Thomas Clark on QDIA Litigation & Fiduciary Defense | Retireholics

[0:00] JD: I know. Can you hear them all? They're all applauding and they're screaming. Can you hear them out there? Ro got. You're muted, I believe. Is this your first rodeo? [0:13] Chad: Seriously, I don't think we can go back to regular shows. [0:17] JD: Rob Guy. [0:18] Mark: Rob Guy. [0:20] JD: Rob Guy. All right, we're gonna move on like I said. [0:24] Mark: Bye, Mark. [0:26] JD: Oh, bro, Guy's gonna be. This is gonna be the best show ever. [0:30] Mark: He hasn't used zoom in weeks. [0:33] JD: Can you hear me? Yes, we can hear you now, unfortunately. [0:37] Thomas Clark: Dude. [0:40] JD: Okay, okay, we can hear you. You're good. [0:45] Thomas Clark: All right. It's. It's better off I don't say anything today. [0:47] JD: Okay, fair enough. Like I mentioned, we got a real live guest, so. Justin, take it away. You're going to enter our guests and we are not going to rate you on a scale of 0 to 10 because we don't do that anymore. [0:58] Thomas Clark: Damn. [0:59] Chad: He's legal wizard who can make even the most compliment complicated pension plan sound like a bedtime story. If his superpower is unraveling tangled web of employee benefits law, his kryptonite is thinking his brand will grow by coming back on the show. Rumor has it he's been known to break out in a pension themed rap battles in the courtroom from time to time. And during one particular high stakes case, he even serenaded the jury with his rendition of my 401k. Brings all the gains to the yard. Goes without saying that he lost that case, but. Ladies and gentlemen, runner up for JD's ERISA Attorney BFF. That's two. And still the sexiest bald head in 401k, Mr. Tom Clark. [1:36] JD: Wow. [1:38] Thomas Clark: Thank you, thank you. [1:40] JD: I. I give Justin a 10, everyone. You can still. You can still. There you go. There you go. You can still. [1:45] Mark: He doesn't use sexy often, Tom. That's high praise from him. [1:50] Thomas Clark: Look, I appreciate the tens, but I will. I know very much that I'm a. At best a solid six and a half. And I'm frankly okay with that. [1:57] JD: They're wrong. [1:58] Mark: My intro. [1:58] Chad: Not your face. [2:01] JD: The tens aren't for you, you smug. They're for Justin's intro. Jesus. Okay, let's get right to it. Let's get right to it, Brandon. There's lots to talk about, everybody. I feel like there's a lot popping off in the 401k world right now. So let's go to headlines. Headline. Okay? This one comes to us from multiple sources and very well may be the headline that I am most excited about in a very, very long time. This is say it ain't so. Shlomo Nevin Adams and Shlomo Benazi are literally in a fistfight right now somewhere. They're punching each other in the face one after another, and it never ends. Let's slow down at least, JD Slow down and breathe. Let me. Let me kind of play this out for you. Shlomo writes an article at the Wall Street Journal. An opinion editorial. Is that what you call it? Is that what the initials stand for? An editorial opinion? No, an opinion editorial. And. And he talks about. We'll get into it, but about the fact that. And you need to know this first. Shloma was kind of involved in the creation of automatic enrollment and automatic escalation. He has a concern now that in this new world, there he is. He doesn't have the best taste in glasses, but trust me, he's very. [3:44] Thomas Clark: Want those? I want those glasses. [3:46] JD: No, you don't. Trust me, you don't want those. Not if you want to find wife number three, you don't. [3:52] Thomas Clark: Okay? That's the point. [3:54] JD: And. And so you can imagine that he's very proud of those things. Well, he's concerned in this current world that people change jobs so often that his strategy of automatic enrollment might get kind of swatted down a little bit. Example. I'm at an employer. They start me off at 3% as the default. There's 1% increases each year. I make my way all the way up to 7%. I leave that employer, go to another employer. And now they start me off at their default, which, who knows what that is? Could be 3%. I'm starting all over again where I started. Or maybe it even doesn't. Doesn't have one at all. But anyways, this concerns Shlomo, and so he's got some solutions to this. People have read this. Nate Mooney's already chiming in, and he says, hey, in Australia, they do something where your retirement plan account is your own and not the employer's. And so wherever you go, you've got the same retirement plan account. Well, Nevin gets a hold of this thing and makes his own response to it on I will drink on Napa. Net. And. And so get out your popcorn, everybody. And Nevin takes him one at a time and says, hey, I respect you. They try to keep it friendly because I'm sure these guys, they've hung out before they've had a beer. [5:18] Thomas Clark: And he says, absolutely. [5:20] JD: Yeah, for sure. And he says, hey, Shlomo, I'm. You're freaking me out talking about this Australian Government plan. I think he even mentioned cow savers as a, as a solution that made sense. Let me try to get to the point. And Nevin starts to break it down like, oh my God, how could you do this? This is the first question I want to ask you guys. The first thing he says is he disagrees with Shlomo that we are a more mobile workforce these days. He says that there are stats that since the 40s that has not really changed. It's consistent we do not have more jobs, more careers than we did back in the day. I'll go straight to you because I'm kind of sliding with Shlomo on this one. Does that make sense to you, Mr. Clark? Don't you feel like we're in a, in a world now where there's a lot more job change than there used to be? [6:10] Thomas Clark: Yeah, yeah, but like. [6:14] JD: Yeah, okay, good. Okay, yeah, so I'm with you on that. So we'll give Shlomo the win on that one. Okay, sure. Although, and this is where I'd like your next opinion, how do you feel about his concerns about someone going to a new employer and losing all that momentum they had in terms of their defaults? And then would you go so far as to say the solution to that might be some type of moving this away from an employer sponsored plan? I don't think I'm exaggerating to an individual account. Does that make any sense to you whatsoever? [6:50] Thomas Clark: I look a for effort. I get the concept, but don't we think like there's an easier approach, like, I don't know, just educate, like have somebody come in with an account balance when you have that conversation with a new employee and say, hey, do you have an account balance at your old firm? Hey, let's go get a copy of the account statement. Oh, look, that was an auto escalate plan and you were at 7%. Why don't you start at 7% here? Like that initial 3% is for employees who have never had a 401k, don't understand the savings. I think psychologically, wouldn't you hope that by the time somebody gets to the point of having 5 or 6 or 7%, they're a little bit more knowledgeable about their plan and they see an account balance and then they kind of like the idea of savings. [7:34] JD: But Tom, you can, you don't have to be a genius to understand why Shlomo would hate everything you just said. Because he's an automatic guy. He wants to nudge people, people through automatic types. [7:47] Chad: If we're talking 7%. What's the Ottoman rule that we're talking about? Like that Slow Mo wants. Does he want 6, 10%? [7:53] JD: He's okay with you making that decision. He just doesn't want you to jump off your evolution as you change employers. But let me go a little further. I think this is odd coming from Shlomo. [8:04] Mark: This is the one that created auto renewal and auto escalation for our industry to begin with. Like a problem that essentially stems from his brainchild. [8:13] JD: Yeah, it does. That's why he's so close to it. But what I thought was weird is he also thinks that if you move this responsibility of the participant to choosing the vendor. So if you read through this back and forth, Shlomo goes, chad. Chad's nodding his head in agreement. He goes, it would be interesting if we had the. The employee choose the vendor, and that would create a more competitive business thing. Shlomo, the guy who doesn't want employees to choose their own deferral and savings amounts, wants them to compare vendors and choose their vendor. That's when my brain went boom. And I jumped on the Nevin Adams side and was like, what the is going on here, Chad? I mean, oh, Tom, go. [8:59] Thomas Clark: We. We do that in, like, the terrible public school education California 403B market, right? Because there's that law in California that you create anybody and everybody has to be on the list. So. Oh, by the way, choose from 96 different vendors or whatever the list is up to now in California. [9:15] JD: Great analogy. [9:17] Thomas Clark: Show me how that's been a resounding [9:18] Mark: success for teachers and good luck, employer running that plan when you have 48 different vendors being used by your employees. JD what I think he was really saying is that the employer picks the vendor. And when you start employment there and you start saving there, your balance is there. And then when you leave a move to a new job, you can choose, do I want to move my balance to this new employer and start saving there, or do I want to continue to save into the plan that I originally chose? So you're not forced to save into the plan of your employer. You're forced to save into the original plan that you started contributing in or deciding to contribute at your new one. That's what superannuation. And. And that's how it's ran. I believe in Australia. [10:09] JD: Sorry, I'm. [10:10] Thomas Clark: But there's only like six of them, though. Have you actually looked at what goes on in Australia? There's only like six. Which means if there were like a massive market correction With a couple of stocks and a couple of like you'd have a sixth of the country with the same lineup. All lose money at the same time. Like that. [10:29] Mark: And that would eliminate the competitive markets. Like I, I think slow mode wasn't that commented on how it would create a competitive situation. [10:37] Chad: Follow that completely. [10:38] JD: He felt. [10:38] Mark: I don't know how letting them choose creates the competitive situation that that competitive situation exists when plan sponsors are all trying to pick between vendors and vendors are jockeying to see which plan they can land and what they can create next. I mean the competitive nature is there already. [10:54] JD: I also don't even. We won't even go into this because we can move on. But the whole concept of fiduciary responsibility and employer sponsored plans, I mean this is Tom's world. [11:05] Thomas Clark: But. [11:05] JD: And then of like allowing participants to make some choice in this matter. Like call me old school, but I like the way this thing's built currently where the employer has the responsibility for making these decisions on behalf of their employees. Oh, of course. [11:22] Thomas Clark: You. Because you're a business owner. You dumb, dumb. [11:25] JD: No, I don't like the control of it. I hate that part. I would much rather push that to you. [11:30] Thomas Clark: I just, I just think it's. You have an inherent bias. [11:35] Mark: Might I point out. [11:38] Thomas Clark: Can you. [11:39] Chad: That's a good point. Plus, you're in this industry. I wonder that. [11:44] Thomas Clark: Yeah. [11:46] Chad: Across people who aren't in our industry. [11:48] Thomas Clark: What if you were still a, A bum surfing on the side of the streets and working at the Taco Shack down in San Diego 12 hours a week? Right. Then how would you feel? Okay. [12:01] JD: I would love to have more control over my vendor. But you know what? We, we already have that. Because when I leave my 401k plan, I can roll that into an IRA. And I said that on purpose because I want to take a swig of my vodka and I can choose, I can choose the vendor of that individual retirement account as I please. And then the next employer I leave, I roll that sucker right back into that one if I want and keep putting them there so they're all in one place. [12:27] Mark: I think there's something nice about that [12:29] Chad: though, if you have the bill say, okay, as we, we all know, some plans are better than others. Some, you know, some new four 1Ks that we go to at a new employer probably cost, may cost more. So to have the choice to be able to contribute to both, I think is for the participants sake is pretty nice. [12:45] JD: You guys are, you guys are communists. [12:50] Chad: But I'm actually all right on superannuation I'm actually a big. I. I like it a lot, I think, but I don't think it's a good replacement for 401k. Like Shlomo was saying. [13:00] Mark: And why do we. Why. Why are we acting like. Like moving from one vendor to another is creating some massive difference in lineup options? You guys, every fucking lineup is using an institutional shared class now. There's so much overlap in these core menus. I want to. Every company. [13:18] JD: I want to also bring up. Nevin did bring up a point that there are people in our industry that are working on portability. And so that type of technology seems like a far more reasonable solution to this than kind of what Shlomo is coming up with. But Shlomo, I get it. You created this really cool thing and you're worried that it's not quite working the way it should as people change jobs. So I understand your pain point, but I side with Nevin Adams on this one and. And so does Rob Smith. So that's. If Rob says that, we all know that's the right. [13:49] Chad: Let's just make every Plan automatic enrollment, 10% or more, and let the employees decide from there. [13:53] Thomas Clark: Done. [13:54] JD: Now you're. [13:54] Thomas Clark: That's fantastic. By the way. That graphic of Nevin, that's. That's some stellar right there. [14:00] JD: Now you're truly a communist, Justin. Okay, let's move on. [14:06] Chad: Or. [14:06] JD: Or you're a capitalist. I'm not sure which one. Okay, let's move on. [14:09] Chad: Trying to get people to say for retirement. [14:11] JD: This is an article by I Owe Two Drinks by Napa. Net. The article is by our buddy Sully. And if I haven't said before, I far preferred John Sullivan. When he was at 401K, Specialist magazine, he was a lot more fun. Now that he's at the American Retirement Association. He seems like a boring corporate dud, but he wrote this article and it's about past guests on our show. [14:38] Thomas Clark: Fantastic. [14:39] JD: I think we called her at the time, the six billion dollar woman, Janice Stout. She has left One Digital. Let's. Let's take inventory here for a second. Yeah, I think it's exactly three years. She sold a practice, One Digital, in 2021. Her firm at the time was called Fiduciary Plan Advisors. And by the way, I don't want to know if she's here because that'll impact what I say right now. So I'm not even look. And her firm is called Fiduciary Plan Advisors, which she had found in 2014. And as I mentioned, she grew it to 6 billion. She did lose a bet with me on stage at a conference and I think she still owes me $1 billion. But we'll have to figure out where that, where that stands. By the way, Chad, what's. I got a quiz question for you. What's 10 basis points on 6 billion? [15:35] Mark: A lot. [15:37] Thomas Clark: It's. [15:38] JD: It's 6 million. It's 6 million. Take a guess at her EBITDA. Oh, that wasn't intentional. [15:44] Chad: Does she get some though? Because she was leaving all of her clients behind. [15:47] JD: She is. No, no, no, I'm just talking about. Good point. I talk about when she made that deal. How much did she make? But fuck, fuck EBITDA. I'll drink. Uh, it's. Let's just look at two times revenue. Maybe she made like $12 million, maybe more. 15 million, maybe 20. I, I think she did pretty well. And so Justin, to your point, we're really digging into her personal life here. I've had a beer with her, late night at Nashville. I love, I, I love her. I, I know her daughters, but I can still talk about this. It's fun. So she probably got a big check and then had, to Chad's point, like a commitment of a couple of years or dare we say three. [16:28] Thomas Clark: Dare we say three. [16:29] JD: And, and now she will leave behind. Yes, Justin, that, that $6 billion and she will move to our buddy Scott Colangello and Prime. Prime Capital Retirement. Now here's the deal. I think she's going to be an actual executive. Now based on these, these press releases, I think she is going to lead their entire retirement plan team. So support all those advisors across the country with her experience and her knowledge and she's going to lead the Prime Capital wellness team. So you know what that means. Scott is going to pay her a big fat fucking salary and that's how she'll continue to. Right, but what's the news there? I don't know. [17:20] Thomas Clark: What do you think? There's always equity. I mean, I have no idea, right? But if I were going to go build something, I want equity too, but [17:28] JD: I'm assuming I got a little equity too. [17:30] Thomas Clark: But so what are you surprised at? Right? I'm just curious, like, are you surprised that she left her team? Because, you know, there's a lot. I'll just say this. I'm not sure people have pieced together that the great disaggregation has already begun. So maybe I just have a different viewpoint because people call the me's of the world to say, like, hey, I'd like to start a new RIA or I need you to review this paperwork because I'm going to go join this RA over here. Okay. Yeah. Okay, Fair enough. Yep. [18:00] JD: No, you're nailing it, Tom. I'll tell you. Can I answer you? [18:04] Thomas Clark: The great disaggregation has started. I am. I have already heard of a number of other people who are ready to leave that they're hitting their three year mark, their two year. Some have five. Right. Depending on which firm they went to. And it's, it's, it's. This is the very, very, very subtle leading edge of that. [18:24] JD: It's, it's. You're totally right. And I love that you brought that up. I. It's just weird to see it happen. I guess it would be my answer to you. It's like, oh, Janya goes to One Digital. Okay, Vince Morris, carry on. One Digital is going, it's moving. And then here it is, we're seeing it, what you just said, live and in color. This was a big one. She was a headline name and now boom, three years and she's moving. And so I guess the old school person is like, oh, that's how the world works. You know, you kind of go that way. And I'm not saying that's bad. Like, God bless. [18:56] Chad: This one's a little different though too because she's not taking any of her book over, right? [19:00] Thomas Clark: No. [19:00] Chad: And they bought it by any means. Right. And so she's got a. She's taken. [19:05] Mark: And can we talk about this from the other side? From One Digital's perspective. Did this work out for them? [19:13] Thomas Clark: One Digital, like all the bigger. They have a bench to end all benches like all of these folks do. Right. Like think about who is still there. Right. They've got some amazing advice. Right? Right. [19:25] JD: I mean, they'd love to keep Jania around, I'm sure, but, but they got the, they got the 6 billion, they got the clients, they'll continue on. They're. They knew what they're getting into. That's why that three year deal was there. [19:38] Mark: That's why it's there. And she had some equity in there and she had some equity in st around there. So I look at this and I go from a business perspective, it seems to have made sense on all fronts. [19:49] JD: Hey, by the way, she built something. [19:51] Mark: She got value for that thing that she built and now she gets to go do something that she's probably excited about doing that is different for her. [19:59] JD: Well, yeah, I didn't think about that. That's a great Point, she's gonna have a different life now. She doesn't have to necessarily be the entrepreneur that runs a book of business. She can just go around and share her wealth of knowledge, train people. You know, that's. That's a more fun job in a way. Depends how you're built. [20:16] Thomas Clark: Think about it this way. Just imagine if, like, you spent 15. I don't know how long she was at her firm. I don't know how long it took her to collect $6 billion. Probably not. [20:25] JD: She started in 2014, so about seven years. [20:28] Thomas Clark: Yeah, she's a baller. Okay, but imagine if you just built and rebuilt the same Lego set over and over and over again. I mean, you know, like. Or imagine just all you did was build Legos, and now it's like, hey, I just want to go do something different. Maybe I want to be a woodworker. You know, I still want to build. I just want to do something slightly different. [20:49] JD: Tom, is there something you want to tell us today? Are you. Are you losing inspiration for your law practice? [20:55] Thomas Clark: I don't see. Someday you'll all know because, you know, it'll just be me with, like, literally $700 sets. Yeah, I love Legos. You. You can't see it right now, but the Artemis. For my birthday, my sisters and my son got together and got me the Artemis. The NASA, the new NASA heavy lift. [21:17] Chad: Oh, nice. [21:18] Thomas Clark: Rocket. As a LEGO set. So it's on my kitchen counter right now, half built. [21:22] JD: I live. [21:23] Chad: My cousin has one of those. [21:25] JD: I live five miles from Legoland. Never been there. Okay, let's go to the next one. [21:31] Thomas Clark: You know, something weird about Legoland. They don't let just a singular dude in there. You have to be with somebody. [21:39] JD: Yeah. [21:39] Chad: What did you try. [21:41] JD: Did you try in your. [21:43] Mark: No, I heard. [21:43] Chad: I. I put it on a podcast. [21:45] Thomas Clark: Now, I could be getting duped. [21:47] JD: I don't know, but I'm gonna test. I will. I will test that theory this weekend. [21:52] Thomas Clark: Might have been the white van with the word Candy painted on the outside in the trench coat. [21:56] JD: Or the. Or the bathrobe. The bathrobe that he was wearing with [22:00] Thomas Clark: a K. With a K? Yeah, yeah, with a K. It's the [22:05] JD: bathrobe that he was wearing. Okay. Kind of related, but not really related. Planet Visor magazine has a. A piece from. From Scott at Prime Capital, and it's a bit of a Jerry Maguire op Ed moment. [22:25] Thomas Clark: You missed it. The K around Candy. Someone's Some. Someone's just nailing them tonight. [22:31] Mark: Come on, Brandon. [22:32] Thomas Clark: That's sick. [22:32] Chad: What Are you doing? [22:33] Thomas Clark: You know, we don't do that on the show. That's if there is not. If there is not a bumper sticker at the next conference that I see you all out with candy with the K around. Like, I am gonna be so disappointed with booze. [22:49] Mark: We've put stickers around booze bottles with the K on it. And then we got kicked out of a conference for it. [22:53] JD: Nope, nope. Or dope around a K. Sometimes you say words. [22:59] Chad: Sorry, J.D. [23:00] JD: everyone. Sometimes I lose control of the show. It doesn't happen often, but it does start saying odd. [23:06] Chad: Talking about sports. [23:06] Thomas Clark: Yeah, [23:09] JD: he had a bit of a Jerry Maguire moment. He had a man manifesto, if you might, about income solutions and the lack of transparency around the fees, which I thought was really cool. He's kind of having his Todd Kading moment of really, like spouting his truth to the world. And obviously he's involved in these income solutions. [23:32] Thomas Clark: Yes. Yeah. [23:33] JD: Tom's shaking his head and we can't wait to see what we're gonna get from Tom. But this is a real thing. [23:38] Thomas Clark: It's the chat bot. I needed to shut the chat box. Right? [23:40] JD: No, no. Enjoy both. Stay with it. Stay with it. Enjoy both. This is what is Retiraholics is all about. This is not supposed to. [23:47] Thomas Clark: I'm not even gonna say that because I don't want the feds to bust through my door. So I'm not even gonn. [23:52] JD: That says this cannot be a smooth process. It should just play out the way it plays out. But I'll go to you first, Chad, as typically guaranteed incomes or retirement income solutions. I probably shouldn't use that word. Retirement income solutions obviously are using insurance type platforms, which tend to be a bit of a black box when it comes to fees. And Scott talks about this in this piece where no one really understands the spread or the gap or the revenue that's being made, which is odd for us. And I back him on this article. As a 401k industry, we value transparency from all angles. And because we're making decisions or helping plan sponsors make decisions that have immense fiduciary responsibility, we need to know what these fees are and who's making what where and how. How do you feel about Scott saying that's not happening in a lot of these products? [24:51] Mark: I mean, we need to continue to ring that bell. Right? I. I had this conversation on a panel today about going back in time when you had no idea what you were paying in your plan expenses. [25:04] JD: That makes it okay. [25:05] Mark: Share class. No, it doesn't make it okay. That's what I'm saying. We got to continue to ring that bell and try to lift open the hood and figure this out. Now, we, none of us on here are naive enough to think when you're looking at some sort of guaranteed or fixed income type solution, of course they're creating spreads. That's why they're offering the guaranteed side, is because they have this belief they're going to make more on that money before they've got to pay out what they owe you. That's the nature of it. So do they want to explain what they're making underneath the hood, what that spread, what that margin is? No, because we would all probably be flabbergasted at how much they're actually making. [25:44] JD: Well, that's not okay, then. [25:46] Mark: I'm not saying it's okay. I'm saying why it's happening. [25:48] JD: And all Scott was saying is that it should be disclosed. You know, like we should be able to compare one to the other. Tom, you must get asked for count. [25:59] Mark: No, you can compare. Don't, don't leave that off. Sorry. Before you transition, you can compare one to the other because what you're looking at is net. You're looking at net return there. [26:10] JD: So you think that's okay, to just look at the net and not know how it's built? I can't imagine. I'm not saying it's okay, but I can't imagine. I can't imagine our ERISA attorney would agree. Eldrink, with that, with that comment. Because someone's got to look at all things and understand it when making these decisions. Tom, I'm sure people have come to you for counsel on this, specifically fees inside of Retirement Income Solutions. How sensitive of a subject is this? [26:37] Thomas Clark: It's super sensitive. And what we're all doing right now as an industry is. Exactly. And I know we're going to talk about it later, right, Because I talked about income annuity or retirement income and annuities at the. In front of the Risk Advisory Council. But at the end of the day, the industry. [26:56] JD: You can finish your thoughts. Yeah, yeah. [26:58] Thomas Clark: The. In the industry is going to tell the product providers, yay or nay. That's capitalism, right? Like, that's how this all works, right? You put out a product like there's a reason that, like Crystal Pepsi doesn't exist anymore. Because it was shitty, right? They put it out, we drank it. Like two people liked it. I was half of that. Right. But then, like, it went out and it didn't work. And so they can build all the product they want, but we're not going to buy what we like. We, as the industry advisors and Erisa Council, we are the gatekeepers of, you know, and the thought leaders on these, like, what's appropriate and what's in the best interest of our clients. And we're just right now in like the shake it around popcorn phase, right? Like we're just shaking all around figuring out and then they're going to get more transparent and better and because the stuff that isn't transparent likely is not going to be selected. So I'm not as offended. I'm not as offended. I'm not, I'm not Pollyanna, I'm not a prude, right? But like, I, I, I get that people are making money, but the stuff that is just egregious, if there is something out there egregious, it's just not going to survive. [28:13] Mark: So do I. Shame on us for creating something that egregious that it doesn't survive. Like, we know how to, how to make a product that is transparent and lift open that hood yet. Sounds like some are choosing not to do that. In an effort to short term, did [28:27] JD: you gather a lot of money? Did you feel like Scott was saying that these people were making way too much money, or did you feel like he was saying that they just weren't being transparent? Because part of this could be, no offense to Scott. Part of this could be just Scott trying to, about his competition a little bit and say, hey, I'm transparent, they're not. But I didn't hear him saying they were like ripping people off or something. [28:52] Mark: No. [28:52] JD: Maybe I forgot what I read again. [28:55] Mark: I'm, I'm, I'm talking two different sides of this. There's a lot of comments in the chat bar about the annuitization side of this, the actual payout. I'm talking about the fixed income side getting to that point and this guarantee on the back end. I don't think he's saying that they're, they're ripping people off, but I think we all know that there's a significant amount of money made when there's a guaranteed offering and they're using your money in that interim period. [29:22] JD: It's been this way in our industry with, it's been this way with fixed accounts forever. Fixed accounts are the same way. No one knows what that spread is. [29:31] Mark: It made me so uncomfortable. J.D. i won't say the advisor's name, but I was like six days into this business and we went into his office. And we sat down on the other side of his computer desk. And he's like, you guys should never sit on the other side of my computer desk. I'll be distracted and type on my computer the whole time. You should ask me to stand up and walk over to my table when we sit down to meet for a meeting. I was like, this is getting weird. And then we got on the investment topic, and he said, why do you care what I charge if I'm making you 10%? Like, if you want 10%, why do you care if I charge 3% or charge 1%? Like, well, because you'd be making me 12% if you only charged one and we're making 13 instead of charging me three when you're making 13 and I walk away with 10. [30:15] Thomas Clark: That. [30:16] Mark: That concept is what's happening in this guaranteed world. When you talk about comparing products, if one's saying, we're going to give you 4%, here's your decumulation on the backside. Then, then maybe we shouldn't care about the expense, but we do, and it should be transparent. [30:31] JD: I understand that the first thing you're going to want to know as a consumer is how much am I going to get guaranteed? Totally agree. Totally agree. But when you're talking. We're not talking about individual consumers right now. We're talking about plan sponsors who have a fiduciary responsibility. And in doing that, they need to look at. They need to pop the hood open and understand how the engine works and who's making what. That's all. And so I agree with you. The amount you're getting is paramount and probably the most important thing. But at the same time, you got to know who's getting paid what when you're offering these things to your participants. And so I agree with Scott in that regard. I. I think it's. I'm going to bring up an odd thing that's slightly connected every time I see a Fisher Investments ad on tv. Have you seen these? Where the person stands behind. I work with Fisher Investments, and we're not like the other guys. And one of the things they say is to save fiduciaries, we don't charge. We don't charge crazy fees or conflict interest. We do better when you do, you do better. And I'm. And I sit with the beer in my hand going, we do better when you do better. What does that mean? I'm like, that's basically just a basis point rap fee, right? Am I wrong? [31:42] Thomas Clark: Yeah, yeah, that's right. [31:44] JD: We do better when you do better. Okay. I'm excited to bring back a segment. It wasn't done and dusted. It was always meant to just come from time to time. And it's a segment where we bring a product in front of y' all to kind of check it out. Something that's new, something that's different, something that we don't think you're really aware of. [32:06] Thomas Clark: Necessary Pepsi. No. Just kidding. [32:08] JD: And we call the segment Flashlight. And Brandon need to bring up our guy Jovika. All right, Jovica, we're going to be bringing you up, Jovika. Okay. We're bringing you up. Oh, boy. Okay, this is perfectly timed. How do we pronounce your name, buddy? [32:47] Speaker E: So it's actually. It's Yavitza. [32:49] JD: Oh, wow. Okay. [32:53] Speaker E: I tell everyone the same thing. I'm like, look, I was born in what was Yugoslavia. My parents gave me, like, the most, like, pumpkin spice latte. Basic ass Serbian name ever. It's, like, not creative at all. And then When I was 10, we ended up in Memphis, and they were like, tough luck, kid. Like, good luck dating. [33:07] Chad: I don't know. Figure it out. [33:08] JD: But now you have the cool, creative name. Now you do. Now you do. [33:12] Mark: Yeah, yeah, yeah. [33:12] Speaker E: I went from super basic to super ethnic. Overnight. It was. [33:15] Mark: Wait, wait, wait, wait, wait. So in from, like, where you were [33:18] Thomas Clark: born, your name was basically Chad. [33:21] Speaker E: It's literally the equivalent of Johnny. [33:24] Chad: Like, [33:27] Speaker E: I'm named after my grandfather, who's Yovon, which is John. And then if you add an ica, it makes it like a. Like a. Like a diminutive. Like a. Like Juanita or something in Spanish. Yeah. [33:36] Thomas Clark: Little. [33:37] Speaker E: So Yavitza is literally Johnny. That's how basic it is. [33:40] JD: Okay, Johnny, here's how this is gonna work. [33:43] Thomas Clark: Here's. [33:44] JD: Here's how it's gonna work, Johnny. We all. Did you guys already pound yours, and I wasn't paying attention. Yes. Okay. Me and you. Okay. I'm gonna pound this smear bias with rogue guy. And what I'd like for you to do. Jovisa. Jovisa, right? [34:01] Speaker E: Y is like a L. Yeah. [34:05] Thomas Clark: He's done a few shots of od. [34:07] JD: The more I drink. The more I drink, the more I'm gonna just piss you off and try to pronounce. Hey, hey, J.D. [34:16] Thomas Clark: this segment is not. Is no longer called Flashlight. It's going to be called Yavitza. [34:21] Speaker E: There you go. [34:23] JD: What I would like for you to do is you're here representing Savvy Fi. Hopefully, I'm pronouncing that Right. And specifically their student loan retirement match tech solution. But you guys do all kinds of things. So give everyone a taste of what Savvy Fi is, or Savvy Fi. That's what it is. Savvy is as a company. How long you all been in business? What are the types of products? I'm. I'm assuming they're all around like, college saving, but you, you kick us off while I pound some smearn off. [34:56] Speaker E: All right, pound that smearnoff. Again, thanks for. Thanks for having me on, guys. I really appreciate it. So Savvy Fi, it's interesting. I actually came across Savvy Fi in 2020 when I was a health and benefits consultant with one of the large firms nationally. And one of my clients asked, hey, I need a 529 solution. And I'm a former financial advisor. So I had sold 529s in the past, but I'd never done it for within that context. So I looked at him and said, I don't know, where am I supposed to find this? So I got connected to the two co founders who happened to be in Nashville here with me, got to know them, became friends, and then four and a half years later, I'm getting conned into joining the team. But what Savvy Fi fundamentally does is it started off as a 529 solution, building out a integrated origination platform where employees could get educated and take action on actually creating a 529. [35:47] JD: And are you guys were delivering this through employers? [35:50] Thomas Clark: Correct. [35:51] JD: Employers could say, hey, employees, you want to save for college? We got a program for you. [35:56] Speaker E: Correct. And because we made it a direct integration, they could contribute directly to employees529 without sending a check to somebody's account and hoping it ends up there or having to track down, hey, how do I get this to the state of [36:07] JD: Utah or whatever, the employers could chip in. [36:10] Thomas Clark: Correct. [36:10] JD: That's cool. Okay, yeah, continue on. [36:13] Speaker E: So we have that, and the majority of our employers who offer the 529 solutions are contributing something, whether it's on an ad hoc basis or monthly or whatever. [36:21] JD: And Mark, Mark, no, I'm not going to set one up and I'm not contributing for your kids to go to fucking college. Okay, sorry, Continue on. [36:29] Speaker E: And with that, kids, you have kids. So that was in 2017. By 2020, it had evolved into including the student loan piece as well. So they built out a direct integration with all the servicers, allowing for employers to make basically for us to facilitate that student loan payment [36:49] Thomas Clark: for. [36:49] Speaker E: Because I'm not going to go into deep, but section 120, tuition reimbursement, student loan payments, tax deductible, etc. But are you going to be sending a check to Sallie Mae that sounds like, you know, living hell for an hr. [37:00] JD: Yes. [37:02] Speaker E: So we built out that integration, build out a whole bunch of cool features along with that for 529 and student was like a gifting feature. You can send a link to people and they can gift towards your 529. [37:12] JD: Grandparents, uncles, aunts can help out and then, and then fast forward and your path cross with us in the retirement plan industry because we now have this provision where if you are an employee at a plan and you got a college loan debt, maybe you can't chalk up the money to defer in the 401k plan and so, and maybe that company has a match and you're not getting it. But we all know now in our industry that through Secure 2.0 we can officially now look at those payments back to that college loan and the employer can provide a match on top of it. And you guys somehow jumped on this opportunity to offer some tech that helps out in this space? [37:59] Speaker E: Yeah, so we had, we already had the tech basically because of the student loan piece that we've had for years. So basically when this came into effect we started getting reached out to by all These different advisors, TPAs, record keepers, everyone saying like hey, can you help with this? We were like yeah, we actually can. So we can provide the infrastructure to actually validate that all of the payments have been made because we're already getting that data due to us having access since we've been making student loan payments for five years at this point. [38:28] JD: So is that the problem that we face as an industry right now is you got all these employees, they're telling you they've got these student loans and they're making these payment amounts, but now we have to trust them in terms of what that amount is and what the match is and how do we validate that and where does the responsibility lay out? I would ask an ERISA attorney if we had one that wasn't on purpose. I'll drink for that. But. But let's keep it on you for a second or actually no, the way we like to do this is you've done your pitch. Tom, Chad, Justin, Mark. Questions, hit them up. What do you want to know? [39:04] Thomas Clark: So how many platforms are you connected to now? Like of the major record keeping platforms, how many you connected to? [39:10] Speaker E: So we're not. So we are not connected directly into any of the record keepers. What we have decided to do this year, since it's literally first time anybody's doing this, is we are so full disclosure, we're launching our first program 11 of next year. So we've been gathering up folks, we are working with whoever they want us to work with and basically saying how do you need the information provided on all on who made payments, what the payments were, and us making sure that those payments were made so that you are good from a compliance standpoint. [39:40] Thomas Clark: Okay, so you're doing it through like secure FTP or an API. [39:44] Speaker E: We have it. We have a direct API for ourselves that directly integrates with the servicers. [39:51] Thomas Clark: The shtick on this show is you're not allowed to say acronyms. So I'm screwed. Look at this. Yeah, it's not a shtick, Tom. It's just the rules, buddy. [40:00] JD: I'm pretty sure we sent your people some information. Do you have a beer on you or something? [40:05] Speaker E: So I am sick as a dog, but I do have some Serbian homemade plum brandy that was made by a grandma in the village and brought to America by my parents. I have no idea what proof this is. You can't. It's like hiding. [40:16] JD: I think you should. I think you should respect grandma and do some good for your illness. [40:23] Mark: The man is sick. [40:25] Thomas Clark: Well, that'll actually clean them out. I grew up with Czech grandparents and they would drink slivovits at Christmas and very similar. Yeah, fuel. You're sick. You got the way you do that, it just cleans out everything. [40:38] Speaker E: Yeah, I just took a hefty recept than I probably should have. That was good. [40:44] JD: Well, you had a couple penalties there, Chad. Think of it from the advisor's perspective. And what do you think about this? I mean, advisors, a lot of clients out there. I will say this not to like jump on the bandwagon of all the secured 2.0 provisions. I feel like this one gets a lot of attention from my clients that I go see like the bigger clients, they were interested in this pre secure coming to play because we had heard, you know, rumors of it and we're waiting for official, you know, approval to do it. So I do think this is a popular provision. But Chad, advisors must be wanting to help their clients set this up. And this is a. A thing that savvy could help out with. [41:25] Mark: It's been a tough one for us because in our market space, that micro, small space, that clients don't really want it, but the advisors want to be able to Talk about it. It's almost like employer Roth contributions. Like none of the employees actually want that, but the advisors want to talk to the client about it. So there, and I think there is a need in that space. But adding complexity to the micro plans is, is not where we're well, and [41:52] JD: let me back you up and be clear. These are the, these are our clients that I meet with that are our biggest, they're our larger ones. [41:59] Mark: Yeah. And it, and it makes sense. And I think about my working life like I, I left college with some money owed. I went and worked at Vail Resorts. It was difficult, alarming news. After that, Vail Resorts made me an offer. I've told it on this show. They came and said, will give you like a 50 cent raise or we'll give you a matching component in the retirement plan up to 3% of your pay. And I'm like, I can't afford to save 3%. I was working three jobs, so I took a 50 cent on the hour raise. I would have loved to have an opportunity to still get the match because I was paying down my student loan at the time. So there is a need for this across the whole spectrum. But the practicality of it in the space that we're walking in is just not there yet. It's going to start upper market and it will filter down. [42:44] JD: Okay. So, so don't be depressed by what Chad just said. He, he plays in the micro market space. Obviously the, the mid and big plans are interested in this. So why don't you tell us what is savvy fi seeing in terms of, of people being excited about this or companies wanting to use it and, or advisors? Like how are you guys supporting financial advisors across the country and are they aware of you and reaching out to you? You. [43:10] Speaker E: So the financial advisor piece is brand new to us because we've never, quite frankly had a need that was never a partner for us. [43:18] JD: Historically you're working through the employer and the, and the employees and well really [43:22] Speaker E: the employee benefit broker on the health and benefit side as well. [43:25] JD: Okay, well that's, that's, that's basically the team position that we call the Advisor in the 401k space. That's the person consulting with the employer and helping them make these decisions. [43:36] Thomas Clark: Okay. [43:37] Speaker E: So that we, we have been working through the employee benefit side on the health and benefit side for years. And I come out of that space so I, you know, I bring my experience there. So we are working through really figuring out how to build the relationship with the financial advisors with the TPAs with all the folks. What I am seeing since I'm dealing with it on a day to day is well, sorry Chad, you are correct. I'm not seeing a lot of, [44:04] Thomas Clark: I'm [44:04] Speaker E: not seeing a lot of conversation on this. And I'm assuming the micro space is probably 50 and under employee wise or lower? [44:12] JD: Yeah. [44:12] Thomas Clark: Oh, I thought you meant millions. [44:15] JD: No, fancy pants. We're talking participants. [44:20] Speaker E: What I am seeing in that space aggressively is the 529 conversation a lot. Once you get above 50 employees, the student loan repayment conversation, the, the piece that we've been doing for years comes up a lot. I mean constantly really. 250 and above is where I've really seen the conversations around and really in the thousands around the retirement plan contribution piece. [44:45] JD: You're lining up with a Chad said. Yeah, makes sense. [44:48] Mark: I do need to know the, the repayment process. You're connected to a number of traditional state student loan companies. Is that how you're monitoring that the repayments have happened and validating it for the employer so they have to roll their loan over to you guys? [45:07] Speaker E: So we're directly integrated with like 90% of the loan services, which is pretty much everybody that's going to have a loan with any. Realistically you have like five loan services to run all the loans. [45:19] Mark: So you're not refinancing any loans. They're not needing to move anything over. You're just the tech in between chat. [45:25] Chad: Great. [45:25] Thomas Clark: We. [45:26] Speaker E: So I actually have prospects. Ask me, this is like, well, how do you move the money? I'm like, no, no, no, no. If you want to do a, just a traditional student loan contribution to an employee, we can do that all day, every day. We've been doing that for years. We are not touching the money in the retirement plan piece. That is not our job in this arrangement. In this arrangement, our job is purely showing you that hey, these payments that need to be made in order for them to get this contribution have been [45:49] JD: paid have been made. Yeah. Because Tom, I hate to pivot to like legal, but I'm a little shaky on the, the secure 2.0 rules. I thought a lot of secure 2.0 relieved the plan sponsor of validating this. Is that not true with these, these college loan. Oh, sorry to put you on the spot. Yeah, I don't know. [46:10] Thomas Clark: Yeah, I, I, it seemed the theme [46:13] JD: of Secure 2.0 was like no, no, no, you can just take their word for it. You don't. [46:17] Mark: Certification. [46:18] Speaker E: Yeah. So it is, it, it is technically self certification. What we've seen is people there. They want that extra step. [46:25] JD: Yeah. Even though they still want to know. Well, because they're. They're giving the match. Right, right, right, right. [46:31] Speaker E: Exactly. [46:31] JD: Want to get bamboozled by someone saying, yo, I'm making big time loan payments, bro. Hit me up with that match. I get it. I get it. Okay, Well, I will end it with this. I also didn't think about for savvy Fi, like, if advisors out there just want to offer something to their employers to do 529 savings plans that they can reach out to you guys. But as well as I know, it was Michael Desenso who tuned me into what you guys are doing. He's got a great nose for our industry, and he's very passionate about that. You guys are filling a gap and a value that advisors will need as this college loan repayment stuff keeps permeating our. Our industry. So, Savvy Fi, it's got an option. And if you could do me a favor, take one more big swig of that, and we'll send you back [47:30] Thomas Clark: and feel better. [47:31] JD: Yeah, yeah. [47:33] Speaker E: My whole family's sick, so I need all of them to feel better. Little, little girl, wife, everyone. So I appreciate you guys. [47:40] JD: Give them all some of grandma's booze. All right? [47:42] Mark: Kudos to you for jumping in. [47:44] Thomas Clark: Yeah. [47:44] JD: Thanks for jumping on. Appreciate it. [47:46] Thomas Clark: Yeah. Good to meet you. [47:47] Speaker E: You too. [47:49] JD: Okay, before we dive into the. [47:51] Thomas Clark: Let me tell you, if you've never had plum brandy. You've never had plum brandy. [47:55] JD: Yeah. No, I never have. [47:57] Thomas Clark: It's an experience. It's an experience. Bless you. [48:00] Chad: Like, dude experience. We talking about here? [48:03] Thomas Clark: Like burns? Just birds. No, but when you drink it, it allows you to feel every centimeter of your anatomy from your throat to your whatever down to yours. You can feel it falling down the insides of your stomach. I mean, I, I. Yeah. See, I'm not lying. [48:25] Mark: It is. [48:26] Thomas Clark: It is serious. That's his grandma's homemade, you know, Slavic moonshine over there. But, like, just go. You just. It's called slivovits. [48:38] Mark: Right. [48:39] Thomas Clark: It's. It's good stuff, you know, but can you. So we always used to hear. [48:44] Chad: Yeah, I was about to. [48:45] Thomas Clark: Yeah, yeah, yeah. I. I used. We used to buy it. Why you never mentioned this to us before? [48:51] Chad: Ever? Like, boy, season 11 penalty. [48:53] JD: Let's get some. Hey, I will send you all some for our next show. We'll taste it together. How about that? [48:59] Thomas Clark: All right. I'm gonna be tuning in. [49:01] Mark: Speaking of, I'm not gonna be there. [49:03] JD: Speaking of bodies and colons and all that kind of stuff. I would like to. Quick announcement. I had my first bidet installed upstairs in my. And we're putting one in downstairs. And I. Now I'm. I'm actually excited. When I need to take a shit, I run upstairs. [49:20] Chad: I'm surprised it took you this long, man. [49:22] JD: I pumped that baby up to the highest power it has. [49:25] Thomas Clark: So happy for you. [49:26] JD: And it squirts water you know where, and it's just amazing. Okay, we're gonna play a game. [49:33] Thomas Clark: No, I'm not of a day guy, but look, if. If there's a lot of folks out in the industry who know that I make things awkward on this topic, but I'm gonna bring it up since I have. I have this wonderful opportunity, and we're talking about butts and poop right for it. If you have not gotten your colonoscopy yet at your appropriate age, you need to go out and do it right. That's. [49:54] JD: That's not. [49:55] Thomas Clark: Colon cancer is what killed my dad. And last August, so a year ago August, I went and had my first one and had two pre cancerous polyps removed at 41, right? You're not even supposed to get it till 45 or even 50, right? If you have a history, it's 45. My doctor was like, no, no, no, you're gonna go in now, right? And he, like, pay played with the paperwork and so on and got me in. And yeah, okay. They had two removed at 30. It is just. It is not a big deal. People are like, I don't want to go. Like, no go. And I'm telling you, yesterday my day was made. I won't call them out who they are, but I got an email from one of our industry friends who said, I know you said this a year and a half ago at a, like, a group study group meeting that we were at. I finally made the appointment. I'm going, right? So you're talking about bidets. I'm talking about colonoscopies. Thank you for the opportunity to talk about that. That's my psa, right? Go get [50:49] Chad: stuff. [50:51] JD: I'll jump on board and I'll drink on that one. [50:54] Thomas Clark: 10. [50:54] JD: Check your boobs to. Got it right here. Everyone knows my wife's got going through what she's going through. Let's play a game. Since. Since Tom's got opinions about things like that, likes and dislikes, let's play a totally original game I came up with called the no or dope game. The way this works, Tom, is I'm Going to bring up like a pop culture type thing for you, and you're going to let us know if you're a thumbs up on it or thumbs down on it, and then a little description of why. And we'll always start with you. My dentist checks my private part every six months. Hey. [51:46] Chad: Okay, Only kush. [51:49] Thomas Clark: Say something like that. Hey, can you give me your dentist's phone number? [51:58] JD: I'm gonna make this kush on the big TV again. [52:01] Thomas Clark: Oh, I'm sick of me already. [52:02] JD: I got Kush Lash. I'm gonna go with a Halloween theme because we kind of missed that little holiday in retireholics. I know it's come and gone, but. Nope. Or dope Tom. Full size candy bars. You know, if your neighbor's giving out full size Snickers. And are you okay with that or not? [52:29] Thomas Clark: Okay, dope. Dope. [52:32] JD: Okay. [52:33] Thomas Clark: 100. [52:34] JD: You all right with that robe guy? No. Yeah, it's competition making you look bad. No, it's. No, you're just trying to show off like rich people. [52:43] Mark: Oh, come on. They're just trying to be nice to the kids. [52:47] JD: Now I understand why Tom was. Now I understand why Tom was dope on that. He's just a rich attorney trying to show up by giving out full blown Twix bars and butterfingers and. [52:59] Thomas Clark: Oh, I know. So, hey, by the way, it's not cool when your kid then learns how to, like, take advantage of the situation where they go, oh, can I have a piece of my Halloween candy? And you're like, yeah, sure. And then they pull out a full [53:14] Mark: size KitKat and you're like, but it's still a piece. [53:17] JD: That's a piece. Parent up. [53:20] Chad: Like, hey, one piece. [53:21] JD: Little bit. [53:22] Chad: Save the rest. [53:23] JD: Just. [53:23] Thomas Clark: You sure, like, don't do that. But it creates conflict. Okay. [53:28] Chad: Hey, you're the boss. [53:29] JD: Justin's claiming parent up. When's the last time you sold a plan? Okay, let's go. Sugar free candy. Handing out something my wife did this year, by the way, it looks candy support. [53:46] Chad: Why she's doing that. [53:47] Thomas Clark: But some of that stuff can make you, though, with the. With the. With the. That. The sugar for like the. The Xylitol or whatever in that stuff. Or the one that starts with an [53:57] JD: E. Like, can we stay off the colon and the rectum? [54:01] Thomas Clark: Yeah, but I'm just saying, like, so if you eat. That's like. Remember like when lay's potato chips, like, they started making them in like the late 90s or early 2000s with that alternative oil. And it's like when you were reading the warning. If you meet this much, you're going to yourself if you eat too many of these potato chips. [54:16] JD: That. What happens with sugar free candy? [54:19] Thomas Clark: Yeah, because it's not like sucralose. They put like, whatever. That one kind of like sugar free stuff is something with the erythritol. Who are you, [54:30] Chad: smarter than us? [54:31] JD: Are you RFK Jr? [54:33] Thomas Clark: No. No, not even close. Okay, if we're. If we're talking about poop and poop and butt stuff. When I was a kid, you know they used to sell XLX as chocolate bars. Yes. I didn't know that. I found that in the medicine cabinet. Ate the whole thing. [54:50] JD: Lisa, I was hurting. At least was inedible. Okay. Nope. Or dope. Tom. Not wearing. You're an adult. You're handing out candy. They knock on your door, but you are not wearing a costume. You're just. Oh, you're an adult. [55:10] Thomas Clark: You. Nope, nope. [55:14] JD: Rude. Right? [55:15] Thomas Clark: You gotta dress up. [55:16] JD: You gotta respect the holiday. [55:18] Thomas Clark: Wait, look, here's my costume. [55:20] JD: Put it right in front of your face. Put it in front of your face. [55:24] Thomas Clark: That was an avocado. [55:24] Mark: You were an avocado. [55:27] Thomas Clark: Yeah. [55:27] JD: That's very Californian. [55:29] Thomas Clark: So in St. Louis there, buddy. Well, in St. Louis, you do a joke. Like all the kids go up and I don't know if in the other parts of Missouri, because I don't think they do it in Kansas City, but the kids all have to give a joke to get candy. [55:43] Chad: What? [55:44] JD: Okay. [55:45] Thomas Clark: Yeah. So. So. So my kid. Yeah, it's like, hey, what's your joke? So my kid went as a scary pig butcher. He had this like insane pig mask. And I dressed him up with all my barbecue gear and he had like this big fake plastic. So he was like a pig butcher. Right. Of pigs or humans or whatever. I. So he had a joke. What is the. How does the butcher introduce his wife? Meet Patty. [56:12] JD: Meet Patty. [56:13] Thomas Clark: That's. That's hilarious. Right? [56:15] JD: Yeah. [56:15] Thomas Clark: My joke was, what did the avocado say to the ghost? You scared the pit out of me. And then I'd pull the ball out because that ball came out of the. [56:24] Chad: Came out right every time for every kid. [56:29] Thomas Clark: So, yeah. So I only told my joke, like four times. And I didn't want any candy. But like, yeah, every house you're technically supposed to tell that joke over and over. [56:37] Mark: Interesting. [56:38] Thomas Clark: You must live in a really nice neighborhood giving out full size candy bars and selling jokes. Oh, we didn't. I. I didn't take my kid to that neighborhood this year. No, like we went. No, no, we were in the normal sized neighborhood. Like the normal. [56:52] JD: I know. [56:52] Thomas Clark: He. He had the greatest hack this year, unfortunately. The kid at his last baseball tournament of the year, a couple weeks ago, about a week and a half ago, tagged a guy out at third base and the kid didn't like it and slid into my kid and broke his leg and dislocated it. So he didn't mean to hurt him, but, you know, whatever. It's baseball. So. Yeah, it was dislocated. [57:12] JD: Yeah, yeah. I feel like the preamble like it. [57:15] Chad: So I mean, [57:18] Thomas Clark: into him, but they don't think he meant to hurt him. Right. And, like, tear, you know, the whole bone was like, pushed forward, but. So the kids. Got his kids in a wheelchair with a huge cast. Dude, every old lady in the whole neighborhood was giving them handfuls of candy. So it was the ultimate Halloween. Half my came back with no shit. 12 pounds of candy. [57:39] JD: Chad, you know the cool guy sign out? Yeah, we should talk about that. That's going to be. This is not Halloween related. This is gonna be my last impromptu no for dope. The cool guy sign out. This is what this is, and I want to know if you're okay with it. Tom, I experienced this recently. You're on a business Zoom meeting. [57:57] Thomas Clark: Okay? [57:57] JD: There's maybe five, six of you. And I was on one, and one of the younger guys on the meeting bailed. And right before he bailed the Zoom, without saying anything, he put in the chat bar, sorry, everyone, I got another meeting. Gotta hop. And he just sent it and then, boom, left. I was like, I. I wasn't sure how I felt about it. How do you feel about exiting a Zoom meeting with the cool guy? Exit [58:29] Thomas Clark: dope. [58:30] JD: Okay. I'm dope too, I think. [58:33] Thomas Clark: I mean, there's a. Who is it? Isn't it? Like, which tech executive, if he's in it, he or she is in, like, a meeting. And it's stupid. After five minutes, they just leave. [58:43] JD: And I honestly feel like this guy just had another meeting. I didn't think he was saying stupid. Just what we typically do as old people is. What's it called, Chad, when you show up and you say, I got a hard stop. I got a hard stop. That's what it is. Like, hey, everyone. [58:58] Mark: And then you're like, guys, I really have to go now. My hard stop is coming up. I didn't mean to stop the meeting, but I had to let you know I'm getting ready to leave. Okay? [59:06] JD: Get it. [59:06] Thomas Clark: I mean, no one ever talks like [59:08] Chad: that when they do it, it's like, hey, guys, I gotta go. [59:10] JD: Remember, I'm out chat. [59:13] Chad: Than just like in the text chain. [59:15] JD: God gets it. [59:16] Mark: It was awesome. The cool guy sign out was awesome. [59:19] JD: You nailed it, Chad. You get it. Even though you tell everyone the hard stop, then you got to tell them right before you leave. This kid was just like, not out of here. See a boom out. Okay, lastly, and I, I probably shouldn't have left this for last. Or maybe I should, because sometimes it's the best thing I looked at. Thomas Clark had gone and presented in front of the Department of Labor's ERISA Advisory Council, which, by the way, I'd love to pretend that I knew that he ever existed. I honestly didn't. I know I did. But you had to go speak to them. Can I ask what was your goal? What were you trying to communicate or accomplish? And was it received and understood? [1:00:16] Thomas Clark: It's a great question or series of questions. So I was reached out to by a member of the, Member of the advisory council. And it was. I, I, I won't tell you the original makeup. The original thought is I was going to have a panel with Jerry Schlichter, of all people. [1:00:34] JD: Oh, but which you, you know him? [1:00:37] Chad: Bogeyman. [1:00:37] Thomas Clark: Yeah. Yeah. We're not friends anymore, but that's. [1:00:41] Chad: Can we hear that? [1:00:42] Thomas Clark: Go read Nevin's article. Go, Go read Nevin's article. Headline. [1:00:46] Chad: I'd rather hear from the source right here. [1:00:49] Thomas Clark: Wagner taking notes. Go, go find that article from six years ago. So, no, that's what was so interesting when I debated him on Brian Graf's, like, second podcast when he did that. Pension Geeks podcast number two was me and Jerry. [1:01:03] JD: Yes. [1:01:04] Thomas Clark: John Sullivan reached out and said, you know, are you willing to do this? Jerry doesn't know if you would be willing to do it. I said, you know what? I'm not gonna let bad blood stand in the way of good content. So we had a good time. It was a fun, respectful podcast. [1:01:16] JD: I commented on that or posted it. I would, I enjoyed that immensely. [1:01:21] Thomas Clark: Me too. [1:01:22] JD: Yeah, that was good. Okay, go on. [1:01:24] Thomas Clark: Me too. Look, I, look, he, he came. He did not like Marcia acting as an expert witness against him in a case and tried to disqualify her as an expert, claiming that somehow there was a conflict and the judge was like, no way. And it's just stupid. It's not very fun as a lawyer seeing your name literally in a federal court opinion where somebody is saying and alleging like, well, we think you're conflicted. Yeah, like that's not fun when you have zero evidence I ever did anything wrong. [1:01:53] JD: We're going to bring you back in 2025, get deeper into this. But what I want to talk about is you going in front of this committee of a better description, and if I could set it up for everyone. You were talking to them about qualified default investment alternatives and litigation risk around those things. Because I want to tell you before you get started, when I started seeing lawsuits on target date funds and things that we would label as qualified default investment alternatives, I brought myself back to the old days when I remember running around a suit and tie and saying to plan sponsors with an advisor at my side, oh, this is a qualified default investment alternative. This is a safe harbor. This protects you. This is government approved. You put this in place, and you've got nothing to worry about. That was naive. I was full of. They could get sued the very next day. And so I think this is part of what you were discussing with this committee, right? Take it away. [1:02:58] Thomas Clark: Yeah. So the advisory council hadn't touched QDA or retirement income since 2018. And if you look at their mandate for this year. Wait, what did I say? [1:03:09] JD: Qualified. [1:03:11] Speaker E: I. [1:03:13] Thomas Clark: The whole thing. [1:03:13] JD: You can rack them up. You can rack them up. [1:03:15] Thomas Clark: Yeah, yeah, we can just rack them up because I'm representing. So this is a. This is a hard seller company from St. Louis, Four Hands. And then I also have a Kansas City one, the Quirk Rocket Pop over here. So I'll drink through all of it. [1:03:30] Mark: Delicious. [1:03:31] Thomas Clark: But so. So they just. They. If you look at their issue statement on the QDIA side, it's like a grab bag of different topics. Right. They. They wanted to talk about this. They wanted to talk about that. So when they asked me to join, ended up having Bonnie Trichel, another arrest attorney, who. I don't know. Have you had Bonnie on the show yet? [1:03:52] JD: We have, yes. [1:03:53] Thomas Clark: Yeah. So she joined me, and she is really more focused on retirement income. Like, she developed the retirement income teaching for Napa. She teaches the boot camp every year at the end of the Napa Summit. Right. [1:04:07] JD: Another one. [1:04:08] Thomas Clark: I know I'm not gonna sit here. I know I'm just gonna get screwed. It's. So the two of us went in there and we kind of did it in tandem where she talked about current state of the marketplace, products and best practices. And I thought long and hard, like, what do I have to offer? You know? Like, there's. There's some really smart people in that room, very smart people on that advisory council, and some very Smart. Other witnesses that they had already brought in and intended to bring in. [1:04:34] JD: Are there other people on the council that come from our industry or they. [1:04:37] Thomas Clark: Everyone came like the head ERISA attorney at Lincoln Alice is on that committee and the head. [1:04:42] JD: So they know. They know the language that you're talking then. [1:04:45] Thomas Clark: They do. They do. And there are like five or six or seven ERISA attorneys on there as well. And so it's like, you can't go in there and bullshit. Right? There's no bullshitting. Not like sometimes we go to these meetings. But no, there was no bullshitting. So I said to myself, you know what? If I were in their shoes, I would want to know what. Instead of just people making generalized, over sensationalized statements about, well, you're going to get sued or there's fiduciary risk and all this other stuff, I said, why don't I go through and do what I can do? And I literally read every decision that had the word target date in it since 2018, every decision that had the word QDIA in it, every decision that had the word managed account in it. And I just went through and I said, I want to know what the state of the law is. So as they make their decision and they make their recommendation to the department about QDIA and retirement income, I want them to actually know what the state of the law is on this and what I found. [1:05:46] JD: You did an autopsy of all the litigation that had happened in that space. And by the way, it's in that piece, which is. I can. I'll get a link for everyone to look at it. [1:05:58] Thomas Clark: But yeah, it was a labor of love for all of you. Right. So that you that. So that the over generalists, one way or the other, there's over generalists in both ways. Retirement income is fantastic. Refinery incomes, you know, the devil. Right. That's fine. People are entitled to their opinion. I love, you know, democracy of opinion. But I wanted them to know this is what the law actually says. Because the punchline of the letter and my testimony was there is a robust set of decisions that if a fiduciary engages in a good process, does everything they can, you know, under the due diligence to. To examine stuff and look under the hood and figure out the fee transparency to your point and all of that. Like you can make decisions that are off the beaten path and not in the center of the bell curve. Right. Like everybody else to be. [1:06:53] JD: You can get outside, have to be higher performing. [1:06:56] Thomas Clark: Right, Right. That's exactly. It doesn't have to be the cheapest. You don't even have, according to Flexpath decisions, you don't even have to have a set history. Right. Because of the dol tips saying you can go custom. Well, of course, custom doesn't have a demonstrated three year history. Right. So that was. And, and so, because my, my bigger thesis to them was don't put your thumb on the scale of innovation. Let the industry innovate. And we as the gatekeepers, we as the consultants, the advisors, the ERISA attorneys and the good Plan sponsor fiduciaries, we will tell the marketplace, and I know there's people who are on here, not on here anymore who hate this opinion from me. Right? And I get it, that's fine. But let the marketplace decide. Don't put a thumb on the scale. [1:07:41] JD: But is it also your assessment from that paper that any of those lawsuits that I saw come to fruition? Because I was taken aback when I'd see them. And when I say I saw them, what did I see? I saw a press write up of this thing that was happening and I was like, holy shit, they're suing them because their target date funds, which were a qualified default investment alternative, have underperformed some other target date funds. They can't possibly get away with that. Like that makes no sense to me. And was your assessment in that paper that they all had lost those cases, it never come to fruition, am I right? [1:08:20] Thomas Clark: It. Well, sorry. I got distracted by my friend Nevin Adams. It's not about losing it in court. It's about not getting sued in the first place. [1:08:27] JD: Well, we can get to that. [1:08:29] Thomas Clark: We can get the standard. If that's the standard. Everyone, right now hang up your gloves and go sell fucking lemonade. [1:08:35] JD: By the way, Nevin. Nevin, News alert. Anyone can sue anyone at any time for anything, bro. [1:08:41] Thomas Clark: Right? Right. I can't be afraid. I mean, I understand, but I. I guess maybe I'm more desensitized having been in the belly of the beast and sued people for a living for five years. Right? Like, I'm maybe just more open to it, but like, I don't know. But okay, so basketball. [1:09:01] JD: She was too. Most of those cases, or none of them have actually succeeded in terms of proving that it was inappropriate or not okay for them to choose those investments and those qualified default investment alternatives. [1:09:18] Thomas Clark: And the most obvious was tussie vs abb where very clearly they threw the target dates in to generate soft dollars for Fidelity. Right. Because of the Cross subsidiary. Remember that case? We all remember that case. The cross subsidiation the 401k participants were paying 4 to $500 ahead and ABB was paying nothing in their DB nonquo health and welfare and payroll. So the 401k was subsidizing all of the other services. And so that's, you know, that's maybe one of the most successful target date cases. Right. Where. But a lot of these other like American, they went after American Century. American Century beat that back. [1:10:02] JD: Yes. [1:10:02] Thomas Clark: Right. And that's the worst thing you can be accused of under erisa, which is ripping off your own employees to line your pockets. [1:10:09] JD: What is the status on Vince G and the, but you mentioned him earlier [1:10:15] Thomas Clark: that you know, the flex path decision, [1:10:17] JD: the flex pass stuff, they, they, they're off too. Right? Are they done with all that? [1:10:20] Thomas Clark: Well, they're going to, I mean Schlichter is going to appeal. He's already, you know, the schedules are already set on those and, and you [1:10:26] JD: know they'll appeal those to good from, from Vince G's perspective. Right. [1:10:31] Thomas Clark: Like, yeah, they won both trials. I mean again, you have to have nuts of steel to be willing to put your business on the line and go to trial. [1:10:40] JD: Okay, well let's talk about what Nevin said. [1:10:42] Thomas Clark: They did. They did. [1:10:44] JD: Because what Nevin said is true. Because I mentioned that to you in the pre show which is okay, that's great that the court will decide in your favor or that your attorneys can beat away their attorneys. But the bummer of it is that it's still a massive stress and still a massive cost to defend against these accusations. So I, I agree with what Nevin is saying. Like that sucks to be involved in these lawsuits. Like I had a qualified default investment alternative. Like we have a process. We chose these target date funds. We're doing everything on the up and up, we're dotting our I's and crossing our T's. But someone still can sue you and claim that the performance lacked and that the fees are too high and you have to defend yourself and that. So Nevin, I do agree with you. That's. That sucks. That's a bummer. But that's life. [1:11:37] Thomas Clark: And then they sue you for being too conservative. [1:11:40] JD: Right? Yeah, you underperformed. [1:11:41] Thomas Clark: Yeah, right, right. I mean it, it, they can see, it's like they sue you for having stable value. They see you for not having stable value. They sue you for having money market. They sue you for not having money market. I mean they sue you for being active and then having active funds. Now there's the whole line suing you for Having passive funds, Right. I mean at the end of the [1:12:00] JD: day, the moral of the story as [1:12:02] Thomas Clark: we wrap it, like moral is, the moral is the North Star is doing right by plan participants. [1:12:10] JD: Wow. [1:12:10] Thomas Clark: And if you believe that's doing right by plan participants. [1:12:13] JD: I sat in a conference 25 years ago and Fred Reese told me that same thing as advice, come on, you don't have anything new for me two decades later? Act in the best interest of the participants. What the fuck? [1:12:27] Thomas Clark: I mean, look, I didn't write the statute 50 years ago, right? But it's, it's if you can, after you due diligence, justify XYZ Target Date Suite or XYZ Managed account or XYZ Balanced fund or whatever it might be. Right. If you can do that, then, then, and you have a defensible due diligence process, right. Procedural prudence, then you should go for it. Right? Like intel, for example. Intel offered private equity as part of their custom Target Date suite, right? Then they got sued over it. Then there was this whole dispute over whether the participants read the notices. So you trigger the three or estimations went to the Supreme Court. Intel lost at the Supreme Court. This is in my write up, right? I seen this terrible, terrible headlines. They went back to the district court and won. [1:13:16] JD: Yeah, I saw this like final, I saw this in your final few paragraphs where you were giving advice saying if we could just come up with some technology to like show that we electronically deliver this shit to them. And they saw you. [1:13:31] Thomas Clark: Did you check out that. Right now my advocates, there are advocates on the council that are still advocating for that recommendation to be in their final report to the department. Okay, So I hope, because everyone, we're just leaving that we're just, people were forgetting that case exists and not doing anything with it. Right? Like, yes, we should be disclosing proper information to participants, but we also could protect all of our bottom lines by cutting the liability more than half. We call that damages grow. If you cut, if you cut the window from six to three years, you can still sue to protect planned participants. But like this is the hockey stick. It's more than 50% liability is cut. Cutting it to three years because more of the growth is in the second three years. Right. Because of compounding. So if you cut the, the window of the suit from six to three, you're cutting it down to something like 40. I don't know the math. 43%. [1:14:24] JD: In the surfer world we call that CYA. [1:14:29] Thomas Clark: So I, okay, here's what we're going to do, okay? [1:14:34] JD: You just went on. I'm not gonna call it a rant. You went on a phenomenal, like 10 minute little spiel there. And that was a. [1:14:44] Thomas Clark: That was not a TED Talk, but a Tom talk. [1:14:47] JD: Yes. And you know what's most important about it? Robbie is in it. He had about 16 acro sins and you. [1:14:56] Thomas Clark: Oh, yeah, yeah, right. He kept throwing, deciding, I'm drinking the deal. [1:15:00] JD: He's at 22 now. Tom, nobody beats me in acro sins on these games usually. You have doubled my score. [1:15:14] Thomas Clark: Is there a record? Is there like a world? [1:15:17] Chad: Where are we at? Brandon? Can you throw it up? I think it was 26 or 27. [1:15:20] JD: Isn't Amanda Iverson or she was the [1:15:23] Chad: original record, but some holder. But somebody broke it. [1:15:25] JD: There's Amanda with Pinnacle. She went. [1:15:29] Chad: Was over like that was the show. I think it was a three hour show that we did before. We had an after show. It was at least two hours. [1:15:35] Thomas Clark: Yeah, I, I already told you at the beginning, I'm happy being the Karl Rove. So I'm not gonna beat someone's record. I'm gonna be like the number I'm gonna get in. Right. Number two, you don't want to be president. [1:15:46] Chad: You just want to be vice president. [1:15:48] Thomas Clark: Not even. No, I want, you know, if. First of all, I would never move to D.C. and get into politics because I. It wouldn't be good for anyone. But no, I would want to be like Chief of Staff. [1:15:59] Mark: Right. [1:15:59] Thomas Clark: I don't want to be. I don't want to be out on. I don't want to be the President Bush. I just want to be the Chief of Staff actually getting shit done. [1:16:07] JD: Good. Sounds good. My point was I think Brand o' Brien is gone. No, Brandon's here. Chad took off. I think that'll make a phenomenal clip to put on LinkedIn with the 21 like, you know, acro sins happening all the time. I sometimes. Here's the bummer of retireholics and we're gonna wrap it. Is having someone like you here. If I was. If I was left to my own devices, like I would want to talk to you about this for five hours. I would want to be Joe Rogan. The insights you have, the, the way you're able to communicate it, but I don't have that option. But thank you, sir, for sharing that. And please, when you put your head on your pillow at night, I want you to know a fucking brain you have and that ERISA training you. That was not on purpose. You went through and sweeping up those floors at Your mom's hairdressing place have molded you into this perfect little like, blessing of the 401k world. And we're happy to. So thank you for coming back on Retire colleagues. Thank you to everyone tuning in. And thank you to Robe Guy for motivating me to go to Legoland by myself sometime next week. Which I will try. [1:17:33] Thomas Clark: Fantastic. Yeah, I mean, that could be a fallacy. I don't know. [1:17:39] JD: Tom, can you. [1:17:40] Thomas Clark: But can two grown men go into. [1:17:43] JD: They should be God damn gay rights. [1:17:49] Thomas Clark: Tom and JD we would like to see content from this. [1:17:52] Chad: Please go try. [1:17:54] Thomas Clark: Well, I'm gonna be out in LA the beginning of December, so I'm happy to go and grab my cell phone and record you while you try to go in on your own. [1:18:03] JD: Here's what I wanna. I've never done this in night on this. Real quick. [1:18:11] Chad: According to the AI overview on Google, yes, adults can visit Legoland without children. But some Legoland discovery centers require adults to be accompanied by children. [1:18:23] JD: Yeah, okay, so that didn't sound like a comment. [1:18:25] Thomas Clark: That makes sense. That makes sense. [1:18:29] Chad: I'm confirming what Mark had said. Yes, some required them to. [1:18:32] JD: So that could be Legoland saying, no, you can't come alone. Tom, nine years coming up on 10 years of doing this show next year, believe it or not. [1:18:43] Thomas Clark: That's wild. [1:18:44] JD: I've never asked someone to come back so soon. I would love to book you for Q1 next year, please. So I'm going to reach out. [1:18:54] Thomas Clark: Always happy to be with you all, [1:18:55] JD: get you back, bring you back and let's, let's go get right into this, this legal stuff with you. I think I'm wasting some time with Tom Clark on headlines and product placements. [1:19:08] Thomas Clark: Are we now just realizing this, that we have really smart guests and we want to learn from them, but we take up the entire show with Fluffy that we don't need to talk about. [1:19:18] JD: Wow. And headlines. [1:19:20] Thomas Clark: Took you 10 years to realize this? Let's just be clear. [1:19:24] JD: Let's do a Tom Clark right out of the Gates show where we just with him all the time. Okay, sounds good. [1:19:31] Thomas Clark: Well, I, I am, I'm actually trying to expl. I've got a bench trial that I'm trying right before Christmas. So like the week before Christmas. The timing is terrible, but I'm gonna be all rare. I'm gonna be raring to go, I'm sure, like, you know, because I'll hopefully have won and you know, it should. I'll be rare to go in January, [1:19:51] JD: so let's do it in January. Let's do this in January. [1:19:53] Thomas Clark: Do it. [1:19:54] JD: Okay. [1:19:54] Thomas Clark: Let's do it. [1:19:55] JD: All right, everyone. Tom Clark back on Retireholics in January. Tom Clark. [1:20:02] Mark: Jack. [1:20:02] Chad: Our champions. [1:20:03] JD: Just. No, no. Chapter Chat. William Hackler's the champ. We're gonna give him a prize next week. [1:20:08] Chad: It's kind of killed it tonight. [1:20:10] JD: What? [1:20:11] Chad: Tonight. Kind of killed it tonight. I'm just saying. [1:20:14] JD: Okay. Samson, you are Chap. Our champion. What we're gonna do for the rest of November and December is the same old, same old what we've done the last few years. 150 bucks from retire Alex to the. To the charity of your choice. This will be our holiday thing, which we're going to do for the next three shows. So you name the charity, we'll give 150 bucks, and then we'll put it out on LinkedIn and try to, like, guilt other people into putting more money in, and we'll see how much money we can get to your charity. Congratulations to the chat bar champion of tonight, Jim Sampson, Tom Clark. Thank you for being here. We are, and we appreciate this. Justin. I love you, Robe Guy. I love you. Everyone there, you 401 freaks. If you're still here and you're still watching this, you got problems, bro. You got problems. We'll see you next time. Peace out. And next time will be a RA show with a guest, a real guest. Fred Greenstein. Greenstein. Unless he turns me down like the third. [1:21:18] Thomas Clark: Next. [1:21:18] Chad: Next show. [1:21:19] JD: Yeah, it's already starting. Oh, he's up later. [1:21:23] Thomas Clark: Yeah. Thanks, Tom. See you. [1:21:25] Mark: See ya. [1:21:26] Chad: I gotta write an intro. [1:21:27] Thomas Clark: Good luck in your trial. Thank you. [1:21:40] JD: When I was young [1:21:44] Thomas Clark: I never needed [1:21:45] JD: anyone Making love was just for fun [1:21:55] Thomas Clark: those.