. Hashtag barf. You know, like, so I should stop at four or three. Like, what is it, Mike? [36:30] Justin: Five. [36:31] Mark: Five. Okay. All right, I'm gonna go to Chad on this one. [36:36] Chad: I'm thinking four. [36:37] Mark: Chad, the ultimate social media guy. [36:39] Chad: How many is on there? Always there, [36:44] Mark: Justin. J.D. [36:47] JD: i'm with Tony and Nevin. It's four, and I think that's the accurate answer. Oh, no. [36:53] Mark: There's, like, a real answer for this? [36:55] Chad: Yeah. [36:56] JD: Depends on the platform. Yeah. There can't be. [37:00] Chad: There was a correct answer. [37:02] JD: Oh, no. You got a hashtag, bro. People follow that. [37:05] Mark: Yeah. You can actually follow hashtags. [37:07] JD: Yeah. [37:08] Mark: All right. [37:08] JD: Kind of the point. [37:10] Mark: Avocado toast, [37:14] Justin: Mike, for me personally. Lame. [37:17] Mark: All right, J.D. [37:19] JD: my wife's a vegan. I see a lot of avocado toast. I'm not a fan. Lame. [37:25] Mark: I can't wait to ask these guys this question. [37:27] Justin: Chad, game. [37:29] Chad: All the way. Oil on there, some salt and pepper, some Italian seasoning, kale, some egg. [37:35] Speaker E: Oh, it's money. Wow. [37:36] Chad: Garlic. [37:38] Mark: All right, the. The last one is leaving a voicemail. [37:46] Justin: That's game. [37:47] Mark: Okay, Justin. [37:50] Chad: Depends on who it's before, but, yeah, mostly game. [37:53] Justin: Okay. [37:54] Chad: I never leave a voicemail for you [37:56] Mark: or Chad, but, yeah, I was like, I have. I think I had probably six to eight missed calls from Chad. Not one voicemail. Not even one. Not even back and forth. [38:05] Chad: You just need to answer your damn phone. [38:08] Mark: I don't answer when it's. You leave a message so I know what you want. [38:11] Chad: I say game. Leaving a voicemail. I'm game. All right. [38:14] Mark: J.D. [38:15] JD: are you suggesting that, like, younger people don't leave a voicemail because they know that you saw them call? Because that frustrates me. I feel like you should leave a voicemail because if you. If you call me and don't leave a voicemail, I'm not calling you back. [38:30] Mark: I will be honest. There's a couple advisors I work with, and they're never on these episodes, so I don't worry about that, but they don't leave me A message. [38:37] Chad: And it. [38:37] Mark: I don't know, it bugs me a lot. [38:39] JD: But you're. Are you afraid that you're supposed to respond? [38:42] Mark: Yeah. [38:45] Chad: What bothers me is when I leave [38:46] Speaker E: a voicemail and that advisor does not listen to it. [38:50] Mark: Yeah. [38:51] Chad: Call you back. Do they call you back right away? Is that why they don't listen to [38:54] Speaker E: it two hours later like, oh, did [38:55] Chad: you get my voicemail? [38:56] Speaker E: No, I didn't listen to it. [38:57] Chad: It's like [38:59] JD: there's some people chiming in on the chat bar, mostly Ryan Rink, talking about how hammered I'm going to get and I'm going to pass out. I want to be clear with everybody. I've been getting fucking wasted the last three weeks on this show, and today I'm being very mature. I'm halfway through a beer. I've had six ounces. I'm doing pretty good. Don't let the red face fool you. [39:22] Mark: Okay. [39:24] JD: We have one very question. [39:25] Justin: That lamer game came in from the. [39:29] Mark: The attendees. [39:30] Chad: It's a lamer game wearing a robe. [39:38] Mark: I think we all know the correct answer to that. So moving on. You know, you know that comment. People say there's no such thing as stupid questions. They were wrong. Okay, [39:51] JD: do we have another one? [39:53] Mark: Last one. Last one here. This is my curveball, Mike. So the question I'm gonna ask the. Here's what happens if you lose one of these two options? You have to get a tattoo of me on your upper forearm, okay? [40:10] Justin: Okay. My shoulder on my upper forearm the [40:12] Mark: size of like a softball. Okay, here's the question. If you had to pick one of these things to do in order to. You have to win this so you don't get my face on your arm, what would you pick? Would you pick a rap battle against Eminem or would you pick playing Jeopardy. Against Ken Jennings? [40:34] Justin: I take Jeopardy. [40:35] Mark: Jeopardy. [40:36] Justin: Yes. Wow. [40:38] JD: That's a. You know who that your opponent is, right? [40:40] Mark: Yeah. [40:40] JD: Yeah. [40:40] Justin: Oh, yeah. He's the guy that won it all. Most ever. No, I can't rap. [40:47] Speaker E: Oh. [40:47] Chad: To everybody. Ken Jennings. I'm gonna lose either way, so it doesn't matter. I didn't listen. So I'm saying Ken Jennings. [40:57] JD: Wait, hold on. [40:57] Chad: I forgot we have the option for the tattoo. You're pretty face. [41:00] Mark: No, it's not an option. You're gonna get it anyways. You're gonna lose. I just want you all to have tattoos with me. [41:06] Chad: J.D. [41:07] JD: i forget what the first one was, but I'm. I'm gonna go with Jeopardy. Even though every time the stuff this topic as poems I just shout out Robert Frost as the answer. So once in a while I get it right. Once in a while. [41:23] Mark: Well, you know what they say. [41:27] JD: You know what they say. Okay, let's. Oh, there it is. My favorite video of all time. I think Nevin brought it up earlier in the chat bar about clients maybe moving away from these open maps at times. Would you, if you were in your sales mode, which I feel like, Mike, you're in your sales beast mode pretty much 100% of the time. Would you say to an advisor that these plans are sticky? Yes or no? [41:57] Justin: Yes. Here's especially what we've seen with the closed maps and closed maps, I'd say even more so than open maps. But I think the Pepsi are going to follow what the closed maps are doing and we have that history with the closed maps. And from an advisor standpoint, you know, the advisors, it's funny you brought this up earlier on, are advisors for or against these. And it's really interesting. There are a number of calls where we'll get on with a large national RIA and they will downright, you know, we're not even interested, but we're going to listen what you have to say. And by the end of the first call, they're now willing to listen further and talk further. There's a real, I guess, misunderstanding of how these work, what the advisor's role is, how they're priced, how these function for the plan sponsor, which is the adopting employer going forward and the change in duties, responsibilities and obligations and the F word and they really don't comprehend that up front. And yes, they can hire a 3 16, yes, they can hire a 402A but can they hire them with the financial backing? Can they hire them that is integrated into the record keeping system and that's where there's a huge difference. [43:02] JD: Yes, they can go ahead, keep going [43:04] Justin: into the record keeping system. [43:06] JD: Sure. [43:06] Mark: Yeah. [43:06] Justin: There's only, there's only a couple of companies that are doing that today. [43:09] JD: Oh well, it's, it can be done [43:11] Justin: because you, because most of the record keeping systems actually due to security are actually changing the way in which they're doing the integrations with outside partners and into their record keeping system, encrypted emails and others of the formats. [43:23] JD: Let's get back to the stickier part. So why would you suggest that it's stickier because they feel like they can't leave? I mean that's the definition of sticky. Right. As a plan sponsor. But you're uncomfortable with leaving in some way shape or form. [43:39] Justin: I don't know if they're uncomfortable. I think they're just very comfortable with the way things are running because those adopting employers, they're not running a program, they're not doing the day to day task of a program. [43:49] JD: Here's my concern in helping advisors. I feel like what I would call a F review, F word review. Where an advisor goes out, gets several proposals from different record keepers, compares and contrasts them, says a fee comparison, cost comparison, walks into that client and really takes them through that process of due diligence to either make them feel comfortable where they currently are or show them that there's something different or something better out there to me is a phenomenal value add. Not only does the plan sponsor benefit from an education standpoint and possibly better products, but the advisor benefits by improving their brand, showing the client that they're on their side and they're independent. I think that that's super important for advisors and I think that if they go this pep route again, not Newport, just peps in general, I feel like they're losing that, that everything I just [44:53] Justin: talked about, I will say brand especially brand especially. And we will private label it for that advisor. We'll private label it for that firm so it actually increases their brand. We'll do single sign on through their website so the participant has to come through their website and sees their name all the time, not ours. So see, there's different ways in which this is being done out there and there's different value to the advisors at different, at different solutions. [45:14] Chad: I'm, I chat about this often with some of the bigger advisors that we work with, the private labeling side of things. And then the response that I tend to get is look, I want to be responsible for our own ethos. I don't want the 800 number that's on my website that looks like it's my employees to be the brand that we're showing. I don't want the errors that are coming. Perhaps I'm not saying that this is happening, but I don't want any service faults or a grumpy employee to be the representation that these clients get of my firm. So I know that the private label and branding is attractive when it's talked about. I don't, I have not come across a single advisor that actually wants that. Maybe some big rias, perhaps they want that. But from an individual advisor perspective, I don't see that. [45:59] Justin: Well, and I'll say this as well, so in today's world, when a plan sponsor has problems with record Keeping an administration. They're dealing with it every day with their hr, their payroll department, whomever. Those participants are coming to that plan, sponsoring, complaining, in a pep. Their plan sponsor is an adopting employer. They're not going to their plan sponsor. They're not going. They're coming directly to the PEP provider, the ppp. That's who they're coming to. So they are not. So they're not going to their. Because their plan sponsor is an adopting employer. [46:32] Chad: That's the exact same thing. The employee's pissed off, they go to hr. HR deals with it. The employee gets pissed off, they go to hr. You're saying, no, no, no, we're not hr. The PEP is, yeah, go to your, [46:42] JD: go to your ppp. [46:45] Justin: Well, what's going on is they go directly to our call center and that's where they get service from the standpoint of they do. But what happens is in today's world, that HR department is getting involved as well. Okay, that's what we're seeing is the human resource department is getting involved as well. [46:59] JD: We just tapped into another complete unreality. That's not true. That doesn't happen in the real world. You're living in your, you're living in your PEP utopia. Let's do a positive thing for you. Let me jump on your side for a second and I'll tell you where I do think this makes sense. And you mentioned it earlier, I think a large shop, if I'm a large advisor shop, we use that as an example because that's what we're, who we're talking to today on this show. There's one here in California that goes to different states, rbg, you know, big shop. And I'm going to assume, I don't know if this is true of rbg, but maybe this, this advisor shop never sells plans south of 10 million. You know, it's just not their space. They never have, they pretty much thought they never would. And one of the reasons why that is is because in their current revenue generating model they didn't feel like there was enough profits there down in that smaller space. Too much work, not enough profits. And so along comes Mike and says, hey, what if we created the RBG PEP and we can simplify this, make it super efficient. You guys will charge X. I know it's a little less than you normally charge, but you will have, you won't have to do a lot of work or. Yeah, well, you should be charging less if you're doing less work. Mike, if they want to go do other Things make more revenue. Fine. But let's not muddy it up because I'm on your side right now. I think that that's a great option for them to create a small plan solution using a pep, throwing their own logo on it, having that pride of it. And I gotta imagine there's gonna be a lot of shops that are gonna do that. Right? [48:37] Justin: Right. Well, let me put it this way, too. If all this is working so well today, right. You guys are on the side of everything's working so well, then why do we have a coverage issue? [48:46] Chad: Oh, we're not on that side. [48:48] JD: I don't think I'm on the side of everything's working so well. [48:50] Justin: If, if, if everything's working so well and everybody can do this today, then we wouldn't have the coverage issue that we have going on. [48:56] Chad: We still. [48:56] Justin: And that's, that's what this is going to do, is it's going to help with that coverage issue because we're going to see more small and midsize employers. [49:02] Chad: If you're saying we see stop it, then you're saying it's going to fix. [49:06] Justin: What we see is employers aren't putting in plans because of the expense, because the time it takes to run a plan because of the f obligations. And so therefore, they push back and they say, I don't have time to deal with this. What's going to happen is it's going to take that off of them. And now they're going to say, okay, you know what? I get the tax break. This makes sense. I'm in. [49:28] JD: Yeah, here we go again. We're. We're floating around in the pep utopia where it's not going to solve the coverage issue. I think that's crazy talk. I, that's not going to happen. And we don't think that we're living in a perfect world. I obviously think there's lots of things that need to be fixed. My point is I don't think the pep is going to fix them. We still, we have those tools accessible right now. We've had them for the last five years. We can do all the things that you're talking about doing. So I do think the industry needs to improve, and that's what we're always doing. Yes, Mark, Go ahead, Mark. [50:04] Mark: Well, that, that was a button I pushed for. Mike touched the space. [50:07] Justin: But so what I'd say is this is, this is going to go ahead. [50:12] Mark: The correlation I wanted to make is in my mind, I want to be, I want to be positive about this, and I Know that JD has done a really good job articulating sort of like obviously our passion behind what we do. Right. We don't. We want to continue to be in business and be, you know, we're good and all. [50:31] Justin: Absolutely. [50:32] Mark: But on the flip side is if I look at this on the positive side, I said the same thing about CalSavers when it got rolled out great. They're giving employers the idea and the notion and the light under the butt to actually do something. And that, to me is a great thing. Okay. When we talk about coverage, because it's now it's forcing people to take action. So I think that in the community that we're involved in with advisors, right, if they are proactive and they are in there talking to their clients and those folks are hearing about these PepsiPs and want to know more, it's just giving them an option. And I'm okay with that. Because if they're, if they get across the table from those folks, again, I don't know what that person's going to actually say and recommend. But I do believe that if, you know, again, selfishly, if we're partnering with them, they're going to look to us. And I'm okay with that as long as that, hey, what's a pep? What is this? And we can go in there and defend against it if we need to, or talk about what it is, or educate like we always do. So again, I'm taking the positive stance. I'm just happy that it's an alternative and it's something that's creating action. So will it solve coverage? No. Will it help it? Yes, of course it will. [51:45] Justin: Absolutely will help. And so in this, if you look at a PEP as an advisor, if I don't have a PEP in place or a facility to a pep, then I'm putting myself at a disadvantage going forward. So every advisor has to have some sort of partnership with a PEP in some way, shape or form for when that comes up with their clients. At a maximum, At a maximum, next three to five, three to five to 10 years, this could be a solution for a large part of the 401k industry. [52:12] Chad: My mom once told me, like, if your friends jump off a bridge, are you going to do it too? Like, no, I can defend a PEP and be like, okay, look, here's the benefits of a pep, and here's what I disagree with it. I don't need to sell it. If you want a pep, if you are committed to it, I'll introduce you to someone that does sell It. I don't think every advisor needs to be selling a pep. [52:35] JD: Yeah, I agree with you, Chad. [52:36] Justin: Every advisor does. I think you're going to see that you're going to have a situation to where PEPs are going to gain momentum and notoriety in the marketplace and you're going to need to be able to talk intelligently about them and fairly about them. And you're going to need some sort of a partnership in which to have a PEP alliance or partnership, because clients are going to want to go. Unless you're just going to walk away from those potential clients or you're just [52:59] Chad: going to have a. [53:00] JD: You're just going to have a realistic conversation with them and tell them why. Why they don't need to go to a pep. And they're going to go, oh, okay. Don't need to go to a pep. [53:09] Chad: I've been trying to think for two days and kind of prepping and thinking how this conversation would go of what my analogy would be. And I even mentioned to jd, I'm like, I don't have a good one yet. And I love analogies. But when I hear you talk about the only thing, the plan sponsor. I'm sorry, I couldn't even call them the plan sponsor. That business has to do is process this payroll. Adopting employee makes me think like when I had my surgeries where the doctor, the doctor had said, chad, you don't even have to. You don't even have to heal. All you have to do is come in here and I'm going to do the surgery. Everything else is good. It's going to happen. It's just not true. I still think. Bullshit. [53:43] Justin: I'm sorry, but adopting employer, again in a pep. The adopting employer what their responsibilities, duties and obligations are turning in payroll and monitoring the PPP once a year. [53:54] Chad: That was one of the. [53:55] Justin: Those are duties, obligations, liabilities. That is what they do. They're not tracking the world. They're not tracking. They're not tracking. They're not tracking eligibility, they're not tracking beneficiaries, they're not signing off on loans, they're not signing up on hardships, they're not approving anything. [54:11] JD: How funny. Go ahead, Justin. [54:13] Justin: Go ahead, go ahead. [54:14] Chad: I'll go. [54:14] JD: How funny is that? That you close your eyes, Mike, and you envision that world and there's like rainbows and unicorns and blue sky. And I close my eyes and envision your world and it's dark and dangerous and there's thunder and lightning and ripping [54:30] Chad: out their hair like the [54:33] Justin: back. [54:33] JD: It's apocalyptic. What you're talking about is apocalyptic. [54:37] Justin: My world shows. My world shows employers who now have a way to focus on what they really do, which is driving revenue and driving profitability for the business. Their job is not running their benefits program. [54:50] Chad: What about those, Those employers that. I mean in my experience, I'm sure you guys might share this sentiment. The employers who want nothing to do with their plans have the worst plans out there. So that's compile. [55:02] Mark: But that's. [55:04] JD: Yeah. How about the audience? I'd like the audience. I'd like the audience to chime in. In the, in the chat bar. [55:09] Mark: I think our audience is actually hammered right now. [55:12] JD: What percentage? [55:14] Chad: I don't think I've seen this much. [55:15] Mark: What? [55:16] JD: What? [55:17] Mark: Yeah, I know. They're firing off chat like it's nothing. [55:21] JD: What percentage of the market do you think PEPS will have in say what, what timeline do you want, Michael? Three years? Five years? Ten years? Do you want you on ten years [55:33] Justin: as far as for what? [55:34] JD: How much market share PEPS are going to grab? [55:38] Justin: I think in 10 years they'll have the majority. [55:40] JD: The majority. All right. [55:41] Justin: I want everyone of the 401 marketplace. [55:43] JD: And by the way, Chad, did you see that you offended Lisa again. [55:47] Chad: Did you see me blush as soon as, as soon as I said that state run plans haven't solved this. [55:52] JD: Lisa says hi Chad. [55:56] Chad: Twice. [55:58] JD: We'll see. Yeah. Over the next 10 years as the timing Lisa says. Yeah, 10 years. You're getting single digit percentages from what is a very intelligent audience. [56:07] Justin: Oh no. We're seeing 50%. We're seeing four to five at seven. We're seeing seven. [56:12] JD: Seven from the ARA. Michael Webb's a genius. He says 5% or less. Ryan Rink, your vote doesn't count. Got too many beers. [56:22] Justin: Let me bring this up. I know you love these. One of our competitors. One of our competitors does an exchange. Do you know what percent of their new business every year goes on the exchange instead of through individual plans? [56:35] JD: No. [56:35] Justin: 60%. Today. Today. And that's an exchange because that's what they're selling. [56:42] JD: They sold 10 plants. [56:44] Justin: 60% of the new business, 60% of the new business goes through an exchange. [56:49] Chad: You know what percentage of new business at plan design goes to plan design? [56:53] JD: 100 and 100 goes non open map too. [56:59] Justin: And by the way, I, I agree, I agree. Open map up net. I'm not a favor of. In favor of open maps. Open maps to me just cause more headaches. I'm talking about closed maps and I'm [57:09] JD: talking about PepsiPs let me ask you a little bit about Newport now. So you can. I know you came out here to promote a little bit and that's totally okay. I'm genuinely curious an advisor that goes with your guys pep. Can they. They can dial up or dial down their comp any way they like. Or is it a fixed basis points or something? I don't know the answer. [57:30] Justin: Let's say that again. [57:31] JD: Is it a fixed basis points or can they dial it up or down? [57:34] Justin: They can. Okay, so we have a. There's a number of different things that advisors are doing. No different than on any 401k plan of any size. There's inconsistency with what advisors are charging because the services are different than advisors are doing. And so in that summer fee only, some are on a commission basis, some are commission to fee basis. It's all over the board. So there is not anything that truly is consistent around the pricing even with the peps. [58:00] JD: Ryan Rink wants to be let in. Shame on him. He's like, let me come in. I can actually make this funny. [58:10] Chad: I like that question from Tony. Are PEP plans portable? Can they change our case? If they're with you, what's the ease for them to move to somebody else? [58:18] Justin: Yes, they can move. No different than a MEP can move today. And so can an adopting employer can move from one PEP to another pep. [58:26] JD: Right. [58:26] Justin: Right now they can remove themselves from one PEP and go to another pep. No different than an adopting employer can move from MEP to mep. [58:37] JD: Hi, Brandon. If you want to let Ryan Rink in. I fucking dare you. You should do it. You should let him know. Okay. All right. I'm losing my train of thought here. All right. So the consensus is that PEPs suck. We all agree that it's. Are you gonna look. Are you gonna look for a new job? Are you gonna go somewhere else and try to sell something that's actually valuable and real? Or are you gonna keep going down road the this PEP road? [59:05] Justin: You're going to see how valuable this is. That's all I know is what we're getting from our partners, from our clients, from people who are currently in MEPs. When you take a look at this, take a. Take a closed map to a PEP in today's world. In a closed map, somebody has to be the fiduciary that is a part of that organization with the Chamber of Commerce. [59:27] Mark: I missed that one. [59:29] Justin: Okay. Whether it's a Chamber of Commerce, [59:32] JD: Better [59:33] Justin: Business Bureau or association or peo some entity. Because a financial services company cannot Be the end fiduciary. Another drink? [59:42] Mark: I'm nervous right now. [59:44] Justin: They don't happen. Financial services companies can be that end F word, right? [59:49] Mark: Yeah. [59:50] Justin: And so that then helps those organizations that are now having the liability, helps them to alleviate that liability or offload that liability. [1:00:01] Speaker E: Do you think get ready to. [1:00:04] Chad: If you're thinking objectively, do you think [1:00:06] Speaker E: invited into it, based on my chat. [1:00:09] Chad: There he goes. Now I can mute. Do you think that the big players in the world, let's use those that are north of 50,000 plans or 40,000 plans and power and Voya, we know Voya's got an Aeon thing going. Do you think those folks are going to follow suit? They're going to chase down the PEP world as well? [1:00:28] Justin: I think so. There are a few people we're not talking to of size. So when you look at this, there is a lot of interest out there. Number one, there's a lot of momentum, but there are people who are actually moving through contract. And so in this, an establishment of the pep. So in this there is momentum out there. Whether you guys believe in it, agree with it or not, it's out there and it's happening for sure. [1:00:51] Chad: I've said for a while it's an asset play. And my thought, which JD didn't like, I could see the Voyas, the empowers, I could see them going to all those small margin revenue plans, you know, they all rank them in terms of profitability and saying, hey, if you're our third level or fourth level of profitability, you need to move into our pep. And now they can pull everybody into one lineup. And this is what JD didn't like. I said I could see them loading it up with proprietary funds in that PEP so that they can make more and they could turn into a one client. [1:01:25] Justin: They could. And what I see is literally we're talking about market size. I see this moving up market more and more. It's definitely smart to start with the small and mid size plans that are coming in and it will continue to move up market. Like I said, we're seeing 25 and $30 million plans coming into close maps. We have and we will see the same sort of things happening within the PEP world in time. [1:01:49] JD: Wow, that really helps the coverage gaps that we're looking to do. Hey, Brandon's telling you, Ryan, that you shouldn't film vertically, but okay, Ryan. Ryan, go ahead. Hey, Ryan, tell us what you're up to. [1:02:04] Justin: How you doing? [1:02:06] JD: I don't want to. We don't want to see Your. We don't want to see your card game. [1:02:10] Speaker E: No, I don't have. [1:02:12] Justin: Legit. [1:02:13] Mark: Not again. [1:02:14] Speaker E: Hey, J.D. the Chardonnay and peanut butter. Nutter Butters, dude, it's. That's my move. [1:02:20] JD: It's your combo. [1:02:22] Speaker E: And I love the fact that by the time you guys start. Well, by the time you guys start, I'm. I'm kind of done, [1:02:30] Mark: so. [1:02:31] Speaker E: No, I'm with. I'm with Mike, man. [1:02:34] JD: You are. [1:02:34] Speaker E: J.D. [1:02:35] Chad: you know my firm well enough. [1:02:37] Speaker E: We're. We're big. We don't call them MEPs and PEPs and MEEPS and OPENS. We just call them aggregation. Just a bunch of people coming together for better stuff. And it's that. My whole point is, I think it's about storytelling and what the plan sponsor wants to hear and the execution of the benefits, you know, from, you know, all the chores that the 316 takes away to save time and if there's some cost benefit. But if you do it right, it's a big deal. I mean, I'm all in, man. And so here's my big question to you, jd. How do you fit in? Because Newport's got their own 316 which competes against you. Tag's got their version of it. Pentagra's got their version of it. Do you jump on the train or do you not? Because I think it's here and it's coming. I mean, half of my entire company is MEEP aggregation related. I don't care what it is. Carlsbad Chamber of Commerce down in South San Diego, that's ours. Okay? [1:03:35] JD: It does not surprise me at all that you are an advocate of this MAP PEP aggregation strategy, because you, in my mind, fit the exact example that I gave earlier. So I could totally see the way you run your business, the way you guys do, what you do, you going this route. But when you tell me that it's storytelling, I just keep going back to the same broken record that I keep saying. I can tell the same story that you're fucking telling. Without a PEP in my pocket, I can tell the exact same story. So great. I agree with you, Ryan. To go in and tell a plan sponsor that you can do more for them, you can get them cost savings, you can create efficiency, you can relieve them of things that they need to do. Is a great story to tell, sure. But it's not unique to a pep. And I'm going to say it till I fucking pass out here, but no one seems to understand that because you guys keep going back to you Keep going back to the same damn bullet point. [1:04:35] Speaker E: I'm with it. [1:04:36] Justin: The difference is though, is the holistic integration. Because integration of multiple players is difficult. It can create challenges in communication and timing and accuracy. And that's one of the differences. [1:04:48] JD: But you're talking Newport. You're talking Newport. [1:04:50] Speaker E: But jd, this is why we need you. And this is why. Yeah, I challenge your business model to just shift a little bit because I can go out with tia. Like the NAI is a big aggregation program for us. Right. And I've got an exchange with Trance and Tag and tags who I choose at the moment. And Mike, you know, you guys are in my inbox to build something together. But here's where I'm at. I mean, you can get RK down to less than 10 bips if you've got volume. Make it a commodity. All record keepers want our eyeballs these days. You saw the empowered thing yesterday and the fidelity thing yesterday or the other day. And so what I'm saying is everybody's trying to commoditize us. There's a cold war against the third party administrators and the advisors. And we want to win the eyeballs. And the way to win the eyeballs is simply creating. Oh, again, I'll say this. [1:05:52] Justin: We strictly work with the advisor. We have to be with the advisor. [1:05:57] Speaker E: I need you to say, hey, do this like tia. [1:06:01] JD: We've lost Ryan a little bit. [1:06:03] Justin: I know that. [1:06:03] JD: Which is all right. But you weren't coming in completely, Ryan. But we understand what you're saying. And if that question directly to us as a TPA and there's other TPAs that are tuned in right now. Look, we were considering this stuff with open maps, you know, long before the Secure act, we were looking at this. Chad and I have had several deep, deep dive discussions. We've talked with advisors about it. And here's my answer to you. I think about the advisor first. So everybody on this call, Mark, Justin, Chad, myself, we live, breathe and sleep about how do we support the advisor. That's all we do. And if I was sitting with an advisor tomorrow in his office and he was a small time guy or girl looking to build her little business to 30 plans and ask me, should I do a pep for these next 30 plans? Should I do a non pep solution? I would tell her 10 times out of 10 not to go Pepsi because I don't think, I don't think it's right for her business model. I don't think it's a smart entrepreneur thing to do. And I like I said to me it's apocalyptic. I don't want to go to a do less, get paid less type of flow. I want to see advisors doing more for their clients. And Mike, don't tell me about the. They can do the wellness the other side. I get it. We heard your point. [1:07:19] Chad: Advisors doing more 401. [1:07:21] JD: The 401k stuff. 401k stuff. I want them in there holding the pen when they sign the 5500 in ink. That's what I want from them. No, I didn't have a good point. [1:07:30] Chad: Let the pet be one of those strategies. I'm comfortable with that. [1:07:34] Justin: Oh, absolutely, it is. But I think, I think the issue is here is you're thinking the advisor is getting cut out. In our world, the advisor is not getting cut out. They are the partner and they are not charging less. So that's why I don't know where that's coming from. We're not seeing them charging less. And we're also seeing from the standpoint that the advisor has the opportunity to drive more revenue than they did before because of those other aspects of the business, which they might not be the 401k but they're part of the 401k aspect of helping people to secure a successful retirement. [1:08:07] JD: I'm going to chat. I'm going to type in the chat bar. [1:08:12] Speaker E: Hold on. Jd. The best thing you said on this entire conversation. [1:08:17] Chad: Can you hear me? [1:08:18] JD: Yes, Go on. [1:08:19] Speaker E: Okay. [1:08:19] JD: Not unique to Pepsi. Not unique to Pepsi. Not unique to Peps. Not unique to Peps. Not unique to Peps. Not unique To Peps. [1:08:28] Mark: Not unique to Pep. [1:08:29] JD: Sorry, Ryan, go ahead. [1:08:30] Speaker E: The best thing you said earlier, dude, and this is all this is. Let's grab a hundred one million dollar clients and go to a record keeper and build a club without a frickin PEP map. Meep, open, blah structure. It's the same damn thing. Find an auditor for the large plan filers that'll do it for 4 or 5 grand versus 12 or 15 just because they're churning out the same investments in the record keeper. It's the same thing. So I go back to what you say, aggregate for buying power. You don't need MEPs, you don't need MEEPS and OPENS. You just need buying power. You need a club. That's my whole thing. [1:09:10] JD: Yeah. [1:09:11] Speaker E: Don't structure it. Don't structure. [1:09:13] JD: So call me old school. Call me old school that I. Dude, I'm with you. I don't like that approach. Yeah, I don't like that approach. I like the approach of offering them different flavors, different things, adding services, working hard, educating them, supporting them. There's something in my gut that's telling me don't go down this path because I don't think it's the right path. [1:09:36] Justin: But that's just, you know, what's in my gut right now is employers are saying I'm in survival mode. I've got to grow revenues and I got to grow profits because Covid and other have hampered this business world and hampered the economy. And I've got to grow my way out of this. And I have, I have time to focus on nothing but growing my business right now and running my business efficiently. And so why do I want to do anything with running benefits that takes away and takes my eye off and my people's time off of growing my business by running a retirement plan. [1:10:06] Speaker E: Mike, [1:10:08] Mark: hold on to this. [1:10:11] JD: Not unique. [1:10:12] Chad: Tony. [1:10:12] JD: Tony, Tony. Not unique to Paps. Thank you, Tony. [1:10:17] Speaker E: I'm going Point Break. If JD says it's in his gut and Patrick Swayze is with Johnny Utah on the beach in Point Break, then I'm going to listen to JD's gut a little bit because that's one of the best movies of all time. And I feel like JD's kind of connected to the spirits. And so I'm going with jd. [1:10:37] JD: I think you're going to get, trust me, Peps are going to sell plans. Of course. Of course. And we'll wrap it with this. And I would love to get the audience's final, final vote in terms of yay or nay. So go ahead right now if you think Peps are going to, I won't even say take over the world because that was what Mike said. Let's say Peps are going to be, Peps are going to be. I want to give them a chance here. Peps are going to be pretty damn successful or no, they won't be. Give me yes if you think they're going to be pretty damn successful or no if you don't. And unless what was I going to wrap up? [1:11:13] Justin: Here's all say is I don't even care what the vote is. I want to see what happens in the next 10 years. [1:11:18] Chad: I say yes. [1:11:22] JD: Brands trying to. [1:11:24] Speaker E: I'm with Chad. I think it depends on, I think it depends on the advisor's ability to adapt and sell and tell stories and create value. And you know, there's, I don't know how many advisors out there there are, but there's some that are struggling. So I, I think it I think it depends on the advisor community that gets on board with it. [1:11:45] Justin: We have been watching this. [1:11:47] Speaker E: It'll be small. [1:11:48] Justin: We've been watching advisor. We've been watching Advisor margin compression for how long now? And that's whether that's whether it's pricing or whether it's I do more services for the same price. We've been watching Advisor margin compression going on for 10, 15 years now. [1:12:04] Speaker E: And guys. [1:12:06] Justin: And this is a way in which advisors can actually get margin expansion. [1:12:10] Speaker E: That's what I said earlier. [1:12:12] Mark: It is. [1:12:14] Justin: It's a way in which advisors get margin expansion because it frees them up to do the right things for the individuals. [1:12:20] JD: Mike, can you see the results? [1:12:21] Justin: I see that. That's awesome. [1:12:23] Mark: Yeah, I saw that too. [1:12:24] Speaker E: That's pretty funny. [1:12:26] Justin: There's a fix. [1:12:27] Chad: Jd, I miss you. Jd. I'll wrap my thought with this. Yes, it will be impactful. Will it be 50% more of the market share? No way. Impactful in this space right now is 10% of the market share would be a massive success and impact in my [1:12:46] Speaker E: mind, if not less. Jad, I agree. [1:12:48] JD: Yeah. And I just. And I know, Mike, that you feel as though the PEP can allow for this to happen, what I'm about to say. But I just really want to see advisors increase what they're doing for their clients. And so you and I can agree on that. You feel as though by using the PEP they can do other things. I personally, as a 401k obsessed person, want them to deliver better 401k services. And I don't like this path of what I see as doing less. But that's okay. And like I said, I do believe Pepsi will have a part, but I don't think that they're going to be that big of a deal. Mike, thanks for taking all our shit. I appreciate you. [1:13:29] Justin: Oh, guys, it's fun. It was fun. [1:13:32] JD: Thanks for letting me in. Ryan, I thought you were going to be. You promised to bring drunkenness and humor to the show and you did neither of those things. So next. [1:13:42] Chad: Point Break, dude. [1:13:43] Speaker E: Point Break. [1:13:43] Mark: Point Break. [1:13:44] Chad: That was awesome. [1:13:45] Mark: That was a Point Break Point Breaks. [1:13:49] Speaker E: Funny. [1:13:49] JD: Lisa, it was great to see you. I'm sorry that Chad continues to disrespect you in the ways that he does. Everyone, thanks for tuning in. Have a great fourth of July. Wear your mask, social distance, and stop spreading this fucking virus. I want to get through this. [1:14:06] Justin: All right, everybody, check your phones, go to Settings, go to Privacy, and then go to Health. There's been a Covid app that has been put on all your phones so you can make sure it's on off. Well, unless you want to turn it on. [1:14:21] JD: You know who's tracking you? It's the. It's. The pet people are watching you. The pet people are watching you. All right, don't touch your face. [1:14:29] Justin: All right, guys, have a good one. Thanks, guys. Happy 4th. Bye. [1:14:33] Chad: See you, guys. [1:14:37] Justin: No. [1:16:39] JD: Talk about my inner child. Get together and focus now. Elevate the intuition now. Monsters again. [1:17:05] Mark: Everyone scared. [1:17:30] JD: The. Sa.