TPA Consolidation Wave: Inside Strongpoint Partners' Strategy

[0:00] JD: Welcome. Hang on. [0:03] Chad: Today is the day. [0:04] JD: Every time this show starts, my freaking YouTube goes off on my other thing. This is phenomenal show. Hello, everyone. Welcome to the show. We're so glad that you could be here. Yes, we've got Silent J and nerdy Chad, too. The dizzle's here for sure. But don't you worry. Don't you worry. The RO guy is here. I don't know. [0:49] Justin: That was the best high note you've ever hit. And it was really bad, too. [0:53] JD: Welcome to another episode of Retireholics, you sick little 401k. We're happy to have you here. And might I say, we're happy to have Brandon back. Look at all these beautiful graphics we're surrounded by. And just having his presence here makes me feel that much better. Am I wrong, Silent Justin? No, I'm not. Okay. What are we going to do? Not one bit. What are we going to do today? Let's not intro our guests yet, since only half of our guests are here shopping. [1:26] Chad: Half of our guests. [1:27] JD: I'm seeing a color change on their [1:30] Chad: screen that makes me think they have a. Like a block over their camera. [1:34] JD: They're maybe not paying attention to the other half of the gash. [1:39] Justin: Richard, do you have a block over your camera? Like a screen? [1:44] Richard: It's not even showing up. I'm not even getting a light here. [1:46] JD: Oh, he's here. [1:47] Mark: What about. [1:49] JD: We're seeing video, but we're seeing darkness and movement on it. So it's like. It's not that your camera doesn't work, [1:55] Chad: it's that something's in front of it or something. [1:59] JD: Guys are killing my butt. [2:01] Chad: I'm out. [2:02] JD: Killing. I'm out. [2:07] Chad: Let's. [2:08] JD: Let's just. We'll just go straight to headlines first, and then we'll introduce our guest in a little bit. Headlines, Brandon, headlines. Not as though Richard's gonna fix his video thing, but we can hear him so he can be part of the conversation. Okay, do you remember the old. What was the company Smart that came over from the United Kingdom? That's my British accent. The United Kingdom. And they were going to crush it in the United States with record keeping, I believe. Then it was pooled employer plans, and it was snap on technology. I don't know what it was, but then it all crumbled down into nothing and. And they. They gave up and. And closed up shop. We got another British company coming to America with a very fancy name, Pension B. It's an article at the national association of Plan Advisors. Hyphen. Whatever. Whatever website you all know what it is and it is titled. Is it titled fintech Friday the buzz is over a digital retirement platform's US Arrival. Chad, were you able to take a look at this pension be and what it's all about? [3:33] Justin: And I couldn't find much in terms of what it's all about but they've had some success over in the UK and much like any smart business person would, they look at the. Dang, I forgot. They look at the United States of America and see opportunity with trillions of dollars sitting in our retirement vehicles. What I couldn't pull JD and maybe you can enlighten us. They are looking for rollover access. [3:57] JD: Right? [3:58] Justin: Right. They're trying to be a snap on in between the record keeper and the participant when they're finding a distributable event and they're going to try to gather those assets. [4:07] JD: And that's what I found interesting about this and why I kind of include it to the agenda is yeah, they're not coming in to do a pat. They're not coming in to be a record keeper. It looks like they've been successful in the in. Oh, did I say UK too? I just said it again. [4:20] Justin: You also said cool employer plan. [4:23] JD: Okay, I owe a couple. I'll catch up on those. But they're coming here to focus on 401k rollovers into individual retirement accounts and that seems odd but also kind of exciting to me in that well, there's no way Voya and Power Principal in these big companies wants to let go of that. But we've got a lot of kind of smaller type record keepers or maybe they're trying to insert themselves into those as some type of tool or maybe they're trying to market themselves directly to the public. Like it's interesting to see something new come into play is all I'm saying. I don't. We're uncomfortable with it. [5:01] Justin: The area that I, that I question, just as you alluded to there, they've the, the current retirement plan landscape has record keepers that are going to swallow these rollovers up if it's of any asset size. They probably have a financial advisor helping them and they're going to roll it over to an individual retirement account that has some money management in it. I think the difference between this group and others JD is they're looking at being the technology to do it. What I thought was interesting in the release is that it was all about the partnership with State street and how that's going to be there in to our marketplace. But if they're going to go to the record keeping systems and try to get the, the tech inside there. Then State street is not going to be the investment solution on the back end of that offering. They're going to get kicked to the curb. [5:51] JD: Well, where's good old, where's good old JD that likes to shit on these new businesses? Like you would think I would sit here and be like, this thing's doomed for failure too, but I'd have to do a little more research on it. So we'll see Brandon, I can see Richard now. Maybe he, you can bring him in or you, maybe you're trying. Brandon's gonna get mad at me if I try to talk to him. Let's go to another one. And this one, Danny, we can get your vibe on. Have y' all seen Meta's leader, the famous Mark Zuckerberg has gone through a fashion transformation. I don't know if Brandon can put up the article that shows some of the looks. It's from mashable.com but Danny, have you seen Zuck's new look? And what do you think about this? [6:38] Chad: I saw today, I also read, I think I read an article that he's $8 billion returned today because of the, their, their earnings. [6:46] JD: Gotta be the new look. [6:47] Chad: Yeah, yeah, yeah. I kind of, yeah, I would say I don't, I don't spend a lot of time thinking about them, so I don't really care. But yeah, great look. [6:59] JD: You're gonna be a lot of fun today, Danny. I can already tell he, he also does mixed martial arts, so he. [7:05] Justin: That's what I was gonna say. Didn't he get all yoked up for a while? Yeah, [7:11] JD: kids call it, the kids call it a glow up. Okay. [7:16] Mark: How do you feel about his. Him posting those surfing videos of himself when he's on the foil and like that? [7:23] JD: I thought it was so cringe. He had his, like his sun protection on his sun block and he was holding like a flag but he stuck to it. And the Robi's point, I've seen him interviewed about his love for jiu jitsu and the guy's kind of wearing me down with his nerdy consistency of like wanting to be involved in these action sports. So I'm kind of a fan and so I believe that this is what has fueled the transformation. If you're going to hang out and do jiu jitsu and you're gonna buy a house in, in Hawaii and go surfing, you've got a kind of glow. Would you say Robey glow up? Yeah, I get that. Right. You gotta glow up. So why not some big puffy jackets, some shades, the hair grow a little bit. Little facial hair, I think. Lean forward. [8:11] Justin: All right. [8:11] JD: If Chad just had curly hair, that might be a dolphin hair. [8:15] Justin: I'm just saying. Richard, it's the red. [8:20] JD: Welcome to the. The show here. Let me ask you, not just relevant to Zucks, but how do you feel about business leaders? You know, chief executive officers, founders, and it could be in the big tech space, but it could also be in the small business space having a fashion edge, you know, a little. A little something, a little alternative, a little off. When they show up to the office, are they peacocking too much or is this kind of a good look to show who's in charge? [8:49] Richard: Yeah, I think it gives them a, you know, Persona that sets them apart from the rest of the. The crowd. So, yeah, I'm digging his jacket, and I think the gold chain is. Is, you know, just completing the whole ensemble. So he's. [9:04] JD: I agree. [9:05] Richard: I think he's moving in the right direction. [9:07] JD: Great insights, Great insights. I. I want to be honest with everyone listening in and you guys here. I have purchased, as they say, a chain before, and it's. I've got it through the mail. I've never really tried one out the store because I was too embarrassed. But I have had a chain come to my house. I put it on. I was really proud that it came. I was going to wear it on top of my black T shirts, and I looked in the mirror and I just couldn't do it, man. I couldn't pull the trigger. So it's just been sitting in my sock drawer. So I just don't have the chain. I can't do the chain. Look, maybe someday. [9:40] Mark: Was this a recent purchase or like many years ago? [9:42] JD: Yeah, no, probably like I. Like a year ago. Like a year ago. One of those. Was it one of those Jackson chains? I have no idea. I got it from All Saints. Was the. [9:54] Justin: Of course, I was gonna say JD could probably sell it and cover your guys bonus checks for the next two years. [10:01] JD: So you got like 20 grand just sitting. [10:03] Mark: We'll be overpaid at that point. [10:06] JD: Let's go. Let's go industry, shall we? I know a lot of our industry nerds are in Washington or they were the last few days talking to our representatives. And I think the. The biggest news that I was seeing coming out of that was the. The delay or the stalling or maybe the death of what we all called the fiduciary rule. So I'VE got an article from PlanAdvisor.com the title of the article is second I'll drink for this. Second US District Court issue Stay. A retirement security rule. Apparently this happened in, in two different courts. Fiduciary rule, Chad. Everyone's been so obsessed with it. I think. Here we go again with rollovers and stuff. It's a big deal. Nevin and Fred talking about on their podcast, this was coming in September. It's going to be a big deal. Is this not just telltale sign now that this thing's just dead on arrival and it's done for at least the, the foreseeable future? [11:06] Justin: I mean, maybe in the rule as we know it, but can we all take one step back and say, do we think that this is an overall good thing for the people we're trying to serve? I think my answer would be yes. Is it a good thing for the industry and the people that are trying to be the catalyst of these transactions? No. And so will it ever get by? Probably not in its current form. [11:29] JD: Let's go to the classic debate though on that, because the classic debate is you say it's good for the consumers. But if I was to stand on the other side of that argument, when you handcuff the people that are serving those consumers and you scare broker dealers and you scare large financial firms and you force them to limit the services and the roles and the help that their people can do, you're maybe you're hurting the end consumer. In the end, that's what how I feel about a lot of those things. I feel like most advisors are trying to work in the best interest of their clients with everything that they're doing. And they all know that there's a responsibility there that they could be drawn into some kind of lawsuit or what have you. This to me is more directed at the big insurance companies. The broker dealers that now have, if this rule is to go through, have to put them through a ton of paperwork and put a lot of rules in front of their people as it relates to even rolling money out of a 401k in an individual retirement account. You'd have to really check all your boxes. Richard, a big question, but, you know, regulation that's in a sense intended to kind of protect the consumer, but can also be the same kind of red tape you see in all kinds of industries. Are you for or against new regulations on the financial services industry? [12:56] Richard: Yeah, that's a tough question because, you know, you're looking, like Chad said earlier, to protect the consumer and make sure that they're getting a good shake. But I think in general, most financial advisors out there are acting in the best interest of the, the consumer and the, and the investor. Right? I mean they are. There's a few bad eggs out there that make it, you know that you hear about are the ones that are getting the press. But I, I would say 99, you know, 90, you know, high 90 percentage is, is looking to act in the best interest of their, of their clients. So yeah, I think it's a little overreaching but. And you know the self regulation has worked pretty well for, for, for years and I think it still can. [13:40] JD: Heidi from the, from the chat bar. And Heidi, we don't. We do not. You must be new here. We do not communicate directly to the hosts and panelists. That's a penalty for you. You communicate. This is an open family environment. You write to everybody. But she's got a great question. Isn't this about the insurance company? So I guess I only touched on that. Yeah. I think this is hugely a concern for the large insurance companies that are playing in this space and so slapping a regulation on them to kind of make them act more like finance true financial advisors. All right, you would win me over with that a little bit. But unfortunately the bathwater, you catch up a lot of other big broker dealers and things as well. But yes, Heidi, you're correct. [14:30] Mark: Ever again. Just 10 shots. [14:33] Justin: So if you're not making consistently flush contact with your watching golf videos now. [14:41] JD: Gotta be me. [14:42] Justin: Hey, here's the way I would argue back just a little bit to get your perspective on that. J.D. if, if it is directed at the insurance folks who are not licensed to provide guidance or advice. I'll say. And usually are not operating in a financial services role, they're selling insurance. Then. Then why wouldn't we want to police that better when they're already being handcuffed in terms of what product they can [15:09] Mark: offer, you'll never play. Good call. [15:12] Chad: Who's got the video going on strike [15:15] Mark: sequence that instantly fixes the root cause? [15:19] JD: It's not me. [15:20] Justin: It's Richard. Richard's Richard's name highlighted up. [15:24] JD: I love it. That's good. Look at your other browser, Richard. I'm trying [15:32] Justin: to explain a simple strike [15:33] Mark: sequence to you in a lot more detail. [15:38] Justin: Keep playing it. [15:38] JD: I want to learn Richard while you figure that out. That could have been so much worse. Just be happy. [15:45] Justin: Okay. [15:46] JD: Let's just keeps disappearing. Where's Silent Jago? [15:52] Justin: His. Remember in our sales call this week, his computer just keeps Crashing. [15:56] JD: This is. [15:56] Justin: It just shuts down. [15:59] JD: That was you saying, come, I'm gonna teach you something in the middle of a Wednesday when I'm trying to take a nap. [16:05] Justin: You guys needed to learn, all right. You needed to learn. [16:08] JD: All right. I'm gonna do the introduction here. No, no, no, no, no, no, no, no, no. Well, he'll. He'll be back. You can't do his intro. I can't do his intro. He's fine. We gotta get going on some stuff. Okay. [16:22] Justin: He's gonna go to his phone. [16:23] JD: All right. For everyone tuning in. [16:28] Mark: Sorry. [16:29] JD: There he is. There he is. Justin, are you good? [16:34] Mark: We'll see. [16:35] Richard: Yeah. [16:35] JD: Okay, well, everybody, it's that time of the show where we're gonna introduce our guests. And who's gonna do that for us? Oh, of course. It's gonna be silen. And you out there, are you gonna rank him on a scale of 0 to 10? No, you're not, because we don't judge Justin anymore. We just let him do his thing. Justin, take it away. [16:54] Mark: Ten years, no judgment. Awesome. Well, for the first time ever, I think we got two dudes in one podcast. They're quite the fisted, the sophisticated drinkers. Both are taking. Taking shots at tequila. One enjoys their daily Daisy Cutter Half Acre Pale Ale, while the other enjoys a Dogfish Head Brewery 60 Minute IPA. The one who was here on time joins us from the Windy City land of the shitty NFL team. Beautiful cityscapes in show favorite Malort. And since the other one couldn't figure out his tech ahead of time, and I ain't gonna bother with the proper intro to him, we got the president from Capstone Retirement Group, Mr. Richard Banzinger is what we're going to call him. [17:37] Chad: And [17:40] Mark: Mr. Danny Heist. Welcome to the show. [17:42] JD: Sorry about the shit. All right. Why are. Why are these guys here? I think this can be a really fun kind of TPA centric show and we can cover some other topics and kind of go outside the lines a little bit. But your screen. Look at your screen. [18:00] Mark: Oh, you missed you. [18:02] JD: Oh, one. I owe one. Okay. But I. I've always been really fascinated and I'm sure it's no secret to people tune into the show. I've been really fascinated with the mergers and acquisitions, just industry. And it gets a lot of attention. On the advisor side. You always hear about this. This registered investment advisor was purchased by this company. And. And I hear rumors around the industry for how much? And I go play golf with these guys and find out how much money they made. I was with two of them this afternoon. And I'm just really interested in that money kind of side of it. But I'm also interested as a third party administrator that there's some of these firms out there and Danny represents one of them is leaning one of them called Strong Point and who are out there gathering up. And maybe, Danny, you'll say it's in a different way. Are you acquiring them? I believe that you are, but you're also letting them be their own firms and do their own thing. And so I'm very interested in the business strategy of that and I think a lot of third party administrators listening in would also be interested in that, whether or not they're vetting it out for their own firm or just curious about what their peers are doing and what competition looks like. And then Richard comes from a career that's really interesting. Like kind of parallels mine where his father started a TPA firm. Richard came in, got involved, he kind of continued to run the TPA firm that spun out on a financial advisor shop as well, which continues to do to this day. And, and Richard and I just really hit it off. And so I thought, okay, what a great opportunity to talk about these types of things in detail. So. So, Danny, without, like, I don't want this to be a Strong Point Partners advertisement, and we're going to dive into this a little bit more later, but just so everyone has a feeling of who they're talking to, give us a quick 30 to 45 seconds on strong point partners. Kind of how many TPAs you've gathered up and just what the general strategy is. [20:10] Chad: Yeah. [20:11] JD: So, J.D. time out. I'm sorry, dude. [20:14] Justin: Yeah, this is rough now. [20:16] Chad: Yeah, dude, that's four. [20:18] JD: Do you not know the company that you're the chief executive officer of, the type of company? Maybe I try to play this game loose Robey. I try to just talk flu. I don't think about what I'm saying, you know. All right, anyways, go on, guys. Danny, what your. It's your elevator pitch. What is strongpoint Partners as it relates to third party administrators? [20:38] Chad: Yeah. So. So thanks for having Richard and I on. So, so Strong Point is we're, we're. I would call it a network of local independent TPAs with purpose of trying to grow, Trying to make those businesses better and trying to learn from each other and the way we've set up the business. So just. This is going to take a little more than 45 seconds, but. [21:09] JD: Okay, we'll give you that. [21:11] Chad: I don't come from this space I come from the technology space. I was for many years in the travel, space travel technology. I worked at Orbitz and then Orbitz was acquired by Expedia and I led the B2B division where we had clients. [21:26] JD: And that's one, that's one. Bring them up. [21:29] Justin: It's got a number. I'm not very smart. It was a number in there, so [21:32] JD: it confused me a little bit. [21:34] Chad: Yeah, so, so I was part of something that grew, went through many different phases, but it grew both organically and then we got acquired by Expedia in 2015 and then I was put in charge of that business and given the opportunity to grow it a lot, a lot bigger. And we did a few acquisitions. [21:55] JD: I still can't wait for the jump to retirement. Like, how the hell are you going to make this pivot to retirement? [22:00] Chad: Oh, it's a hard pivot. So, you know, it was a great learning experience for me and I had to learn how to get really comfortable. Kind of a decentralized structure where we can create kind of a common core of like shared services to be able to help a bunch of different businesses. Because I had a few different businesses all grow and, and we had kind of explosive growth over the period about three years at Expedia. And when I was looking for something new to do, this seemed like a really interesting opportunity for a few reasons. [22:36] JD: Can I stop you for a second? You looked at the third party administration space and saw another opportunity for explosive growth. Am I correct? Damn, dude. Okay, keep on, keep going. Go ahead. [22:49] Chad: So I, I think the thing to know about me is I, I like to build things and, and I saw the opportunity in this space. I think all industries go through these cycles where there's, there's some sort of change in our industry right now. There's, there's change that's brought on by, you know, the fact that a lot of TPAs were founded in the, in the 80s, 90s and early 2000s. You have technology changes that are coming into place and then you have all these legislative and regulatory changes that, that are, you know, creating complexity. [23:28] JD: So most, most ASPA members. I'll drink for this. Are old fuddy duddies that don't know how to run their businesses. Is that what you're saying? [23:35] Chad: That's a different way of saying it. But it was your horse over the years, man. [23:40] Mark: You, I'm joking. [23:41] JD: But yes, we, we're picking up what you're putting down, Danny. [23:45] Chad: So I, I, I met some people at, at a private equity firm. They introduced me to the, the founders of Howard Simon, which is a family run business, father and two sons, great business here in Chicago. And this was an opportunity to build something in a space that I thought was interesting, in a space where I can get up every day and feel good about what I was doing because I thought it was important and working with smart people. I'd done some acquisitions before. I learned a lot about, you know, how to do them in a way that doesn't alienate all the people. [24:16] JD: But Howard Simon was your first look at a third party administrator and kind of getting to understand what it is that they do. [24:23] Chad: Exactly. Yeah. I'm a student of this industry. I'd say I'm still learning quite a bit, but I think. [24:31] JD: But nothing has spooked you. And we can move on a little bit because you start with Howard Simon. And now for the audience, you're what, six, seven, eight third party administrators? [24:42] Chad: Later, we have nine third party administrators. We also have a payroll company called StrongPay, which we rebranded out of Howard Simon. I expect that by the end of the year, we'll have another three to four. And, you know, the fun part about my job is that I get to talk to a lot of different business owners. And, you know, when we first started strongpoint, it was more of a concept we'd seen with some other competitors of ours in the industry had done. And there's a few ways to make money in this industry if you're an investor. One way is to take out a lot of costs and you create value that way. And someday you sell that business, like [25:20] JD: improve the overhead to make it more profitable. [25:23] Chad: You outsource, you. You get rid of the founders and a lot of the leaders. You put everybody in a matrix. And honestly, that doesn't sound like a lot of fun to me. And that's not really what I wanted to do. [25:34] JD: I like the sound of that. [25:35] Chad: All right. [25:36] JD: If I had, if I had deep pockets, that's the way I'd go about doing it. [25:39] Richard: But. [25:40] JD: All right, continue on. [25:41] Chad: Yeah, so I, I think there's a. What we. The hypothesis we had is that we could partner with a bunch of other TPAs that. [25:53] Mark: I got you, buddy. [25:54] JD: Don't worry. You can always finish your thoughts. You can save up your penalties. [25:58] Chad: Oh, okay. Got it. So we could partner with a bunch of third party administrators that wanted to still grow, that wanted to be part of something bigger. We could focus on the areas that could help them grow faster than they would buy on their own, help them make technology investments, help them hire faster Help them with hr, Help them with finance, all these areas. [26:20] JD: Okay. This. You're a great. You're a great, like ce. Drink. Got the vernacular down, but I, I get it. Okay. And do we announce today to everyone here, Danny, that should we announce to Chad, Justin and Mark that their jobs are gone and that I've sold out to Strong Point. And it's a good run, fellas. Jk. Jk. Jk. [26:46] Justin: Oh, geez. Jd, I was over here poking around your website and seeing, seeing people I worked with for years. We, we used to send a fair amount of business to Carlson and Quinn. I worked on a couple different committees with Mike Warren. Like, interesting to see the groups, good groups that you've gone out and acquired. [27:07] Chad: Yeah, we have great people, which is important for me because as I said, I'm still learning the space. But I get a lot of advice from people like Mike, people like Richard, folks like Claire May who just joined us from rpcg, folks like Mary Grayson. So we have a really, I think an amazing group of people and we try to learn from them. So that's. [27:34] JD: We'll dive, we'll dive a little more into that in a general sense in a little bit. But now that everyone kind of understands Strong Point why you guys are here, let's, let's. Let's pivot a little bit. I don't, I don't understand. Can we go through that again? [27:49] Justin: There it is. [27:50] JD: I'd like, I'd like to go to a. A fun topic. Third party administrator marketing videos. I. I ran across a video. How'd you come across these, dude? [28:04] Justin: Oh, I've been watching these. I've been watching these for a while. [28:07] JD: You have? So I didn't know them. So I ran across on LinkedIn the name of the. The firm is Hunter Benefits, I believe. And it's this husband and wife. And what caught my attention was they had a, a bottle of. God damn it. It's good bourbon, but it's good bourbon. It's when the one. The little horses on the top of the tops, you know, I should know that bourbon. Anyways, it's a really good bourbon Blanton. Thank you everybody. Blanton's. And, and the wife's got these shades on, bro. And I clicked on a few of their videos I'm watching and I, I thought to myself, okay, J.D. calm down. They're drinking alcohol, talking about, you know, third party administrator stuff. It's not like they're ripping off retireaholics. Bro, Husband might doing their own thing. But then my first instinct was, I wonder where these guys got this idea. And then I watched a couple of them. I'm like, I love these. So I wrote the husband on LinkedIn. I'm like, Bro, I'm watching your videos. This is sick. You guys are going. I don't know if they're here tonight. They. They might be. I talked about them, I think. Yeah, Catherine. So anyways, I wanted to. For you guys to comment on these videos, if you've seen them. Chad, you said you've been watching them for a while. So what was your original thoughts? [29:30] Justin: So you know how much of a nerd I am. And I research people that I meet. Well, I had met Tipper at a. I think it was a John Hancock's retreat. And then so I just, you know, connect with people on LinkedIn and Start. And they've got a slew. There was a lot back back then in the past when I just went to the website today when you said, [29:48] JD: oh, no, no, yeah, if you go to. [29:49] Justin: I didn't see nearly as many. [29:50] JD: See them all. I think they. [29:52] Justin: And so I got into a spiral hole of, of looking through them and seeing what they had to say about different topics. It was awesome. [30:00] JD: Yeah, I loved it. [30:01] Justin: And it was truly their personality, which was my favorite. They weren't hiding anything. [30:09] JD: I don't need this episode to be like the third party administrator. Love episode. My doorbell just rang. God damn it. But. But it is pizza there. Yeah, I love that. So, Justin, did you look at these things? I'm gonna. I can't believe I'm gonna answer my. [30:24] Justin: I did. [30:24] Mark: I was glad Chad had said that because I was trying to click on quite a few of the videos on the website and they, they weren't available. And so I just, I was like, wait, what's going on here? So. But yeah, they're the recent ones without the thumbnails work pretty good. I, I was a fan. [30:38] Justin: We've said it on the show before. There's. There's content everywhere. Right. Like we've gone out to. This has got to be one. But dwc, for, for a lot of their content is solid. I was listening into some in the past of some, some. Some of their releases. I'm like, this is super valuable even for a third party administrator that knows the space. [30:59] JD: So by the way, I think I just missed out on a great dealer on a deal on solar for my home. But maybe, maybe he'll come back again. So I say hunter benefits, husband, wife. And I just want to say shout out to the wife for wearing those dark sunglasses. Baller. We were talking about socks. Little fashion. I love that. There it is. I love that. That's Baller TPA right there. I'll drink for that. [31:26] Mark: I mean, they got a legit set too, it looks like. Huh. [31:29] JD: That's not all set up. [31:31] Mark: Yeah, it's not. [31:33] JD: I'm a fan. And they're drinking the. The Blantons. Look at the editing. You guys are killing it. You're crushing it. Crushing it. The retireholics are now fans of Hunter benefits. Okay, Another third party administrator who you're aware of, you guys are all aware of, I think Nova, I recognized or took notice of Betsy Kelly because I love golf and she's obviously like some kind. I've never seen her golf, but looks like she's some kind of kick ass golfer like that played semi pro or something. I don't know. She's got her name on her bag and so that's what I'm assuming. But she's rocking these little LinkedIn third party administrator ads where she's on the golf course. I don't know if Brandon can. That's putting them on the spot to show a clip. Brandon. Or just show the video. You're back, bro. We want to use you now. Here. There it is. So she's like, hey, A T. A TPA is that too? [32:32] Justin: Geez, J.D. [32:33] JD: it's like you're gonna check something. [32:35] Justin: You were off for a week. [32:37] JD: She's saying it's like that was okay. [32:39] Mark: We. We talk about analogies all the time. Ever thought or at least discussed caddy related to third party administrators? And I thought that was pretty brilliant. [32:47] JD: You liked it? [32:49] Mark: Yeah. [32:50] JD: Robey, did you check these out? [32:54] Justin: Yeah. [32:57] JD: I don't know. [32:57] Chad: It's the golf. [32:58] JD: The golf thing's very stereotypical. [33:00] Justin: I don't know. [33:01] JD: When I first started selling, way back [33:04] Justin: in the day, I used caddy. [33:07] JD: I thought that was a great way because I was a golf nerd too. And then I realized, ah, just. [33:12] Justin: It's just stuffy. [33:12] Mark: It's. [33:13] JD: It's. I don't know. I'm over it. As Jim Sampson says, takes a lot to impress Robey. You're right. Richard, you spent your life running a third party administration firm. How do you feel about things like the Hunter benefits? This woman here with Nova even. I don't know. Not to ask you to talk about our firm here and the crazy we're doing, but how do you feel about third prime ministers getting out there and with video? [33:41] Richard: Yeah, I think it's awesome. I mean, I love the, the videos that they do on the, on the, you know, comparing the, the third party administration business to a caddy and how that, you know, how the caddy is, is, you know, watches out for the golfer to make sure that they navigate the, you know, the environment and, you know, making that, that comparison. It's kind of like your long board, short board comparison. JD it, you know, any way you can, you know, kind of distinguish how we, how we do things as third party administrators. It's, it, you know, it helps us all. [34:20] JD: So, you know, who loves analogies? I, I want to tell the entire world right now, Nerdy Chad is obsessed with analogies. I think if you put a lie detector on him, he thinks a good analogy is the secret to closing business. Like everything he does is a analogy. So am I. [34:43] Justin: No. We used to sit down at the beginning every year as a consulting team and say what analogies are working, what are not? What are the conversations you're constantly having that people are struggling with? And how can we put that into everyday terms? That's where analogies are beneficial. You know, how many times JD We've done our home builder analogy for the roles and responsibilities in the, in the. [35:05] JD: Justin, how many times have you done it? [35:07] Justin: And people. And people immediately go, that's the first time someone's explained the rules that I actually understand. What, what, what you all do. It's constant. Analogies are crucial. [35:20] JD: Danny. I've got it. I've got a great J.D. [35:22] Richard: hold on. [35:23] JD: You can't just glance over this. Do you want to know really what happened in those, what I'll just call analogy brainstorming sessions with Chad? How that worked would be, Chad would say, here's the analogy we're gonna use. And he's like, what are your ideas? And we would give him ideas and he would tell us why those analogies didn't work. So that's your analogy, nerd. Danny. [35:44] Justin: True at all, Danny. [35:46] JD: Richard, such a truth. [35:47] Mark: Just. [35:48] JD: I can support that to give you guys some context. Chad is the boss of them. And so they're, they use this show as their moment to talk about their boss because it's a safe space. Danny, I think that we can't get fired for that. I have an idea that you can take with you. No charge from me. Advice, if you will. If you could get all these third party administrative firms that you, you've acquired, if you could get them all to get on YouTube and get super drunk and talk about 401k, could be the key to your success. Okay? Let's move on. Let's move on. Let's. Let's spin the wheel of ice, shall we, motherfuckers? Let's spin the shit. Wheel of ice. The wheel of ice. The wheel of. I'm down to lose. Pick me, Wheel. I dare you. Pick me. [36:41] Justin: I'm afraid. Kill me. [36:47] JD: I was trying to use reverse psychology. Right, we're muted right now. Oh, hackler, you lost the bet. You lost the bat, Chad, while I pound this smear off ice. Did you read the article that I wrote on TPAs and the technological revolution? [37:08] Justin: Yes, I did. [37:10] JD: All right, well, why don't you kick off the conversation while it takes me two minutes to drink this thing? [37:17] Justin: JD's version of Kick off the conversation is engage our guests when he does this. So that's where I'll go. Richard, I'll start with you. I think JD's whole point there is that the TPAs are so dang, so far behind in embracing technology and coming to modern times that there's a lot of room for us to run. Feel the same way. Record keepers are somewhat ahead of us as a community, and therefore we've got a lot of room to catch up. [37:46] Richard: I think that's a good true statement. I mean, I'm buying on that one. TPAs definitely are. You know, they're more consultive just based on what we do. [38:02] JD: Richardson. Pretty good. [38:03] Mark: Hold on. Time out, Time out. Boys, boys, boys. [38:05] Richard: Yeah. [38:05] Mark: The penalty drink is tequila. It's not beer. [38:08] JD: Yeah. Where's the. Where's your boobs? I've been swinging off Woodford Reserve over here. People like, I drank a bottle of Seagrams. And I just want to clarify, Richard. Oh, wow. Did he just penalize himself while drinking? Yeah. What I was trying to state in this article. And Chad, your point is totally accurate. Third party administrators are behind the curve. I was saying that there. I believe that there's this world kind of right now and kind of coming up in the future, or more so coming up in the future, where all of a sudden small businesses that didn't have big technological budgets in the past will actually be able to afford a lot of really impactful technology, and they can use that to snap on to their own business model. And I'm going to have to drink for these because I don't know words that fit for these. But through APIs and through the world of data and artificial intelligence and all these things, we're all of a sudden in this world where if I've got data over here and data over here as a Small business. I can start to share that or bring it into one central and then I can snap on technology that can do phenomenal things. That the only companies that could do that before were these big, large Fortune 500 companies because they were the only ones that had the budget. And so then I further think, and then I'm going to go straight to you, Richard and Danny, that who could be in the best position going forward? Small businesses that are able to snap on these things or what? I'm familiar with a lot of these large record keepers that, which is what the article is about, that do bundle compliance. They're very slow to move their attorneys, their, their business structure. Everything slows them down from adding technology. I mean, to be totally honest with you, Aaron Chum was correct when he said that these big firms are slow moving ships. Because right now the technology that they're using, when you get inside and you work with them, which I do, they are archaic in terms of things they can do. I needed to change my bank information with Nationwide Financial as a plan sponsor yesterday and I had to fill out a form to do it. I couldn't go online and change my bank information. Anyway, I digress. My point is the big firms are those slow longboards. The small firms are the quick, edgy little surfboards. Okay, take it. Either one of you, Danny OR Richard, could TPAs be in a great position to kick some ass going forward? [41:00] Chad: Yeah, I'll start. I mean, coming from the technology space and, and seeing kind of the case of change here so far, it, it's pretty slow. And I think the TPAs could have a real advantage, but on other, other industries is that sometimes the larger companies that have these really old systems, they're very hard to innovate on. They're like these old code bases and you have a lot of clients on them, so you can't make change that quickly. And smaller companies that are more nimble than invest in their own technology I think could be at a huge advantage. We have a development team, we have data engineers, and we're focused a lot on what we can do to make our team much more efficient and make the client experience a lot better. So I think you can invest in it. The other thing that you kind of pointed to is that I think a lot of these tools are becoming cheaper and more readily available for others as well. So the barrier to entry, I think is a lot lower than it probably was before. The key is like, how do you do the change with your team and how do you bring your clients along and what I've noticed is that a lot of people in this industry don't love change. They've been doing things the same way for a long time. [42:12] JD: Danny, Danny, I'm going to give you again, you're so lucky you're getting so much advice from me tonight. Right, continue on your path. Don't let us old fuddy dy TPAs slow you down. You're right. We are resistant to change, but you need to push us in the right direction. So do not stop on your mission. [42:34] Chad: No, look, I, I think it's how you do change also. You can, you can bring people along for the ride. You can, you can help them understand the why behind it. Change either happens to you or, or with you. So we try to make it a much more inclusive experience and get advice from people before we implement change. But look, I think there's a lot more that's going to happen in the industry to, you know, a lot more innovation, a lot more technology adoption. And I think we're, we're kind of scratching the surface right now. So I'm excited to see what that looks like in the next few years. [43:06] JD: Richard, imagine yourself running your family company still today. I know things have changed a little bit, but, or, or, you know, a few years back. And so what I'm saying to you is I think with artificial intelligence, the reality is even software that you would have to have purchased to do certain things, you don't even need to buy software anymore, and you surely won't need to in a year from now or two years from now. Literally, it could be created for you. Like artificial intelligence could code that software for you and build it for you as a small business. Like this is, the world has changed. And so my question to you is, who's in the better position, you running your small firm or empower? Like, I feel like you're the one that's going to kick ass. I mean, your thoughts on that, your opinion on that? Yeah. [43:59] Richard: Again, you know, part of my decision to, to exit when, when we did was, was, you know, the challenges that you're, you're talking about, right? You know, being able to embrace technology, bring it into your firm to be able to afford it, you know, things you do. So one of the reasons we, we, you know, we exited was because strongpoint did offer all those, you know, those services as part of their, you know, their structure. And it made it easy for us not to have to focus on the it, the it, it, you know, it's, it's, it's difficult and to have a, you know, a team in place to. We don't, we didn't have that team. And, and so when we, we made our decision to move forward, that was a big part of it. And but I think you're right. I think this, this, this, you know, with AI and some of the things that are coming down the road, it'll, it'll be able to come downstream to the smaller businesses where they can use it to, you know, you know, grow and enhance what, what they're doing. So yeah, yeah. [45:08] Justin: The issue I have with some of the comments early on in the chat bar and I think Danny, you kind of mentioned to it as well, from the moment I stepped into this space, I felt like the third party administrator community feels they're the only ones that understand what we do. We are the only ones that can build technology that will actually be useful for a third party administrator. And it's not true. We don't have to build our own tech to both. To all three of your points, if you understand that a good developer or what I put in the chat bar is a connector. If you guys remember from the book we read, Justin, Mark, if you have a good connector that understands technology and can piece together what you're looking for with the proper tech that it already exists and can be molded code wise to what you need, then the world is your oyster at that point. We do not as small firms have to build our own tech for it to be useful. And I still think that the third party administrative community thinks we are the only ones that can do it. [46:11] JD: Well, I will go against you a little bit as just someone who's been working on technology behind the scenes. Justin. I always look at what Justin laughs. I think he's laughing at me and he's laughing at someone in the chat bar. [46:23] Mark: Oh, fucking hackler just lighting me up. [46:25] Justin: I love it. [46:25] JD: Hackler might, should, could possibly have our champion tonight. By the way. He's had a couple of zingers. It is complicated though, Chad. Like as I've worked with people to build tech to do what it is these mom and pop third party administrators do, understanding the rules that they have to go through and all the nuances of compliance. And I'm sure Danny's been exposed to some of that now. Like it can be very complicated and very frustrating. But in the end you're totally right. Like we code, program and build things from far more complicated industries. I mean Danny came from an industry where I could go on my fucking phone and book a flight and a Hotel and a thing in a certain destination and then I can Change it in 30 seconds somewhere else to upgrade myself here or there, change my seat on the flight. Like technology can do amazing, amazing things. So you don't think it can handle affiliated service groups and ADP tests? I'll drink. [47:32] Justin: I still think you're looking at the, at running our work and I'm more so thinking about the workflow procedures, data integration, pull of census information push into this. I'm talking procedurally, not the work that's being done. Well, there's, there's so much tech that already exists out there. Not for the 401k space. There's so many other businesses that can be adapted and used and leveraged here. [47:56] JD: There is the beauty of it is that you can use this technology to improve so many areas of your business. And I, I wasn't here to fall in love with Danny here in his business model, but you've brought together these nine third party administrators. I would think that everything I'm talking about tonight about that I, I'm talking to the individual third party administrator is still true for you and your group like to, to use the technology that is in front of us and it's going forward to improve the third party administrator's workflow and day to day life of the job they're doing. To me there is so much opportunity. It's insane because earlier you said, I said we were funny duddies. You used much better language, much more proper language. But the point of the matter is, is that we've been doing things in an old school fashion for a long time which just means wow. The opportunity to do things in a more efficient way, in a more economical way is, is super easy because it's right there in front of us. So I don't know, I want to continue positivity. Brian Williams I, I literally if you go read my article and we'll wrap this conversation. I want to talk more about mergers and acquisition. But I firmly believe that a good tpa I'll drink a smart third party administrator that's evolving and entrepreneurial and that would be true of what Danny and Richard are doing here with, with their group because they got the money behind them to do this. I think those types of firms are in such a strong position to come to the market with new solutions that no one's seen before that these advisors have not experienced. I mean my dream would be you could submit your sense. We're gonna get nerdy here everyone. So if you're not a third Party administrator. I apologize. But you could submit your census and, and your plan reporting questionnaire, whatever you call it, all the questions you have, and within seconds you could have. Did you pass? Did you fail? This is what happened. This is. Here's your 5500. It's ready to sign and go. Like this could be programmed to the point where it could happen in seconds or minutes, mind you. And if that's scary for third party administrators to hear, it shouldn't be. Don't be scared. It just means that we can make your business that much better. And then we can focus on service and client care and, and distribution and working with advisors. I just think third party administrators could absolutely, in the next two, three, five, seven years, be like the soup du jour for advisors. Because those archaic vendors and power foia, whatever they're trying to bundle can't do the shit that you're doing. [51:01] Justin: You can't say archaic and vendors and, and talk third party administrators in the same sentence. Yes, some of their systems and tech is archaic, but we are light years behind them as a compliance administrator industry. [51:15] JD: No, no, no, Chad. As it comes to compliance work. That's not true. That's. [51:19] Justin: Oh, fair enough. I'll give you that. I'm strictly talking technology. [51:23] JD: Yeah. So I'm just talking compliance work. It would be fun to talk cyber security and all that kind of, but let's. Let's move on. But that's not true. I'm talking about compliance work. [51:31] Justin: Fair enough. [51:32] JD: And they're. They're very archaic. Okay, Danny, this is where you shine. Mergers and acquisitions. Chad calls it murders and. Right. What was that? That was a retireholics joke, I think. So what do you do? I'm into. Oh, murders and executions, mostly. Do you like it? Murders and executions. I don't. I'm not here to, like, put a tough question. You. I just really, really want to learn, and I think the TPA is tuning in. Want to learn? Yeah. Yeah, I'll drink. [52:09] Mark: I mean, we had 20. [52:09] JD: I think in order to learn, JD, you actually have to stop talking and let the guest say something. Well, I got to. I got to position them up here, but thanks for the. I wasn't talking about. [52:19] Mark: Now, [52:23] JD: when you bring these nine firms together, what specific. Like, what's the goal? To make them stronger. And. And like, where. Where do you see the top three things you can do to make it better? You know, so. So all those firms can flourish more or do better? More. A lot of people want to buy my business and they talk to me about Letting me do my own thing and stay in my lane and continue to do it the way I want to do it. I think. Why do you want to do that? We should be changing. If you're going to buy me and bring me into a group, what's the new strategy? So what is, what is strongpoint's new strategy? [53:02] Chad: Yeah, so I wouldn't say that we, we would just leave our partners alone. I think Richard can attest to that. It's, it's not, that's not the strategy. There are some competitor, competitors of ours that, that's what they do there. You know, there are kind of, I would say maybe two or three basic models in the space. There's, you know, cut costs and outsource jobs to, in India, Bangladesh and you know, kick the founders out and, and try to streamline costs. And what happens with that? I've seen that. Doesn't take a rocket scientist to see you lose employees, you lose clients right after that. And then I don't think that the, you know, anybody really knows where they're working for and culture is not great. [53:46] JD: Do you know that they lose like a lot of clients or is it just something that's bearable? [53:50] Chad: I think most TPAs who are probably listening have benefited from, you know, some that have lost clients. Right. I think we've all done, we've all gotten clients. Right. So that's one model. There's another model where you buy and you kind of hold and you don't really do much and you let everyone do their own thing. There might be some value in that. That's, that's also not because what. [54:14] JD: Help us, Danny, because then you'll package it up later and hope that the worth is more and get some type of return on your investment. [54:22] Chad: Yeah, in, in the private equity world. And I'm, look, I'm, I'm not a private equity person, but I'm working with a private equity backed company to, to build this thing. But in the war, in that world, something that has more scale is just going to be more valuable because there are fewer companies like that that have, you know, tens of thousands of plants together and theoretically somebody else could come in and do something with that and make that more valuable afterwards. So the idea of just getting scale, there's some arbitrage in that for some to pursue that strategy. Right. [54:56] JD: Who knows what that, who knows what that acquirer strategy will be? But your point is that, and that seems very logical to me that that is a strategy. Let me accumulate as many as I can so I have mass. And then someone else can be very interested in this group to do something with that, whatever that choice is. Okay. There's a third option. [55:15] Chad: Yeah, so. So private equity gets a bad rap, I think, because of maybe the first one. Because, you know, private equity basically just means any investment that's not public. So any investment in a private company. So it can be growth equity or it could be venture capital, or it could also mean distressed investing where you're looking to turn something around and kind of gut it and all of those have, have a place. You know, personally I wasn't that interested in any of those other models except for growth. I think that's the, the most fun thing to be a part of. And for us, what we're focused on is we, we look for businesses. And you know, not every, every TPA fits this model, but we look for businesses that have a founder that cares about their team, cares about them having jobs, that has a little gas in the tank and wants to continue to grow and that, you know, believes their business could be a little bit better, but can't make those investments on their own and wants to be part of something that's growing and that's a little bit bigger where they can learn from other, other similar businesses. I got a drink. [56:21] JD: All right. [56:22] Chad: That's kind of the core philosophy around strongpoint and what we're doing. And you asked how we're doing it. It's not one thing. It's not even three things. It's probably a dozen things. There are different levers. A lot of the businesses that have come to strongpoint have founders who have led sales for many years. At one point, you know, I kind of think of sales as hunting and then farming. At one point they were hunters and they were making, you know, new, new relationships with advisors. At this point, they're mostly farming and they're nurturing those relationships and that's how they get clients. So, you know, for that we want to hire some new salespeople that are establishing new relationships and helping to grow that way. We are, by the way. [57:02] JD: That makes perfect sense to me. So as a third party administration, firmware, you're looking at my sales team minus one right now. So Devin's not here, but of course you could be a great team. That's a check swing and you could do a great job and have great people. But if you're not out there with a distribution team selling, then you just kind of tread water. Right. Or, or don't do whatever. And so, and why do most third Party administrators not have sales teams even like mine, because usually it's just the founders, right, that are out there. Selling is, is because it costs money. Like these boneheads sitting here tonight cost me a ton of money. [57:51] Justin: They also think nobody can do it better. [57:53] JD: True. [57:54] Justin: That is a. Your dad told you that when you came on board. Nobody can do it better. And I, I think there's some truth to that. But I also think that that's a naive thought process. [58:04] JD: When my father and this. Richard, this should probably resonate with you a lot. When I took over my dad's company and then I told him that I was going to hire Chad to sell because I didn't really want to sell anymore, he said, what? He can't go sell Plain design consultants. He's not me and he's not you. The son of me. Like, he's not a Carlson. How's he going to sell our family business to people out there? And then that's just an. I love my father. But that's a naive perspective because Chad goes out, he crushes it. And then we add Mark and we add Justin. We add all these. Like, everyone can sell anyways. Everyone knows that. But, but third party administrators need to feel that, that love. So anyways, yes, I get it, Danny, that you could add. [58:50] Justin: Let me ask shitty, because we've had this conversation before and Danny, I'm sure you have an answer to this and I'm genuinely curious if, if it's truthful or not. The third party administrator space, there's very little revenue to be made at the current margins and the work that needs to be done. Now, if we brace in technology and, and you outsource, as you mentioned, there is some room to create margin, but it's minimal. I mean, most third party administrators are covering two grand per client in revenue. Three grand per client because it's micro space. Where does, where does private equity look at that business model and say, I'm going to get good return on my investment for buying up these shops? [59:36] Chad: Well, what I'd say is that the margins of third party administrators are not minuscule. They're not as big as raas. I think that. [59:47] JD: Danny, Danny, Danny, don't, don't. Don't tell Chad too much about our margins, okay? How do you think I afford my Lambos, Chad? We got decent. Sorry, Danny. Keep on. [1:00:00] Chad: Yeah, look, they're, they're, they're not as big as some other folks in. Some other players in the space, but they play a really important role. They're really healthy. It's also a business that has very low churn, like single digit churn. And, and that's a very steady consistent, you know, cash flow. And, and that, that can be very attractive for investors. So, you know, I, I think all businesses have different margins, you know, that we've talked to, but most of the businesses we talk to have good margins that we think can be improved. [1:00:38] JD: Improved upon. Yeah, yeah. [1:00:39] Justin: So they, so how many plans do you all have at this point, Danny? Between those nine third party administrators? [1:00:45] Chad: Yeah, we have about 7,000 plans, we have a few thousand record keeping plans and we have about a thousand payroll clients as well. [1:00:53] Justin: And so that's where I was, that's where I think this conversation needs to lead. And I know we're nearly out of time, but it's not the third party administrator business that's going to make the money. The record keeping side, the potential data access and relationship access someone mentioned in the chat bar. It needs to be discussed. Companies are acquired. [1:01:13] JD: Hold on. Danny didn't say that they were doing any kind of record keeping or anything. He said they're just doing payroll. [1:01:19] Justin: No, you have record keeping. [1:01:20] Chad: We have some record keeping as well. So record keeping. [1:01:24] JD: How many of the 7,000 do you think that you guys are doing record keeping on? [1:01:29] Chad: It's, it's about 2,000 or so. [1:01:30] JD: Oh, okay. That's a decent amount. [1:01:32] Mark: All right. [1:01:33] JD: I stand corrected. All right. [1:01:34] Chad: Yeah. And we, but we work also with all the other platforms, relationships with them. So yeah, look, I, I would say the margins are good and they're, they are consistent and they're steady and the business has low turn. And from an investor perspective, I think that that's, that's attractive. So that, that's, that's what I think people see in that space. [1:01:55] Richard: Chad, you need to be asking for a race, I think. [1:01:59] Justin: Thanks, Richard. I appreciate that. [1:02:02] Richard: Yeah, I think it, that's a great. [1:02:05] JD: That was a good question. That was an even better answer. Like, and so I don't want to be like super positive third party administrator, but again, I talked about the technology earlier and I just want to back up kind of or use Danny's thoughts as fuel to our fire. Like the third party administrators out there have really good business models that are attractive and are valuable. And I'm not, I don't mean whether you want to get acquired or not. I'm just saying you're writing a pretty cool business that does good revenues. As Danny mentioned, you keep clients for a long time. Sometimes we forget we get so what we get so butthurt. When we lose a client, we forget that we tend to retain clients for seven, eight, nine years on average. You know, which when you compare that to other industries, is pretty damn good. And the reason being is that the work that we do for our clients is so, dare I say, like intimate and complicated. And, and so it's kind of like you're gonna stay with the person that's doing that kind of stuff for you, which is very different from even a record keeper or even a financial advisor. It's almost like an accountant or someone that's doing that type of work. So there's a lot of positives there. And, and yeah, Chad, Danny backed you up. Like, there is profit margins there that are, that are decent. Yeah, we're not tech companies. They're gonna sell for a hundred times, you know, revenue. But, but in terms of small business, we look pretty damn good when you compare us to restaurants and retail shops and all this other, like, it's a pretty good business model. [1:03:46] Justin: Shame on you, J.D. [1:03:48] JD: huh? [1:03:49] Justin: I said shame on you. We've had so many people talk mergers and acquisitions on this show, and every time we get into why they would want the business, because private equity expects significant roi. Significant roi. And yeah, that's fine. I'll take both of them. I opened up some honey whiskey, so I'm good with that. And so if that's, if that's the case, if that's truly what we're looking at, it's not the third party administrator compliance side of the business. It is, it is other ways of cross selling, which is what the chat bar was talking about. It's other ways of leveraging record keeping. [1:04:23] JD: Point. Great point, Danny. Is that for you, your payroll, like, Chad's got a great point. The people that are giving you money to do all this stuff, they want to get good returns. So they don't want to just see you conservatively take these companies and, and grow them at a nice, steady, fine pace. They want like a home run. And so what's the bigger plan? Is it to get 75% of them on your payroll company? Is it to sell them some other type? Like, where's the home run? [1:04:54] Chad: So look, I would say that I'd love to have 75% of them on their, on our payroll company. Nobody seems like their payroll company, so there's an opportunity for that. And we find that the, the more clients that we have that have, you know, more than one product, they're, they're a lot stickier. So there's a real strategy there. There's you know, we're doing a lot of stuff with cross selling cash balance plans as well. And there's a real opportunity there as well. And, and that's, that's a great thing for our clients. And look, what I'd say is that there's, there's. I, I understand the point that, that there might be different ways to make more money, but there's a lot of money that's flowing into the space right now in private equity. We have a lot of competitors that are out there doing it there. We have some of our competitors have recently recapped or about to recap. There is money flowing into this space right now just for what it is. So I guess I would, I would say, you know, I hear you on that point, but I think that the space is attractive on its own as an investment vehicle. [1:05:55] JD: Home run. Just a conservative. [1:05:58] Chad: It's, it's not just conservative. So there's another point also about, in the chat about, you know, having a collection of TPAs when you go to eventually sell that business. [1:06:11] JD: Keep going, keep going. [1:06:13] Chad: Is, is not as attractive as something that's fully integrated. So there, there's, there's some truth to that. But what I would challenge with that is, is do you want to integrate something at the cost of hemorrhaging clients and losing double digit clients here, over here, which is what we're seeing better. So I don't want to do that. I actually think that doesn't work. We are, we are integrating all of our businesses on the same HR platform. We are integrating all the data. We have a great business intelligence platform for that. We can see exactly what's going on in the business. We are working with a bunch of our partners to migrate them to the same CRM and workflow system and the compliance, compliance systems that are used. And we have to be flexible to work with a bunch of them. It doesn't make sense to me to do a migration for migration sake. [1:07:05] JD: And you're totally right. Like, it's so funny, I felt for a moment there like I could compare myself to you because I bought, I acquired one very small third party administrator a little while ago and. But what you just said rang true to me, which is, yeah, that's the same headspace I was in, which was like, she only had. We love her, Valerie, she tunes in all the time, but she only had like 70 clients. But I just didn't want the road to be rough for those 70 clients. Right. Like, I didn't want their world to change. And so I didn't want to, like, put a lot of new on them. And so that makes a lot of sense to me. But I would also say that I'm sure this is part of your business model, that long term or midterm, you can still make slow, incremental changes and evolutions, and they'll, they'll suck it up, the clients will take it, you know, to say, hey, we need you to do this now. Like, you're only going to pay electronically. No more. No more sending in checks for your payments. And they'll, they'll take it. You'll lose a few clients here or there or some very small percentage, and you can keep moving towards a bigger goal. But it's interesting for me, I thought Chad had such a great, tough question for you, and then for you to say, like, no, we don't have, like, an evil plan to hit a home run. We just want to kind of ride this current wave of decent profitability, which is interesting to me. Like, I, I too, am confused by that in terms of, like, the money that's being invested, because you didn't answer the question, which was really. And I'm not trying to play hardball with you, I love you tonight, Danny. You've been phenomenal. But it's like, if they're gonna give you $20 million, $40 million to go make these acquisitions and do these things, they don't want. If they gave you 20 million, they don't want 27 million back. Like, they want, I would assume, 30 million back or 40 million back. Like, they, they want to make a good return on this. Otherwise they just invest their money in other places. Or maybe your pitch to them is that this is a very steady, conservative, like, solid place. Like, so I guess I move back Chad's question one more time to put you on the hotspot. And then we'll end with chat bar champion. Like, come on. Don't they. What expectations do they want from you, Danny, and how are you going to execute on those? [1:09:43] Chad: Yeah, so. So to use. Let's use some baseball terms, so. So I think someone said home run before. We are, we are on pace, maybe a little bit ahead of pace for what I think what I hope will. Will be a home run outcome. But the way that we're doing it is just different than the way that some of our competitors are singles and doubles. Look, we have. Every business that's joined Strongpoint is growing faster right now than they were before we partnered. [1:10:09] JD: Okay, that's. [1:10:11] Chad: We had 12. We had 12% organic growth year over year and most of our businesses were not double digits. And we've improved them through not one thing but a dozen little things. And it's a bunch of singles and they start to compound. And I, so, so I, I guess I, I would just push back on that and say that what we need to do is keep on finding. I'd love to find a bunch of really great TPAs that care about building something and I love to work with them to help improve their businesses and make, you know, make their client experiences better. That's what we're doing. And it's not that. It's actually not that hard. There's not a big mystery to it. It is very, very hard, I would say, to integrate cultures and to make sure that the employees feel valued. That is the number one reason, I think that a lot of these integrations have failed because there's not enough attention paid to the employees and we probably over index on that. We haven't lost a single employee. Not good because of transition. So far we've lost them to retirement. They've. A couple of them have gotten outside of strongpoint, but we haven't lost a single employee because they've said, I don't, I don't want any part of this. And I think that's really important. Your reputation in the space is important and you got to do what you say you're going to do. So so far we've done that. You know, I hear all the challenges to that. There's a lot of skepticism. It's working. That's all I say. [1:11:33] JD: Yeah. No, and by the way, we, we do not have a time limit on this show. We free flow now. Just like Joe Rogan. We'll smoke a joint and keep going. Chad to whenever. Are you. Danny, are you. You please tell me you've done some research on a census and future plan and everything that they've done. Can you give us, like, what's your take? Because for us as an industry, that was the first time a company we knew came out and started really grabbing a bunch of TPAs. I only said that because I want some more of that Woodford Reserve. I want it. People, what's your take on a census future plan? [1:12:17] Chad: Well, look, I wasn't around this industry for, for when that. That happens. What, what it appears to me, just looking back on it was, was they were trying to get very big very fast, and they didn't really have a great plan for that. And they bought a lot of businesses and they said we'll integrate them later. And that's really hard to do when you push comes to shove. If you don't have a plan, you don't have a track record of what you're going to, you know, kind of a thesis of all that. And so I think that, you know, when they started to do that, I think that they did a lot of the things that we're talking about. They, they eliminated roles, they kicked out founders, they tried to streamline a lot of these things. So you know what's interesting is that a census for investors I think did quite well. And like I said, there's a lot of ways to. [1:13:03] JD: Interesting. Yeah, like the, the industry sits and bitches about how it failed, but maybe it worked financially. [1:13:11] Chad: I, I think it did okay. And you know, more, more power to them. I just think there's more than one way to build a great company that's valuable and we're going about it differently. So that's, that's what I'd say about that. [1:13:24] JD: Well, yeah, I think you should. And you've done a good job. Okay, here's the emotional part of the show. I always hate this. I usually like to hate the guests more than love them. That's a bad thing to say, but it's true. I like, I usually hate outside industry people coming into what I call my industry. And I say that because I'm a second generation family owned business. Right. My father started our firm in 1975. So I think it's really funny when people come in from outside of what we do and try to make sense of it and make profit. I've been on the record of ripping on Guideline and Human Interest invest well and, and all these companies for quite some time and had them here on the show and gone pretty hard on them. I'm gonna get lovey dovey with you right now and say I love that you're pulling together nine third party administrators and bringing them in as a team and trying to do cool with them to make their businesses flourish and grow and, and do better. And if you can benefit from that and your investors can benefit from that and they also can then hurrah. I'm, I'm totally down for that. So, Danny, consider me a friend. And if you ever have a question or want to understand something more, I realize you've got the people you acquired [1:15:03] Justin: and go ahead and call Mark. [1:15:04] JD: The guy sitting next to you is, knows this business as well as I do, if not more. So you've got the people to talk to. But good for you. And so my, the Moral of my little stupid rant here is, and this is biased, of course it is, but I would like to see TPAs I'll drink, really do better and become more paramount and more of a force in the industry over the next 10 years. And the reason why I would like them to do so is I feel like they are the experts. They are the ones who can focus on customer service and do a better job. And we hear all kinds of wailings from advisors, cries from advisors these days about how record keepers are failing when it comes to service and support and all these things. And it's a tough gig. I get it. I experienced that myself with my own company. It's hard to service clients and support them and do these things. But I think third party administrators are in the best position to truly offer the 2.0 or 3.0 version of, of what retirement plan administration and compliance could be. And it's a part of it. And it all exists in a lot of different flavors in terms of partnering, different record keepers and how that works. And, and obviously the advisor plays a massive role in that. But I think the time is now and I'm not just trying to like it is. I think the time is now, you're right for third party administrators to actually gain market share and be a more formidable player in the game of chess that is 401k. And so there are some people out there that say, oh, it's kind of the dumb answer, sorry, channel ego. The dumb lazy answer is oh no, we're all going to become bundled with like three companies. I think there's a different outcome here. So go ahead. Chad. [1:17:07] Justin: I, I was just going to say I think Richard and Danny are smart enough and they've figured this out in the, and I'm going to use the term consortium that they're creating is that I don't necessarily think that the third party administrative community is going to win more business than we have in the past, but I think there's going to be serious, continue to be serious consolidation. I think that if you look at the amount of plans that an outside third party administrator is winning, it's going to fall between the course of 20 groups rather than the course of 120 groups. There are so many groups that have 100 plans, 200 plans, and are ran by an owner and a son or a spouse and two service people. You don't think that would have 250 plan? No, not at all. [1:17:57] JD: Okay. [1:17:57] Justin: I do not. I think that they will be gone in the course of five years And I think that groups like theirs will eat them up. [1:18:05] JD: Yeah, yeah. [1:18:06] Richard: The risks are too, you know, they're too, too heavy out there. I mean, for the small business, you've got the hr, you got the cyber, you got the security, you got. Yeah. [1:18:18] JD: Employees. [1:18:20] Richard: So. Yeah, I agree with you on that, Chad. I think you're right. I think the smaller guys are going to be gobbled up and, you know, it's going to be the, you know, 50 to, you know, you know, 20 to 50 companies that stay around that can really weather the storm. So. Yeah, we'll see. [1:18:39] JD: All right. I don't know. I think you guys don't quite, quite. Boots on the ground and hand to hand combat, that's the best thing Danny [1:18:51] Justin: said in the whole show. Jd, huh? He said that so many of these groups we've acquired had the JDs of the world selling and we realized they had good market share. So what do we do? We put a wholesaler in the area that I've not seen that from. Future plan. I've not seen that From a few of the other aggregators we've seen step into the third party administrator space so you retain the people that advisors liked to work with and you brought in wholesalers to sell the product. Haven't heard anybody else say that yet. [1:19:22] JD: Well, and then don't forget all the opportunity that Danny's firm has and all the firms underneath him and every other TPA out there to also, when Danny says he can lower overhead, create efficiencies, you can too, in your own shop. You can take a look at it and figure out where you're spending too much time, too much money, too much resources, improper software, you got to look at internal operations. I agree. I think this is part of why Danny loves this industry is there's a lot of potential improvement internally where you can make things more efficient to make, to make more money. And that's a great way that doesn't harm anyone to, to do better. Okay, we're gonna go to chapter champion and I'm gonna thank you guys for being on the show. And then we're gonna all kick you out of this little wave that I've enjoyed tonight. The by the way, who showed up first to win 500 points for Chapter? Yep. Samson showed it first. So you got 500 points. Okay, well, I got news for you. This is gonna be a first. Chat bar champion tonight is Will Hackler. Because I am J.D. carlson and I say so. Will Hackler. You are chat bar champion, my friend. You're a was. [1:20:54] Mark: Are we gonna take this. I don't like not being able to vote. This is not cool. [1:20:57] Justin: It was. It was my vote as well. So I feel like. I feel like I'm okay with it. [1:21:03] JD: A democratic society. Silent J, get the. The down and shut up and eat what I serve you. You. I'm in charge of this. And I will determine tonight because I'll. I'll tell you this. Will Hackler gets passed by way too many times. He's a goddamn goat. That's what happened here. [1:21:24] Mark: The goat people get tired of in [1:21:26] JD: the chat bar and is now a chat bar. I'll drink. And after this drink, I will say thank you to our. To our special guest tonight, Richard. Danny. We appreciate you hopping on here with us, spending time in front of our audience and talking about things. We had some tough questions for you and some not so tough questions, but in the end, Danny, at the beginning of the show, I was worried about you, buddy. I was thinking, oh, who is this stiff guy we've got on here? This is not gonna play out well. But you proved me wrong a thousand percent. You came with authenticity, transparency. You were honest, you answered questions and you provided a lot of value tonight. So I thank you for that, Richard. I mean, you're just one of us. You're one of us, bro. You're. You're a third party administrator for life. And I wish you all the best in the business. You keep doing. And even though the waves suck on the east coast, like, I hope you get out there and catch a few from time to time. [1:22:36] Richard: Been pretty steady the last couple months. So. Really, you had a good summer? [1:22:41] JD: I don't believe that, no. When you live on the east coast and you surf, you can come out [1:22:49] Richard: and see for yourself. [1:22:50] JD: And the waves are like wayside, you think it's good, and then San Diego be like, oh, it's not even worth going out. So thank you so much for joining. [1:22:59] Justin: Thank you. [1:23:02] JD: God bless you guys and what you're doing and. And I can't wait to watch the success that Strong Point will have. And. And all the third party administrators that are under your umbrella now, like, good luck to you and I hope you kick ass. Justin, Chad, Roby. Yeah, whatever. Okay, Brandon, love you.