Podcasting as a Business Strategy for 401(k) Advisors

[0:00] Rick Unser: If you look at the top athletes, do the top athletes want to be on guaranteed money or do they want to be on a performance based contract? [0:07] Speaker B: Guaranteed. [0:08] Chad: Guaranteed. [0:25] JD: Welcome everybody, to another episode of the Retireholics. Thanks for tuning in. Exactly. Is the retire holics? Well, we could create a PowerPoint. We could host a webinar. We could talk to you about boring 401k things as you click through our slides. [0:41] Chad: We could put on ties. [0:43] JD: Ties. But instead we could crack a couple beers, sit on a couch, talk about that same boring 401k stuff. And we prefer to do the latter. Right. [0:52] Chad: We talk about it a little differently. [0:54] JD: Come on, deeper. [0:56] Chad: We have a little fun. [0:57] JD: Little more legit. I'm a little worried our guests might cuss once in a while today. We'll see what happens. [1:01] Chad: We don't have compliance to deal with does, so we can go deep in topic. [1:05] JD: Who is this fifth person on the couch? Well, you should say something. [1:09] Speaker B: They might recognize your voice. Oh, there we go. [1:11] Mark: That's a good one. [1:12] Rick Unser: I have a voice that's made for a podcast and the face that's made for a podcast. [1:18] Chad: I disagree. [1:18] JD: Of the greatest 401k podcast in the history of the world. [1:22] Chad: Very true. [1:23] JD: Also, an awesome financial advisor, Mr. Rick on Serkim. A round of applause, boys, for being here. [1:29] Chad: Thank you, sir. [1:29] Rick Unser: And a round of applause to you guys. [1:31] JD: More importantly, though, thank you. Thank you. Like every episode, we're going to start with the beer of the episode. And we've got a kind of special little story here because Mr. Unser brought this for us. So pull those bad boys out, tell us a little bit about them, and let's. Let's get started. [1:48] Rick Unser: Absolutely. As a Hermosa Beach, California resident, this is a local brewery down by me in Torrance called Strand Brewing and. Can't drink. I can't drink it, at least without being a flip flop. So hence. No, I love flops. But I got a little. I got a little something for each of you. For jd, I've got a nice. I got a nice orange wheat. [2:07] JD: Thank you very much. [2:07] Rick Unser: Actually, Chad, I've got the nice Atticus ipa. [2:12] Chad: Ah, thank you. [2:13] Rick Unser: I got two ambers here for Chad and Mark. [2:16] Mark: Beautiful. Thank you. [2:17] Rick Unser: And I'm going to drink the 24th Street. Cheers. [2:19] Chad: We appreciate it. And you've done your research. You nailed us all on our beer choice. [2:25] Rick Unser: I got your flavor profiles, correct? [2:26] Chad: Yes, sir. [2:28] JD: I love this. This is good. I got the orange wheat. Okay, I'd like to break this down into two segments, if you will. In the first segment, I'm going to call Rick the Podcaster, slash Rick the Advisor. I'm an avid listener to the show. I know Chad is. These guys tune in all the time, so we want to learn a little bit more about the genesis of 401k Fridays. So let me first ask you, what was the inspiration? What was that day one where you decided to jump into podcasting? [3:00] Rick Unser: You know, loss will make you do some crazy things. When I. When I started down this path, it was really because I lost about 30% of my business. And with one stroke of a pen, which is never a fun place to be in. And as you sit there and look and say, man, you know, that sucks. What am I going to do next? How do I. How do I rebuild? What's the, you know, what's the strategy? I sat back and looked at a lot of the things that you could do as an advisor to put down [3:26] JD: the gas pedal of marketing, to revamp it all. [3:29] Rick Unser: Do I want to make more cold calls? Do I want to go to more breakfasts and lunch meetings with cold calls are awesome. Those are my favorite, you know, do I want to do more webinars or seminars or just a lot of the typical stuff that you see a lot of advisors doing from a business development standpoint? And as I sat there saying, all right, well, none of that really sounds awesome to me. Let me. What else can I do? Maybe think outside the box a little bit. And this was all kind of coincident with a meeting that I went to for my firm where a guy got up and was just talking about one of the things in his life that's really helped him kind of keep his stuff together was he started listening to some podcasts that were out there. So I started listening to podcasts. I'm thinking about going and having all these ideas of what I'm going to do from a business development standpoint. And I'm just going, man, these podcasts are great. There's got to be 1on401k. You know, there's got to be. Fred Reich has to have one, Marshall Wagner's got to have one, or Fidelity, or somebody has got to have a podcast that talks about 401k stuff, whether it be industry facing or plain sponsor facing. And I did my research. I was going through all. [4:31] JD: There's not a lot there. Yeah, there's that same moment in my career, like, oh, I love this stuff. I've. I listen to surf podcasts, believe it or not. And I'm like, there's got to be a 401k one. [4:41] Rick Unser: Yeah. So that was. That was when the light bulb kind of went off. And I said, all right, well, there's one of two reasons this doesn't exist. It's either because nobody wants it, or it's because nobody's done it yet. And so I chose to be the optimistic side of the equation and said, all right, well, why don't I do it? And that was when I jumped in. This was January of last year. So January 2016. [5:02] JD: It's only been that long. [5:03] Rick Unser: Yeah. So believe it or not, it's been [5:05] Chad: 80 something, 86 episodes. [5:08] Rick Unser: Massive. [5:08] Chad: 52 weeks in a year. [5:09] JD: Every Friday, let's talk about the time involved, because for our audience, I do want advisors out there to think about what they could do. And that's why Rick's here, because he's a great example. [5:19] Chad: Let me ask real quick, what were you doing prior to that? Were you doing any other types of heavy marketing efforts? [5:24] Rick Unser: Not heavy. I was doing the. I was doing the usual stuff. I was meeting with centers of influence, Arista attorneys, CPAs, compensation consultants, whatever it might be, areas that we could potentially get some business. But I wasn't. I done. I'd done some webinars, I'd done some seminars over the years, but it wasn't really anything that I had a. A sustainable formula. [5:45] JD: You surely weren't confident enough in it that it was going to make up that 30% gap. [5:50] Rick Unser: Absolutely, yeah. Just based on prior experience, I'm like, this is not doing the same thing that I've done over the years and doing the same thing that I think a lot of other people are doing. I didn't see that as a great path, and I also wasn't excited about it. It was something that I looked at that if I was going to go down that path, I was going to go down it somewhat begrudgingly, somewhat like, man, all right, I guess it's just, you know, you gotta lace up. Well, I don't have shoes on, but, you know, you gotta lace up your shoes and just go to work and, you know, and just trudge through this and not really. Maybe not really be passionate or enthusiastic about it. [6:21] JD: Now, you did what I think is one of the smartest things and one of the dumbest things. When you decided to embark upon this podcast, you named it 401k Fridays, which meant that, and I know this was by design, you were gonna have to do this thing every week because if it didn't come out on Friday, you were letting down your audience. Even though Your audience was non existent at the start, but you were. You were making that commitment. That's a big deal. So let me ask you and give us the real story. You know the time involved you're getting. You have guests on every one of these shows. [6:53] Chad: Yeah. Let's set that stage a little bit because I think many might think that it's a five minute recording of you over your iPhone that you're posting out there. No, these are. Which I would still listen very well. Very well professionally done guests on every episode. Tons of content, hugely valuable. And the production of it from start to finish much takes some serious time. [7:17] Speaker B: That's all done by you. [7:18] Chad: Yeah. [7:19] Rick Unser: So I'm doing everything right now and it's really. In the beginning it was mind boggling just trying to figure out. Because you're new. Yeah, because I'd never done anything like that before. I mean I know my way around a computer, I know my way around the Internet. But once you start to have to pull in sound recording equipment, figuring out how microphone set up, getting a mixing [7:41] JD: board, you got to edit some stuff out. [7:43] Rick Unser: Edit. You know, you've got to. How do you record people remotely? How do you record people when you're live and in person. And just the idea of trying to coordinate all that was. Was creating crazy. [7:54] JD: I would be equally intimidated by. You got to set up your guest for next Tuesday at 3. You know how busy people's schedules are [8:01] Chad: and your guests constantly ask questions and want to know what's going to happen and wants to work. Yeah, I can imagine even like our episodes trying to calm me down. Oh wait, hold on. [8:12] Speaker B: Yeah, don't let's point out the obvious. Those guys were on the podcast. Where are we drinking beer. [8:21] JD: But there's a reason for. For that. [8:24] Speaker B: Can I take two steps back real fast? [8:25] JD: Yes. [8:26] Speaker B: Because I was trying to say it but we're just spread out here. You talked about doing a lot of the same things that other people were doing at some point in time. And we talk about the constantly. We call it not your typical advisor. And I'd say you're sitting in the seat for a reason as we believe this to be one of those cases. Now a lot of people do the same things and have the same marketing materials and email blasts and whatever and we ask those questions well, why don't you do this or that or this or that. And they're compliance. I can't do this. They limit me here and there was that an issue to start your show to go. Did you go through any red tape to say, can I do this? How can I do it? What do I have to do? [9:04] Rick Unser: That was my first phone call. Yeah. Of course, my compliance group was, hey, I've got this crazy idea. Before I go too far down the path here, can you get your arms around it from a compliance standpoint that this is even would work, and if it could work, what are the parameters around how it would work? So we had that conversation. And ultimately, just the fact that I'm not talking about a specific intermediate term bond fund and its performance versus its benchmark or making any recommend, making any securities recommendations or product recommendations that really lowered their concern. [9:41] JD: I'm curious, do you send it to them for review? They do, so they have to review. [9:45] Mark: Do you have a list of topics that you know you want to hit? What. What are you doing there? [9:49] Rick Unser: And I'll circle back to some of the other questions about how did you know? How does this all go? When I first launched the podcast, I basically said, all right, well, if I'm going to do a podcast, one of the things, all the stuff I read online was like, most podcasts stop after three to five episodes because they get what they wanted to get out, and then they've got nothing more to talk about. [10:08] JD: Yeah, they run out of. [10:09] Rick Unser: They run out of stuff. So, you know, if you actually go online and look at a lot of podcasts. Podcasts, yeah, there's a lot of podcasts out there that is done. That never got past episode three. Which is fine. It is what it is. But what I did is I sat down, I said, all right, if I'm gonna do this, I need to have 20 episodes in my mind. Not necessarily a guest identified and questions [10:30] JD: written out, but subject matter. [10:31] Rick Unser: But I needed to have at least 20 episodes that I could say, okay, these are compelling topics that have some value to the audience. Audience that I was trying to cater to, which is. Which are plan sponsors or employers that sponsor workplace retirement plans. And okay, is this a good enough list? And then if at 20, can I. Is there still more that I can talk about? And I got to the point pretty quickly where, yep, all right. I feel like I can make this sustainable. I feel like I can find enough topics. And then from there, what I did is just started finding guests for my first three episodes. We were talking about some of you guys early episodes. For my first three episodes, I just went to some of my internal folks and said, hey, just do me a favor, bear with me. [11:10] JD: I gotta go back and check some of the first. [11:12] Rick Unser: I'm starting [11:16] JD: to find Retireaholics Episode one. You gotta look hard on the shallow. [11:20] Chad: I'm left. Open the hood. And I'm gonna help you see what this engine looks like. [11:23] JD: I'm glad that you said that because I was gonna try to conclude that, to say that. [11:28] Chad: Find it. See if you can find it on the dark web and write in and let us know. [11:31] JD: You find it. Why does it not exist? Because our editor and producer has removed it. [11:36] Mark: But if you find it, we'll send you a bottle opener. [11:38] JD: The good news about subject matter to your question to Rick Justin is we're in a pretty cool industry for that. Like, it's a pretty much an ending line of things to talk about because [11:49] Chad: you, you have production so quickly, you're hitting relevant topics constantly, like what's, what's in the news. You're on it because you're recording every stinking Friday, which is. Is incredibly impressive. So let me ask the. Probably the question that everybody's waiting for us to ask. You looked at the market, you said there's a need. You said, I want to be different. You are different. You're delivering now. Would you do it again? If you went, is it working? Do you feel good about what you're delivering? [12:17] JD: Are you cheating? [12:18] Chad: That's probably a loaded question because I know the answer to that. But yeah, is it succeeding? How's it going? [12:24] Rick Unser: You know, it's been going great. And I, and I think I'll answer that in a little bit of a long winded way because I think the definition of succeeding, I think has been a evolving one. Where initially, obviously the motivation that I had for starting the podcast was, hey, I need to find some more clients, I need to make some more connections with employers and plain sponsors. And so when I initially went into this and launched the podcast, I was like, all right, this is going to be great. People are going to find this. Nobody else is doing it. You know, fish are going to be [12:55] JD: on your door to. [12:55] Rick Unser: Yeah, fish are going to be jumping in the barrel. I'm going to have to have somebody. [12:58] JD: Can you answer my phone, please? Rick, do ours. [13:01] Speaker B: Hey, it's the celebrity. [13:04] Rick Unser: Yeah. And I thought it would just be, hey, this is going to be awesome. And very quickly I put out, I think four or five episodes in my first month and I had 20 downloads and I'm going, all right, well, disheartening. Maybe we need a recalibration little too. Maybe we need to recalibrate expectations a little bit. But no, you know, certainly over the first like three, four months, knew it was going to ramp and build, but going through that, I was like, hey, I put out some great content, had some great conversations. The downloads have been growing, but from a success metric, the phone's not ringing off the hook. You know, people aren't knocking on the door saying, hey, Rick Unser, can you help us with our 401k plan or our workplace retirement plan? And then over time, as, as I've continued to do this, I've had a tremendous amount of passion for it. It's just been, it's been a lot of fun. It's had a lot of other benefits. [13:53] Chad: To me, it sharpens your game. [13:55] Rick Unser: Oh, my gosh. I mean, I may, you know, I consider myself a consummate student of the business. And so for me, just exploring a new topic. And now after 86, 87 episodes, whatever it is, the caliber of some of the guests that I've been able to get. [14:13] Mark: And look at those guys. [14:14] Rick Unser: Yeah, exactly. [14:15] JD: These guys were way down. [14:18] Rick Unser: He was like, I got canceled on. [14:19] Speaker B: Hey, J.D. [14:20] JD: chad. [14:23] Rick Unser: What a great. [14:24] Mark: Yes, what a great value. First off, to bring your plan sponsors and say, hey, this is what makes me incredibly unique. But one thing I'm thinking of or wondering is, so you go from that, those first 20 downloads right in the first month, how did you grow it to where you're at now was what was your marketing like to do that? [14:39] Rick Unser: So part of what I hoped and has become reality is I knew just kind of looking at my social media footprint. I had a LinkedIn profile, but I didn't ever use it other than just accept inbound connection requests, which were generally coming from industry people or from maybe my client or somebody that was maybe a little more active on LinkedIn. Like, okay, sure, I'll accept, You know, so that was, that was my experience on LinkedIn. [15:05] JD: I think that was everyone's experience with LinkedIn four or five years ago too, [15:09] Rick Unser: you know, so that, so I didn't have a big footprint, I didn't have a big email list. So I knew that for me to get this out in the, into the world, I was going to need some help. So part of what I did as well is I just made it really easy for my guest to share the content. [15:25] Mark: Yeah, okay. [15:25] Rick Unser: So whether it's creating LinkedIn posts or sending email links, whatever it is, but I just made it really easy for my guest to co promote. Hey, Rick, thanks for having me on the podcast. And I'll go out to all their connections on LinkedIn. We've had a few people that have pushed it out over their email lists. We've had a few people that have, you know, put it in a newsletter or whatever it might be that they were on the podcast and they should, you know, they should check it out. So getting some co promotion from some of the folks that I've had on as guests has certainly helped. But in addition to that, I'm just doing most of the LinkedIn and other social. [15:59] JD: I want you to know that, that if, if I, I'm not trying to do this just to pat you on the back, but if, if I put it out there on social and LinkedIn, which I do from time to time, it's because I listened to the episode and I was like, this is valuable. So I want to cultivate that and put it out to the people that follow me. And, and that's how it's supposed to work. That kind of stuff you touched on, and I'm sorry to jump in on you, you touched on his plan sponsors, AKA his CL clients. And I want to ask you that question. Like, I know you are becoming somewhat successful, maybe new clients are not beating down your door yet, but surely your current client base knows that you do this and that's got to put you in a pretty high standard with them, right? [16:43] Rick Unser: I mean, yeah, it's funny. I mean, my, my clients go everywhere from kind of poking fun at me about, you know, hey, how's the podcast? To some really love it. And I get. We get into dialogues around some of the topics that we've discussed. We get it. We'll have conversations about, hey, you know, I heard this conversation about financial wellness. Is that something you think would work for us? And, you know, we can have a real great conversation. But that was one of the other things that, as I went into this, I said, all right, this is an easy way for me to stay visible with my clients as well, so that they, even if I'm not talking to them on a weekly monthly basis, they at least see me. You're a friend of mine, on their phone, whether it's on LinkedIn or other areas that they might see part of an email blast, whatever it is, but it's a way to stay in front [17:24] JD: of them and they know their guy's an expert. [17:26] Rick Unser: Yeah, retention. [17:28] Chad: I have to, if you could quantify it, I have to imagine retention probably has gone up. I'm sure you were fantastic and always have been on the service side. But just the fact that you are an authority in this business and you have something like that as an arrow in your quiver, probably build Some retention. So we'll probably bring it all together and cap it with this is, yes, the phone may not be ringing off the hooks, but you're leveraging this in point of sales. Like, let's assume you're getting in front of the same number of people that you would have been getting in front of without this now being able to leverage this to talk about it. That you do this. And forgive me, because I think for many years podcasts were not seen as necessarily being a professional deliverance of content. That has changed over the last four or five years. It is absolutely a way to deliver professional content. And I have to imagine you're leveraging that in that point of sale type setting and people are probably going, oh, geez. If they're interviewing, let's put it this way, if, and I won't, I'll say peers. I'll use that term. Let's just say you got three peers lined up and they're doing an RFP and you're sitting in that room. That is a incredible, as Mark said, notyourtypical advisor. That's a big differentiator for you. [18:40] JD: So let's do a wrap on this and move to a really horrible game. I don't even call it a game that I created. And then we're going to talk about something else I think is really relevant. But the summary for the audience is if you're an advisor, getting into writing your own blog, having content out on social media, having a podcast, having a video show, these are all things that you should consider because it's valuable. It works for a variety of reasons that Rick has talked about today. [19:10] Speaker B: We don't want to promote people starting a podcast because that would be competition to our voice. Right? [19:17] Rick Unser: More than merry. [19:18] JD: Welcome to competition. And I might add, I would think podcasts would be probably one of the most difficult ones to do. However, I will also tell you that I believe as a video guy, that having audio content is maybe a lot more valuable than video. To watch a video is kind of difficult. You need to sit down, have something to watch on, to listen to 401k Friday's podcast. I can be in my car, I can be banging out emails, I can be working out at the gym. And still. So there's a lot of people. [19:47] Speaker B: The next step to all of this, maybe a sponsorship from Strand Brewing Company. [19:54] Rick Unser: I'll talk to Rich when I get back in town, see if he's interested. [19:57] Chad: Oh, you're on a first name basis. Mark and T. Rob's over there. [20:01] JD: Here's a horrible game that I'm gonna put. [20:04] Rick Unser: Can I share my. Can I share my one funny anecdote, please? So my. Just in terms of, you know, how does this help with branding? How does this help with clients? I had probably one of the funnier things last, I think Wednesday or Thursday. One of my clients emailed me. Another advisor had emailed my client client saying, hey, you should check out this episode of the 401K Friday's podcast. This is. It talks a lot about the why managed accounts could be beneficial. And my client just forwards it to me. Obviously she's one of the ones that actually listens fairly regularly and she forwards it to me just kind of like hehe, he doesn't know. So that was. That was pretty funny. Just in terms of, you know. [20:43] Speaker B: That's even better. [20:43] Rick Unser: That's gotta feel really good. Yeah. Just having some interesting benefits of getting into the. That she never would have seen coming or never would have even thought about. [20:51] Chad: But that was a great deal of respect from your peers too. It's probably something we should mention. I think we praised you quite a bit, but you got a lot of respect from many of the folks here for what you're doing and the content that you're delivering. Yeah, pretty much the opposite of the retirehics. [21:07] Speaker B: Exactly. [21:08] JD: Speaking of which, the retireholics. [21:10] Chad: By the way, no word of the episode before we get to this session. [21:13] Mark: You should get leaving it go. [21:16] JD: Fair enough. I'll come up with that. We, the retireholics are here in Vegas. We are staying in a penthouse suite, presidential suite, whatever you call it. It's this massive 35,000 square foot hangover suite. [21:30] Rick Unser: That jacuzzi tub was nice. [21:32] JD: Did I say 35? [21:33] Mark: I got. [21:34] Chad: Yeah, you were there. [21:35] Mark: Never mind. [21:36] JD: That'd be a big suite. Hopefully none of us has lost our front tooth. No one has a face tattoo. [21:43] Speaker B: But Chad and I got into a jacuzzi together last night. [21:45] JD: No one's gotten married. Who got into Jacques? [21:47] Chad: Oh my gosh. [21:48] Rick Unser: Mark, we got a great photo for you. That wasn't supposed to come out. [21:50] Chad: No, it was not. I said no incriminating photos. [21:53] Rick Unser: Be careful though, it is like higher in alcohol content. [21:58] JD: I'm gonna put Rick Unser on the spot. Ooh. And I'm ashamed to do. Or I'm nervous to do this. Cause I know the outcome, at least for me. You've watched a hangover movie, right? You know, the four characters got the handsome Bradley Cooper. You got the dentist. Funny guy. You got the short fat guy with long hair in the Beard. God dang it. And you've got Carlos. The what? [22:23] Mark: You got Baby Carlos. [22:24] JD: Baby Carlos. Those are the four. [22:26] Speaker B: That's not the four. Well, the fourth is the guy that [22:28] Rick Unser: left on the roof on our marketing. [22:29] JD: I need you right now. Down the line. Start with Justin. Which character would Justin be in? Hangover. [22:37] Rick Unser: Oh, I'm gonna have to. I'm trying to pull names up. Bradley Cooper. Right. [22:43] JD: Jeez. Love it. [22:44] Rick Unser: Wow. Ouch. [22:45] Mark: I got the air in it all, huh? [22:47] JD: You're lucky. Yeah. And Mark, can you come up? [22:50] Chad: The field just went down from there. [22:52] Rick Unser: Who was the guy? Who's the guy on the roof again? [22:54] Mark: That was Doug. [22:55] Rick Unser: Doug Doug. [22:57] Mark: You'll be my Doug Doug. [22:58] JD: Right. So now wait, it's coming down to the nerdy dentist who lost his tooth. [23:03] Chad: Seems fitting. [23:05] Rick Unser: I was gonna say. I think the rest might be self fulfilling. And hey, we gotta point it out again. [23:10] Mark: We are between two ferns. [23:12] Rick Unser: Yes. Oh, great. [23:14] JD: Another Zach Galfenigas reference. Love it. [23:17] Chad: JD's very proud of that. [23:18] JD: Really into that. Okay, so you wanted. [23:21] Mark: I did not pay Rick to say I was Bradley Cooper, by the way. [23:24] Chad: Sure. [23:24] Rick Unser: Lucky you are. [23:25] JD: A word of the episode. So if you say the following word for the second half of this episode, you will have to drink and we will say performance will be the word. Why do I say that? That's gonna be tough because I want to talk about Fidelity. Fidelity has recently come out with a new slant on an expense ratio. Okay. The reason why they've come out with this and it's called, for lack of a better term, I think like a performance. Jeez, dude. [23:53] Rick Unser: Like I knew where he was going with that. [23:57] JD: So the expense ratio is tied to the success of the fund. [24:00] Speaker B: I'm not even sure. [24:01] JD: Okay. And it's only for international funds. So we're not talking about something that's real right now. And we're basically just going to shoot the about it because there's not a ton of specifics about the concept, but I still think it's really relevant to the the audience to see what a fund company is doing in response to this huge landslide towards index funds. Passive based investing. Okay. [24:26] Rick Unser: And not to be the investment geek going to. But please tweak that slightly. [24:29] JD: That's why you're here. [24:30] Rick Unser: For funds sold outside of the US [24:33] JD: it is not domestic yet, but there's probably, you know, the writings on the wall that someone's going to start coming up with some creative stuff like this. Why did they do this? I told you. Huge push towards index funds. Secondly, if you talk to your average American, or shouldn't say American because it's international. Your average, you know, investor, they would say, why do I pay this 1.25 expense ratio even when my fund is sucking? You know, shouldn't I just pay you when you're doing something of value for me? Interesting concept, but I think the general public believes that and I think it's important to qualify. [25:08] Chad: Quantify. My fund is sucking is relevant to what the market is doing. Right? Because that's what this is going to tie. [25:14] JD: Sucking is a technical term. Way too much for my wi fi [25:17] Speaker B: and it sucks all the time in [25:20] Chad: terms of what they're paying and tying to the success of that fund. [25:25] Mark: See that? [25:25] Chad: See that? What'd you say? [25:28] JD: Success of the fund? [25:29] Chad: I didn't use the keyword. It's relevant to what the benchmark is doing. Right. Isn't that what the release came out and talked about? I mean, let's say what it is. [25:37] JD: There's not a ton of details to the actual mechanics of it, but yes, we believe that they're going to set some type of expense ratio. I like the way you put it earlier. You think maybe that's their operating cost. That's what it. What they need to keep the lights on. Right. They set that number. Hopefully that's below what the apples. Apple's current expense ratio would be for that fund. And if that fund then out, I can say that outperforms. [26:03] Speaker B: No, you can't say. [26:05] Chad: You can totally say that outdoes a certain benchmark. [26:09] JD: You would pay a premium on top of that. That expense ratio. Okay. If it falls below and it's struggling. No. [26:19] Speaker B: Oh, come on. [26:21] JD: Offering. I have no idea. [26:23] Chad: So you've seen those commercials right now, which I'm curious to dive deeper into, but that's what they're offering. [26:27] JD: Can we stick to fidelity for today? [26:29] Chad: Yeah, we'll stay there. [26:30] JD: Okay. Now sounds great. Right? We said earlier, wonderful headline, but as you start to think about it a little deeper, there's some issues. Let's talk about some of these issues. [26:42] Mark: What's it going to go to? [26:44] JD: How much of that upside are they taking from you? Yeah, great point, because that's kind of freaky. [26:50] Speaker B: Well, they're setting the bar really low, so they're just going to, you know, beat it. [26:55] Rick Unser: Could barely be that. [26:56] Speaker B: Beat the whatever. Don't want to say the words, you [26:59] JD: know, the devil's going to be in the details. Can we talk about fiduciary practice? You, you're an advisor. How are you going to benchmark These funds monitor their fees, you know, put them into some type of review process. It. Things are going to. Would have to change. Right? [27:15] Rick Unser: I mean, one would think. And again, to your point, double being in the details, what I'm maybe a little more concerned about is just the philosophical side of it is that if you've got. And we don't know how they're going to be measuring folks, but let's just say some of the information that came out was. Sounded like there was going to be an annual measuring stick that was going to be used to judge how well this particular investment is done versus their benchmark. Okay. You're three quarters of the year into this now. You're struggling, you're struggling, you're below the benchmark. And does that maybe make you act a little differently? [27:53] JD: Because the only way that your team, [27:56] Rick Unser: the only way that you maybe as a, as a manager are going to get a bonus or are going. [28:01] JD: Are you suggesting that these people on Wall street are motivated by my money? Is that what you're suggesting? No. That's a scary thought. They might really add. I think we were saying is they might add to their aggressiveness, to their. [28:12] Rick Unser: All of a sudden you're bringing in risk factors that might not have been comp. Might not have been contemplated. [28:17] Chad: Yeah. And for what benefit exactly? [28:19] Mark: I started thinking about, you know, from what we do through the proposal process, how do you as an advisor accurately portray, you know, display to a client what their fees are going to be? You know, you're putting it up. Putting them up. [28:32] Chad: I mean, it has the world yet. But that's an incredible. [28:36] Speaker B: You could argue TPA Rev shared fee structure models would be. [28:40] Mark: But you know what you're gonna pay. I'm sure they're gonna have say, hey, in a perfect world, hey, if you exceed the benchmark by this much, this is how much more the fund is going to be. But you're. You're playing. There's. There's so much. [28:51] JD: How do you put that perspective? Put that in a podcast. [28:57] Rick Unser: Right, we'll chew on that one. We get that Tom can back on and we'll go through. [29:01] Chad: There you go. [29:01] JD: Can't put that side by side. [29:03] Rick Unser: I mean, the only thing that I can think of in our world that exists today that would even closely resemble that is if you went to a. Looked at a gross expense ratio versus a net expense ratio. And maybe that's what it is, is that if this was to come to the US and this were going to be something that we as advisors or fiduciaries trying to help manage and benchmark fees. It's all right, I'm just going to use extreme examples. Your highest gross expense ratio that would be charged would be, be 1.25% the lowest net fee that would be charged. Assuming that you had terrible performance. [29:35] JD: Right. Oh wow. He did that on purpose. [29:38] Chad: He needed a sale. [29:39] Rick Unser: Thirsty. That's getting a little, you know, you [29:41] JD: can just go at any time too. [29:44] Rick Unser: But maybe, maybe that in the, in the existing framework of an investment expense structure, maybe that's if it were to come to the US that potentially is how it, how it would work. But yeah, you know, the other thing that I'm, as I sit back and think about it, this is not a foreign concept. [29:59] JD: Right. It's being done right now. Right. [30:01] Rick Unser: No pun intended, right outside the U.S. good job. Hedge funds right now use this strategy. You know, they charge a base level expense ratio and they generally on the upside are going to take 20% if [30:14] JD: they exceed 20% of the gains on the upside. [30:16] Rick Unser: And that's where they make their money. [30:18] JD: They're not, that's, that's actually what kind of concerns me about this methodology is as an investor and I get upside, that's my win. Like I want that. I don't want to give a portion to you, but we'll see. [30:32] Chad: I think in many walks of life this exists though I think analogy to sports, you could have a quarterback who's incentive based, who has a salary but is compensated on number of touchdown, touchdowns or yardage over the season and it may become game 14 and they're looking and going, all right, I need another, you know, I don't know, 600 yards in the next two games. So I'm going to start going, throw heavy audible, audible, see what I can get more plays in or you just [31:01] Speaker B: get tackled and break your collarbone and then you're screwed. [31:04] Chad: Now whether that is, is a good or a bad thing, I think time will tell. My fear as I started to dive into this and think about it is if they are chasing the index and that's a thought, that's why they're coming up, maybe not coming up, this exists elsewhere as you stated, but they're starting to adopt this internationally. Are they trying to look more like the index? And if that's the case, if they outperform the index and they say we've I have to drink for that, don't. [31:31] JD: I said yes. [31:32] Speaker B: I didn't hear it. [31:32] Chad: I was close. [31:33] JD: Keep talking. [31:34] Chad: But they beat, they beat the index and now the additional cost you mentioned 20% or so ends up being the, essentially the cost that brings the net rate of return down to where the index was. Then essentially you took on the risk of an actively managed fund just to get the same rate of return as the index. [31:52] JD: Now what fun is that? [31:54] Chad: So we don't know devils in the details that you stated, but it's interesting [31:57] Rick Unser: to think about and let me go, let me go one step further using your, using your analogy of sports. If you look at the top athletes, do the top athletes want to be on guaranteed money or do they want to be on a performance based contract? [32:11] Speaker B: Guaranteed. [32:12] Chad: Guaranteed. [32:13] Rick Unser: They want guaranteed money. So now let's parlay this to the mutual fund world for a second. Let's say that now they're going to be compensated based on how much they exceed a benchmark by. And that's where they're going to make their money. And they go, well, all right, so let me get this straight. You're asking me now to run my mutual fund like it's a hedge fund. I manage several billion dollars of assets. I have a great reputation in this industry. For you, I've been picked. I've been getting calls from hedge fund managers for years. Man, I'm out of here. I'm going to, I'm going to take my talents and I'm going to go to. [32:46] JD: You just made a point. I think this is a point you made. I think this is a point you just made and I totally agree. Given these parameters, it seems to me that taking more risk will make a lot of sense for these companies because they're going for the upside. They've already protected themselves covering the cost. So now they got extent. [33:06] Chad: Does that exist now though? If they take more risk and they, they end up being in the top percentile of their, I don't know, type of fun, they might get more flows and make more money. [33:16] Rick Unser: Anyways, I'm not sure that's a conversation for another episode. Yeah, I don't disagree with that statement, but that's a broader. [33:21] JD: And all of this is just making up imaginary stuff. We have no idea. Fidelity. [33:26] Speaker B: Isn't that what we always do? [33:27] Chad: But when you have Rick on the show, you have to get into some of these types of advisors. [33:35] JD: So the takeaway is, hey, take a look at these new things that might be coming out. And if you're an advisor or plan sponsor or an industry pro, you know, you should be aware of it. You should be cognizant of it. You maybe should have some opinion about it. You might get asked about it. Check out these articles on Fidelity. I would suggest look at some of the comment sections because a lot of people have chimed in with the negative and not just the positive. [33:58] Speaker B: The comments section is just full of haters. It's great, though. [34:03] JD: I love the comments. [34:04] Speaker B: I know you do. [34:05] JD: I'm always going out. [34:06] Chad: Don't look at our comments. Whatever you have. [34:07] JD: We don't have any. [34:10] Chad: People are. Find episode one one, though, remember? [34:12] JD: Yeah, right. Look for it. Comment on that one. With that, we're gonna wrap this show. I want to do a huge thank you to the world's best 401k podcaster. Thank you, guys, Rick Unser and the rest of these retireholics guys here in Vegas at the Excel 401K conference. [34:30] Speaker B: I'm out. [34:30] Chad: Whoa. [34:31] Rick Unser: Where are you going? [34:32] Speaker B: We're getting derailed by our guests right now. [34:35] JD: What? [34:36] Chad: Oh, no Job. [34:38] Mark: Oh, dear Lord. [34:39] Rick Unser: Thank you guys again for having me. [34:42] Chad: You would come into a Bay Area Giants fan couch. [34:46] JD: He was wearing an LA thing. I'm a San Francisco Giants fan. So are you. So are you. I'm. [34:53] Chad: I'm. I'm in there. [34:54] Speaker B: Let's go. [34:56] Mark: I got one last. [34:57] Rick Unser: The timing. This episode. I could look really great. [34:59] Chad: Could do it. [35:00] JD: The Houston Astros are world champions, right? [35:03] Chad: Dodgers fans for, like a year. Mark made us do it before force. Let's do it now. Make your predictions. We'll look back and see who was right. Astros, Astros or Dodgers? Jess. [35:14] Mark: Astros. [35:16] Speaker B: Yeah, I was. I want to say game number. I want to say game number. [35:19] Rick Unser: I'm going. [35:19] Speaker B: I'm going Dodgers and four. [35:21] Chad: Damn it. Whoa. [35:21] Rick Unser: I'm going Dodgers and six. [35:25] Chad: I'm gonna go Dodgers and six as well. [35:28] JD: You're still employed. You're fired. You're fired. We are the retire. [35:31] Mark: Hold on, hold on. [35:32] JD: We got one. We got one big question. What? [35:35] Mark: When do we get to be on the show? [35:37] Chad: Oh, goodness. We're changing [35:41] JD: one beer at a time. Thank you for tuning in. And we'll see you next time, maybe. Thank you. Thank you, Sir.