TPA Market Dynamics: Scale, Valuation & Fiduciary Rules

[0:00] Chad: Thought it was tennis. [0:00] Speaker B: Yeah, we've got golf and baseball. [0:05] Chad: Are they yours? [0:06] Speaker B: No, they are my husband. My husband's and my kids. Yeah. So. No, not mine. Lots of football. [0:14] JD: There we go. I think we're getting started. Maybe. [0:28] Jerry Bramlett: Okay. We'll see if that's. If you got that, Brandon. So it's a. What it is. They put my head on a Johnny Cash. They wrote it, so. Johnny Cash song. I kind of got the. The title of the Johnny Cash of retirement, so. Hence the redneck and the hippie. [0:48] Speaker B: Hi. [0:49] JD: This is Tony Davis, and it's my pleasure. [0:51] Jerry Bramlett: And Lucas. [0:53] JD: Pleasure to introduce Jerry Bramlett. [0:56] Jerry Bramlett: Lucas. Lucas, do you have anything to add? Nope. Nope. That's it. [1:03] Chad: That's it, folks. [1:18] JD: Hey, Brandon's on his game. Brandon's on his game this week, bringing some new action after last week's little acid trip we all went through. That's a sick little video. Thanks, B.C. let me ask you all. What are these five things have in common? Maui Chihuahuas, 401k plans, the Netflix show, Peaky Blinders, and you, the audience that tuned in today. Justin, any IDEA what those five things happen? [1:50] Chad: No clue. [1:51] JD: Chad. [1:52] Chad: It's J.D. carlson doing an event in Hawaii with his Chihuahuas, watching Peaky Blinders on the bed of his hotel room. [2:01] JD: Ooh, I like that. I was excited. Those are all things that I love from the bottom of my heart. Every fiber in my body loves those things. So thank you for tuning in. We appreciate it. My name is J.D. carlson. You can call me Jay Dizzle. I'm here with chad Johansen, Justin McNeil, and no rope guy's not here. I fired his ass. He's gone. We're done with him. No, Mark Palmeni has got a little family thing. We gave him the day off. And since this is kind of a TPA subject today, a little bit. Shannon. S. Words. She decided to join us, and she will be playing in Mark's role. She is from TriStar Pension Consulting. Shannon, remember, you are not a guest. Take it easy. You are just playing the host role, filling in Mark's spot. And so everyone else out there knows, Shannon had carpal tunnel surgery on her wrist today, banging out too many ADP tests on that keyboard. And so she's been drugged up a little bit, so. So we might see a different side of Shannon. It could be fun. Webby, Webby, if you're out there, let everyone in the chat bar know how to do gallery view. I don't have time to explain it to them, so just type it in there. Make sure they're doing that right in this new kind of under construction, new fresh version of the show. We now play a game called acro sin. And, Jerry, you should pay attention to this. So if you say an acronym during this show, you must drink from your penalty drink. Okay, now, I want to take a moment here. We've had quite a few guests, and if you've been tuning in, you probably noticed this. Quite a few special guests have been skirting the penalty drink rules quite a bit, and we've been letting them get off the hook. That needs to stop. Okay, Jerry, I'm speaking to you. If you say an acronym, and we'll let you know, you'll see it on the screen. You must drink from your penalty drink. We will not upset the retireholic gods tonight. Okay, everyone repeat after me. That includes you, Chad, Justin, Shannon. Repeat after me. Although, Shannon, you get a pass since you're on drugs. I will drink. Say that for me. [4:21] Chad: I will drink. [4:24] JD: When I violate the rule. [4:26] Chad: When I violate the rule. [4:28] JD: Very good. Let's move on. [4:30] Chad: Was on the ERISA outline book. [4:33] Jerry Bramlett: Yeah. [4:34] JD: Shout out to Sal Tripote, the chatbot champion from last week. I went and looked at the transcript I knew I was going to send to all of you, but I didn't. I flaked. So I read it all by myself from start to finish, and even though I was impressed with all the usuals, the Webbies and the Hacklers and the Greenfields and, you know, a ton of them, I chose Erin hall based on consistency from start to finish. She had valuable commentary, she had humorous commentary, and she even ripped on a few people from time to time. That made me chuckle as I was reading it. So Erin hall is the champion. Jerry, Shannon, understand that we will have a chap, our champion today in our new formats. So you will vote for finalists. So please do your best to pay attention to chat bar and have someone in mind towards the end of the show to nominate to the finals. And then it is you. The people have tuned in today that will vote via a zoom poll on who will actually be the chat bar champion. New segment we did last week. I had a lot of fun. What did Webby call his room? [5:46] Chad: Web rating. [5:46] JD: The Webby room rating. I called it web rating. [5:50] Chad: Web rating. [5:51] JD: The web rating. We will do that, but we will do it. We'll save it for the after show. Therefore, if you have a question, make sure your camera's fired up and make sure you're ready to join us via video on the after show. Come on. I don't want to be stalled out like last week, like get me some new blood, get me some people, get me some questions and pop it up on the video. Let's do this. Don't let me down. Muscle up and do this with us. And yeah, we'll have a. The webby room rating will be in effect. Okay, we got a big, fancy, big shot guest, an industry icon, a legend. Chad, can you introduce our guest to the audience? [6:34] Chad: Yes. And I prepared for this one. [6:37] JD: Nice. [6:39] Chad: Ladies and gentlemen, tonight's bout is one hour or the first panelist that passes out commenting out of the box in the bottom right hand corner, weighing in with an account balance north of all five retireholics. The founder of the 401k company, the Brains behind Benefit street and Next Step. He often fills in as the Dos Equis most interesting man in the world. Tuning in from his hotel in Austin, Jerry Bramlett. That's my announcer voice. Come on. You surprised me there, dude. Nice work. I worked on that for like six to eight seconds. [7:21] JD: I'm very proud of you, Chad. [7:22] Chad: That was very welcome. We're excited to have you. [7:25] JD: Absolutely phenomenal, Jerry. I had an maybe unlike any episode before, I had an outpouring of people from the Internet that had questions that they wanted me to ask you. So you definitely got a big following. I also had a lot of people tell me what a great guy you are and how there's not a person on the planet that has anything negative to say about you. So kudos to you for a long career where everyone thinks you're just a phenomenal dude. But I'm going to push aside some of their questions because I got one myself that I want to kick off and start with you. How, how does it feel to be a frickin 401k baller? You start a company, you grow it to 350 employees, some 20 plus billion in assets. You sell it to Charles Schwab. By the way, how is Chuck? Does he come and hang out with you at your Austin ranch and like drink bourbon and leather couches and ride horses with you? I don't know. Then you move on and you help a struggling company, you restructure it, you then buy the assets, you start another company and you sell that sucker to frickin Newport Group. I don't know how much money you make from these things, but then you move on and you're like the lead dude at a census TPA future plan and you help them grow this thing. Like I'm asking myself personally, my company is Growing at a snail's pace. We were founded in 1975. I've never accomplished all the things you have. Is it my surfing? Is it the beach beer that I'm drinking every day? Is that my beanies? What is holding me back? Can you give me a little self help advice? And while you're doing so, maybe you can slap on the end of that. Because people wanted to know and tell us about shit. I'm searching for it. Blitzscaling. What the hell is blitzkaling? So give me some personal advice and then maybe lead into what the fuck blitzscaling is. [9:28] Jerry Bramlett: Yeah, well, I mean, you know, I think I've had some, some being the right place, the right time. 1983, great time for 401k. Back then when we called on firms, we were just like, you know, tell them about what 401k is and putting plans in. There was no daily record keeping. We were the first one of, the first to actually put together a daily record keeping system. I had a technology background, so that helped. So I mean, it's, it's about, you know, it's like, you know, Emerson, Ralph Waldo Emerson said, you know, every great man and he would say, man back then, we'd say person. Today, every great man, he, he says, not me, not me. Meaning history. Where you, where you landed, where you, where you, you know. So I landed at a really good place, everything synchronized. And. And I kept selling four plans, I kept selling larger ones. So I go in from $5 million average plan to 10 million to 20 million. And then I was buying by an aircraft and I went through five different planes. So I could actually, you know, if I needed to go see if I was on the phone with somebody and they're in New York and I'm in Texas and I need to go see them and close the deal, then I could be there, you know, that day. [10:47] JD: You know, there is like, there is Southwest, American Airlines, United. [10:51] Jerry Bramlett: You can do things like, yeah, my first map was Southwest or where they went. I went from Austin and then from there I start, I started buying aircraft. But the. So it's being at the right place, right time. But I also think it's about focus, you know, so 27 years I ran the 401k company. We never did anything other than 401k. We never did a defined benefit. We never did either traditional or cash balance. We never, we never did coli or 401k wraps. We didn't do anything. We didn't do health plans. We only did 401k. And we just kept pushing. It's about specialization and focus. In terms of Blitzscaling, Blitzscaling was something that was developed by Reid Hoffman, who was a co founder of LinkedIn and he's got a podcast out there in Blitzscaling. It's actually been made into a course. That's his book there. And basically what that's about is how do you, how do you run a company that's growing at 100, 200% a year and so at, you know, future plan, part of the Census into over two year period, we grew at about 400%. So we, we added about 30 firms all told in less than three years. And so we were growing very rapidly. And so I started applying a lot of the scaling principles in that book, which I had already been doing at the 401k company. But things like hire miss now, not miss perfect. Introduce products that will embarrass you. In other words, if you have a, if you put a product out there and it goes smoothly, understand introduction, you probably introduced it too late. So you want to get products to the fire. [12:47] JD: The school of get her done. [12:49] Jerry Bramlett: Get her done. [12:50] Chad: Minimal viable product. [12:52] JD: Yeah, that's a nerdy comment, Chad. [12:55] Chad: Oh, that was a. [12:56] Speaker B: Is that an acronym? [12:57] JD: Oh, yes, it is. Bring them up. Bring them up. [13:05] Jerry Bramlett: Yeah, the. Yeah. And the other things are things like let fires burn. [13:14] JD: I like this book. [13:17] Jerry Bramlett: Build things that don't scale that you're going to throw away. So in other words, you've got to build something and you got to get it built maybe manual. It may be part manual, part automated. But what's important is to get it out there and to get something and maybe you're going to throw it away in the future. [13:34] JD: Jerry. It's kind of funny. It's kind of funny. It's actually serious. When I, when I asked you, I had a conversation with my brother who's, you know, running the behind the scenes stuff here. And I was like, what is it in the DNA about people like Jerry? People we've had Chetney on, you know, these people who kind of set their sights so much bigger on these like big mountaintops. And Brandon said, I think it's not having fear of risk. And so a lot of the things that you just said kind of tie into like, like you said, like, let the fire burn higher. Ms. Now, not Ms. Perfect. You know, like it's all this kind of like just go, go, go, go, go. And I think there's a lot of people out there, a lot of the people that aren't like, you that just choose the safer path, you know, just the more consistent, safer path. That's at least how Brandon and I were talking about. I feel like you're backing that up a little bit. You humbly say right place, right time, just kind of go, go, go. But I think that there's something in the way you see things and there's something in the way that you're built, which is just to reach those levels, which I clearly don't fucking have that skill set. So whatever, Chad. We'll just keep growing at our pace. [14:47] Chad: Hey, Thomas, I'll back you a little bit though, because when you came up with the idea of retireholics, I pretty much immediately said, oh, hell no, J.D. not in the T.P.A. dang it. Space. Not a third party administrator space. Not in what we're doing. And that was a risk and look at what it's evolved to. So I think you have a little bit of Jerry in you and you just need to let it loose. [15:11] JD: I like what Mark Lerette said. He goes, I bet JD can surf a lot better than Jerry. Yeah, I'll surf circles around Jerry anytime. [15:25] Jerry Bramlett: Well, there is, there is something to be said for being an adrenaline junkie. So, you know, I'm into motorcycling. I, you know, kayaked in the arctic, motorcycle in places like Turkey, and have done a lot of crazy things on the, on the physical sports side. And so there seems to be an element. But the thing about entrepreneurs is not so much that they take risk is they manage, they know how to manage risk. So it's about understanding, you know, what's actually risky and what's not. [15:59] JD: I didn't have this question planned for you, but when. Obviously the growth of future plan that you were talking about, the 400%, has a lot to do with acquisitions. [16:08] Chad: Yeah. [16:08] Jerry Bramlett: All to do with acquisitions. [16:09] JD: Yeah. Let's put Benefit Street. Let's put Benefit street next step aside for a second because that was kind of a unique situation. You're the 401k company and that growth to 20 plus billion, 350 employees. Was acquisition a big part of that for you? [16:24] Jerry Bramlett: Zero. [16:24] JD: Yeah. [16:25] Jerry Bramlett: Every. Every deal that we had, I was involved pretty much in the sale of it. So I was a salesperson. So it was basically I was a broker advisor who had a record keeping system. And it was just. That's what it really was. So it was really, you know, in that regard. So. [16:45] JD: And how is, how is Chuck these days? Does he invite you to the house at Pebble? [16:50] Jerry Bramlett: No, no. I mean, Chuck did Come down. And we did visit and we connected. And quite an interesting thing. He, he asked me, so why do you keep using all these military examples? He said, you know, you've got women here. I'm sure they find that offensive. So one lady, she said, look, I have a gun on each. On each ship. I'm ready to go. Speaking metaphorically, another lady said, I'm trained and I'm packing. And she had, she had a clock in her purse right then. And he goes, oh, my Lord. And I said, chuck, welcome to Texas. [17:25] JD: But hey, just so everyone knows, I was kidding when I was saying, like, oh, yeah, how's Chuck? As was I. Geez, let's move on to another tpa. Oh, that is a T. Everyone be aware. The acronym for third party administrator does count. David K. Reminded us that. Now the chat bar there. [17:50] Jerry Bramlett: I don't think TPA is an acronym. [17:52] Chad: An acronym needs to be a word. It has to, like NASA is an [17:57] Jerry Bramlett: acronym because you say it as one thing. [18:00] Chad: Tpa, you're saying each letter. [18:02] JD: So we're redefining what it means. It means any little letters that stand for words. TPAs in the micro market. I think if you reach out. Yeah, I got it. That's two owes immediate, I owe one. There's this common concept of like third party administrators kind of play and belong in the micro space. Sometimes you hear like, south of 10 million and this kind of mega, you know, 50 million, 100 million and bigger is a bundled environment. What say you, Jerry? Is that accurate? Does that make sense? Will it change in the future? [18:45] Jerry Bramlett: Well, I think it, I think it's somewhat. It's pretty accurate, but there's no reason why it has to be that way. And I think that you. You know what? When you look at the reasons why people work with third party administrators, right? They work with third party administrators because they like working with someone local. And what happens is you see that with CPA firms. So that. There I went, so I gotta do one for cpa, bring them up. [19:13] JD: And you can always continue your look at the. You can always. Jerry, you can always continue your thought and save it up and catch up. So you can keep. [19:23] Jerry Bramlett: Yeah, yeah. So, yeah, so certified public accountants, you know, they work with local ones and then whenever they reach a certain size, they go with the national firm. Same thing with third party administrators. They work with a local third party administrator and then they reach a certain size and they feel like they should go to Fidelity or they should go to wherever, to Vanguard, one of the other firms, and they should bundle Everything together. So it's just an assumption that they're making. And. But I think that, you know, the concept behind what we were doing at Future Plan, what Future Plan continues to do, is to build a national TPA with very robust workflow systems, very robust security and that kind of thing. And I would envision you should be able to push up market with that. [20:18] JD: It makes sense to me. It makes sense to me from an accountant perspective because I, I feel like there could be lots of different, like rules and laws. There's acquisitions, there's mergers. [20:29] Chad: You've got people in different states. You might think depth of team makes a big deal. But yeah, in the TPA space, dang it, that one's gonna be hard for me. In the third party administrator space. I don't think that when you get to a certain size, you get better service or greater depth of team or knowledge when you go bundle. In fact, I think it's quite the opposite. I don't think, Jerry, that that thought process. [20:58] JD: I agree with Chad Shannon. [21:01] Speaker B: Everything I've seen in the, in the bundled environment, the service does decrease and it commoditizes what we as third party administrators are offering. I mean, I look at the education that I make my staff get compared to some of the people I talk to at some of the larger national firms, and it's amazing to me. [21:22] JD: Which makes you wonder, which. Right. Makes you wonder, Shannon, is how does a large Fortune 500 bundled company provide better consulting and better advice on a very detailed, very niche subject. And again, this isn't Jerry's point, by the way. I've heard him speak to the contrary. And this is what Future Plan is kind of building, this merging of these two things. But I agree, I feel like a third party administrator is far better suited to deal with complex issues, especially if you've built out your network of ERISA attorneys and all this type of stuff. And I say this from experience, and I don't know if Shannon would back me up, but I would argue that some of the relationships that I have with clients that I feel most secure about these days are my mega plans. They're the ones that I know see the value in what we do. I know they understand who we are. I'm more worried about the little ones that don't seem to quite get it. So to me, I feel like, and I'm actually appreciate Future Plan for pushing this narrative, I feel like TPA should be starting to make a push into the larger market because we have more value there now. Okay, gotcha. We'll put this for later. We'll put a pin in this. Cybersecurity processes, software efficiencies, APIs, contingency plans, disaster plans, I think those are all relevant concepts. I don't think they're unique to a national tpa. I think that a lot of medium sized TPA firms have a lot of that shit in place. And I've been seeing, just as a side thing, I've been seeing a lot more mistakes happening from large firms when it comes to cybersecurity or versus my staff. So that would be a fun conversation to have a little later. Chad, how do you feel that on the war front that people just. When it comes to a $20 million plan, a local TPA is not even considered. Yes, I'll drink twice. [23:28] Chad: I do. Sorry. Go ahead, Josh. I was talking to J.D. go ahead. Yeah, I do feel like that's the truth and I think that that truth is beaten on them by the wholesaling community. It's not often the advisor that feels that is the way because they see the value that we bring. But the wholesalers they're talking to are saying there's no need for a third party administrator on this plan. We can do this one in house. Well, the thought behind that too, not even the thought, but it's, I think, the truth of what people are saying. It's efficiency driven and cost driven once [24:00] Jerry Bramlett: you get up in that level. [24:02] Chad: And I think we're fighting an uphill battle here, swimming upstream, trying to convince people. And that's just not the narrative out there right now that needs to be changed. [24:12] Speaker B: Most of the large record keepers work with TPAs. So anything that you can offer with, let's say, an empower, that empower can do bundled, they can do with a TPA. And the client's gonna get better service from the TPA, quite honestly, than calling the 800 number and trying to get something done. [24:28] Chad: Shannon, structurally, let me ask you though, on $100 million, is it the same empowered person that you're working with? Because it's not for us on a hundred million dollar plants, a different Hancock person, it's a different empower person, it's a different T Rowe person. So they don't care about TPA business there. Sorry. I don't think wants to just have one. I think this is what I see the most, is they want to have one company to deal with. [24:53] JD: Well, that's ridiculous. That's, that's so. Yeah, that's so you talk to one person who then can't answer your Question. Who has to run over to the other building to ask the people in that department to answer the question to come? That's just, that's an asinine. [25:09] Jerry Bramlett: I get it. [25:09] JD: I get that you feel like you have one contact, but that to me is not value. And I also don't think cost is something that a $50 million, $100 million plan is really in the decision making process. Maybe your wholesalers feel that way, but they'd be more than happy to chalk up an extra ten grand for a professional to be looking over stuff. I mean, that's a drop in the bucket for them. [25:34] Chad: But to me, JD that issue exists with the third party administrator community. That means we're not able to show enough value to make those people say, oh, it's 100 million. You still need the intellect and the accountability of that team. So that falls on us as a community. [25:54] Speaker B: I think it's changing the story that the advisors are hearing, whether it's from our business is advisor driven. And they're hearing one story from wholesalers and they're getting convinced that those large firms need to go to a large national firm and Jerry need to change it. [26:11] JD: Jerry, I'm sure you spent a lot of time thinking about these things. What does the TPA marketplace look like right now? How many TPAs do we have across? Not to put you on the spot, but how many TPAs do we have across the country? What does their market share look like? You were out there trying to buy them up. So I'm sure you have some pretty good radar on all that. [26:34] Jerry Bramlett: Yeah, well, I mean, there's, there's no really solid numbers because some third party administrators may be a part of a law firm, they may be a part of accounting firm, it may be a part of an advisory practice. So if you look at, you look at books of books of business. So wherever that may be. In a CPA certified public accounting firm, third third party, record keeper, an attorney, a group of attorneys, an advisor firm. There's probably 2000, 2500 books of business out there. [27:08] JD: 2000 to 2500 kind of third party administrator kind of types. And what do you think they're. I mean, I've heard these days that they have north of 50% market share. I guess that depends on whether you're looking at number of plans or size of assets. [27:24] Jerry Bramlett: Under 10 million is like 55, 56%. [27:28] JD: Under 10. [27:28] Chad: Wow. [27:29] JD: 55, 56%. Okay. [27:32] Chad: That's surprising to me. [27:34] Jerry Bramlett: It's always been over 50%. As far as I thought it would [27:37] Chad: be higher though, Jerry, like in that micro space. I thought the, the share. [27:41] Jerry Bramlett: Look at, look at paychecks. Look at point. Look at guide point. [27:48] Speaker B: Diatac will do things for 500. [27:52] JD: No, just paychecks and just paychecks. [27:54] Chad: And so will Justin Shannon. What? [27:57] Jerry Bramlett: What? [27:58] Chad: Sorry, I'm. [27:59] Jerry Bramlett: That part. [28:00] Chad: What a miss. [28:01] JD: Just paychecks and automatic data processing alone is, you know, a big chunk of that. So I am. Okay, fair enough. Future plan has kind of put a cooldown on the acquisitions. Was that just Covid related? Am I tripping that that's not really true? [28:22] Jerry Bramlett: I would say it's, you know, it's a combination of things. I would say that it definitely is Covid related. I mean, Covid slowed everything down, right? I mean, you can't get out and see people and spend time with them, and everything's virtual. So it's. It's more challenging. And I think that they were ready to take a breather and also be in a consolidation mode. They acquired a lot of businesses over the last. The prior two years. And so now it's time to move into more of a consolidation versus, you know, acquiring. We were acquiring a new firm once a month while we, while we were building the firm at the same time. So. But I could see them cranking back up. You know, I can't project what they'll do, what they'll, you know, what other things they might acquire. They've got a record keeping business. They could acquire record keeping. They have a college savings business. They could acquire some businesses there. [29:16] JD: They got to keep up. They got to keep up with empower. [29:18] Chad: Right? [29:19] Jerry Bramlett: Yeah, exactly. So, I mean, it's hard to know, but I wouldn't say that it's all pandemic related. I'd say some is consolidation related, but pandemic definitely had a big impact. I mean, you can see that that's when. When it stopped. Right? [29:32] JD: You say consolidation. The way I interpret that is, is that you've. You've got all these firms and now you're really looking to make it a cohesive unit. That's right. I mean, obviously I. You had blueprints for that and strategies, but you're just really so, you know. Ah, what did I say? [29:49] Chad: Wasn't you. Alfonso called out Jerry with the. [29:53] JD: Okay, good. [29:54] Chad: I'm not even going to say it. Coronavirus acronym. [29:58] JD: Okay, you owe us one. You owe us one. While Jerry catches up on one penalty drink. Brandon, if you're okay with it, let's spin that legit wheel of ice. And I'm Guessing you have removed Mark? [30:14] Chad: I don't know. You can just exclude them from being eligible. So he's on there, but he's not eligible, which means the chances go up. Are you serious? It's rigged. Now, the fact that you keep saying very illegal. I don't believe him anymore. Everyone [30:36] JD: okay? Jerry, the three of us are gonna pound a Smirnoff ice. Why don't you start talking. [30:43] Chad: Brandon's in. [30:43] JD: Why don't you start talking to Shannon about Shannon? Ask him about TPA valuations. How does. How do they come. Are TPA valuations like 110x revenue, or what are they these days? What you're paying for those shops? Oh, God. [31:01] Speaker B: Yeah. How are you figuring out what you're offering to pay us? Right. [31:05] Jerry Bramlett: Yeah. Well, I mean, it's. It's really. There's so many different variables that go into, you know, how you price a book of business, for instance. You know, what's it. What's the book look like itself? Is it a good, solid book? Or is it, you know, spread out across, you know, 15 different areas? Or is it, you know, is it focused heavily in 401k? So for zone, what's the attrition look like, you know, on the book? What's the advertised plan? Revenue? What's the, you know, what's the margin of the company? That's the big determinant. What does the owner intend to do? Do they plan to stay around or be gone two weeks after the deal closes? [31:50] JD: Or does the owner look like. Does the owner look like a homeless person? That could impact it. [31:57] Jerry Bramlett: So, I mean, there's a lot of different variables, but generally speaking, you know, it's a multiple of earnings, not a multiple revenue. I mean, people will buy record keepers for multiple revenues, but typically with the tpa, they're going to be pretty disciplined with talking. [32:10] JD: We're talking ebitda, right? We're talking ebitda. [32:13] Jerry Bramlett: Yeah. So if you're looking to design your firm to be prepared to be sold at some point, you want to focus on EBITDA and what, you know, making that as attractive as possible. Sure. And then you're generally looking at anywhere between. It could be as low as 6 times EBITDA, as high as 10 times EBITDA, and everything in between. [32:35] JD: Chad, Justin, I got some bad news for you guys. [32:38] Chad: Damn it. [32:41] Speaker B: You just got called out. You just got called out for another drink. [32:45] Chad: I feel like the word Tony is. Or Jerry is using [32:51] JD: I will never sell to the Death Star. [32:54] Chad: I feel like that term, and I'm not going to say it because I actually don't know what it breaks down to be, but is an acronym in itself. But Jerry, I'm very curious. Do you see a lot of variance when you're at future plans? Do you see a lot of variance in the revenue or the earnings from different TPAs in terms of the percentage and size? Obviously bigger ones are going to have greater earnings, but I feel like most TPA shops run pretty similar. [33:23] Jerry Bramlett: No, I would say, no, not necessarily. You could have larger firms that run very thin margins. You can have smaller firms that have big margins. So it just, it's all over the map. There isn't, there isn't really a correlation between size of the TPA firm and the margins. What about. But yeah, the margins are all over the map because, I mean, some, you know, if you don't intend to sell, then what's the purpose of a margin? Especially if you're a C corp, you don't want to retain earnings, you want to distribute earnings. And so, you know, but if you want to sell someday, people buy businesses that are making a profit. Right? [34:08] JD: Let me interrupt the icon like I continue to do. I also think that, Chad, if you look at third party administrators across the country, a lot of them are my father's peers and there's some old school peeps running those shops, man. And so you're gonna find a huge variance in terms of the ones that have really built efficiencies. You also, no offense to the baby boomers, you also have a shit ton of like micromanagers. There's a lot of people that hover over their staff to do things. And so they haven't really built a business that's creating massive profits. They're building a business that's supporting their life. Not all of them, but I think there's a lot of that. And then you've got studs like me that build efficient shit that make ton of money. Go ahead, John. [34:54] Chad: Those are the ones I want though. JD like if I were sitting in Jerry's seat at future plans, I'm looking at acquisition and I'm saying we can cut out the cost of the principal because all of those small third party administrative shops, three owners, they're all family members. If you cut them out because they're not part of the operations. If you cut them out and you bring them in house, I think the profits go up dramatically. The margins do. [35:21] Jerry Bramlett: Well, it just depends. I mean, the situation. I mean, yeah, generally speaking, if you've got a couple owners that are leaving or One owner that's leaving that will have a big impact on the overall financials. But the question is how much is that owner? Because what, when you buy, when you're buying a third party administrator, what you're buying is a network of relationships. You're not necessarily just buying a book, you're buying, you know, network relationships. You know, when we acquired qbi, which by the way I acquired QBI at Benefit street and then again [35:58] JD: that's, they're called qualified benefit something. [36:05] Jerry Bramlett: Yeah, qualify, qualified benefiting. So you know, you know, Greg Taylor's been building that business for 43 years, you know, and he's, he's made all these connections with all these wholesalers and all the advisors and another, you know, center of influence. And so the owner can be very valuable in terms of helping maintain and retain that network, that route that's been developed over the years. So there is, it's not, it's not necessarily so clean. You can just buy a firm, get rid of the owner and then recognize that as into your profits. You also got to look at what is the impact. [36:44] Chad: How long do you simply have to stick around for? [36:48] Jerry Bramlett: Well, it just depends. I mean some of them, you know, the mid career people like you. Take for instance Casey Price, who's now head of sales at Future Plan. You know, Casey, you know, she had, she built a nice firm, she sold it to Future Plan and then she became part, you know, ran institutional sales and then she became national sales manager. Matter of fact all the sales folks at all the sales. Divisional, sales deep. I was going to say DVP's but Divisional Vice presidents and sales all came or all former owners. A lot of people in management or former owners. So a lot of them get integrated into the bigger group if they want to keep going. [37:34] JD: Greg? Santa, there was an acronym is. You're correct. I had two questions. I think he kind of answered one and only Be clear. I have zero interest in selling my company. I hope my children run it someday and I love working with these guys. But just to ask the questions, do you like here I have a sales team, right, of three guys and they're the ones that have the relationships with the people on the ground. Do you, does my sales team come along with the gig? And then my second part of the question is what about the admin staff? Is the admin staff then is all the admin and compliance work going completely in house to Future Plan a census and the people that worked for those TPA firms are moving on to other, other areas. How is that Working. [38:23] Jerry Bramlett: No, no, no. First of all, you know, when we acquire a firm like for instance, Gold Leaf, and they had, you know, Aaron, who became a DVP division vice president, and Aaron, six different. Six different salespeople from goleaf became part of his team. So they just became integrated and shifted over to the national sales team. The admins, you know, the administrators and the consultants and those folks, they also get integrated and become part of the operations. So it's not a slash and burn type of strategy that would not work. It's. It's a strategy of, okay, we've got this group of people and now they're going to be part of the large organization. What are the various roles that they could be in this new organization? And so that's what we did. We focused on finding places for all these folks that wanted to stay. But you have a good number of people who want to leave. They're ready to retire, they're ready to move on. And so you build that in and you work with that. So it just depends on the situation. [39:32] JD: Yeah, it doesn't make any sense at all if it's painted that pretty of rainbows and unicorns because not everyone can find a spot at the acquiring company that would. Would defeat the entire strategy of it in the first place. But I do understand that there are places for people. I get it. There are places for people. And for sure, it happens. It's real life. But there are also a lot of other people that get kicked to the side of the curb. Yes. Shannon, go. [39:59] Speaker B: You know, everybody's asking why I'm not talking. And I'm like, it's, well, you know, this happens when Mandy's on here with me too, so I'm used to it. I have a question about billing, Jerry, and how you. There's so many different philosophies on how third party administration firms bill. You know, some of us bill in advance, some of us bill in arrears, some of us bill all at one time. So when you walk into a firm that, let's say bills in advance, you know, so quarterly in advance. So by the time you get to the end of 2020, the client's already paid you for everything, even though the work's going to be done later, versus I may bill in arrears when I get the work done and they may never pay me and I've lost all that time. How do you all. How does that come into your calculations and your figures and how you look at firms you want to build? [40:46] Jerry Bramlett: Well, yeah. Well, every firm, regardless of what the firm's current billing strategy is. It's going to be consolidated into a single billing strategy. Right. So everyone. And using Future Plan example, or I could use Benefit street as an example, you know, they basically became, you know, they standardize the bill and typically they typically build in advance, you know, versus in arrears. But so, but that all gets accounted for. In other words, there's a process to go through that and to work that out to get it under one and that, you know, a lot of stuff takes. It's not done in six months, it's not done in 12 months. A lot of times it's two or three years of working with a firm to get everything, get the buildings squared away, get them on the new workflow platform, to get the sales folks integrated, to get the admin people integrate into operations and the consultants and operations. [41:43] JD: I would argue, Shannon, that any third party administrator deals with that same issue when they take over a plan so it's doable and they figure out a way to do it. Chad, you're right. There's a lot of TPA talk. It was kind of by design. I mean we've got the, the dude that headed up Future Plan. All right, all right, so let's shift it a little bit. And I don't know a lot about this stuff. I'm not a huge kind of. And I will drink for that government following deal. But some people from the Internet had questions around the new presidency. Biden. Let's see. Alan Moore wanted to know if what you thought, Jerry, about Biden's impact on the new Department of Labor fiduciary rule. You know, they're putting kind of this freeze on everything. Jonathan Woznack wanted to discuss any potential compliance issues with the new dude taking over for the sec. I'm probably the first person to call him a dude. Gary Gensler. I think the concept there is this guy's a pretty hard knocks, you know, for a participant advocate, you know, as he should be. Any thoughts you can share with the audience on the new administration? [42:52] Jerry Bramlett: Yeah, I mean, I mean it's going to be a democratic administration and so there's going to be more expectation for, you know, for firms to assume fiduciary liability and not just to be given all scot free. So what you're going to see is that, you know, it's going to be harder for the advisor. This shouldn't affect third party administrators. You know, if anything, you know, what you'll see is you'll see some incentives to enhance 401k, you know, 401k setup and contributions and that kind of thing. So I think you're going to see the industry is going to continue to grow and expand, but it's going to be, you know, advisors are not going to be able to, they're going to have to disclose their, you know, their commissions. They're going to, they're going to have to look for conflicts of interest. This is going to be tough on the advisory world. Not on the, not on the third party administrator world. Shouldn't see any significant changes that impact third party administrators. [43:55] Chad: That's what I think, Shannon. [43:57] Speaker B: I think it'll help third party administrators because you're going to have advisors who need somebody that's more knowledgeable to help them. Fidel, their fulfill their fiduciary responsibilities. [44:08] Jerry Bramlett: When are they stepping over into the fiduciary role? What are they doing to create that? And if they do assume the fiduciary role, what do they need to do? And you know, that kind of thing. So yeah, I think, you know, Tony should always, third party administrators should always be focused on building relationships with advisors and creating education and supporting them and mentoring them. Because the reason why third party administrators do so well, one of the reasons is because there's so many, you know, everybody thinks the advisors, everything's going to go the Bill Chetney specialist route, right? The RPAGs of the world and that kind of thing. The reality is the, you know, the, the blind squirrel, the. What did I say? [44:56] JD: Our retirement plan advisory group. Oh, drink up Mr. Kramla. [45:03] Jerry Bramlett: The. So, you know, the reality is that, you know, I'm an advisor. I get a phone call from somebody who wants to know whether or not I do 401k plans and I'm gonna say sure. And then I'm gonna get back to the office and say okay, what do I do now? And the branch manager says, well, go talk to so and so from John Hancock. They come in here, then John Hancock person grabs the third party administrator and there's your, and you've heard me say it before, J.D. and, and that the, you know, that's the dream team. You've got the record keeper there, you get the tpa, you got the third party administrator there and you got the advisor there. And each has got a separate function. And to JD's point earlier, you're not going to deal with one person just because you go with a bundled approach. You're going to deal with still multiple people. It's actually, you know, easier to deal with a local person who's going to take your phone call, not send you through a, you know, a telephone directory or whatever and be able to walk you through everything. And so I would definitely, if I was a third party administrator, I'd be pushing up market, you know, market with the, with the. [46:12] JD: Well, yeah, we have got, we've had talks about that. We've got plans for that. We're going to try to brand and market in that area. I think what I like to hear is with this Democratic Party presidency it's possible that we'll see a push towards like mandates and things for retirement plans. And some of you have heard me say this before on the show here in California with the state run plan. It's a massive opportunity for advisors out here as well as third party administrators because tens of thousands of new plans are going to be put in place assuming you're in the, in the market for startups. [46:50] Chad: That was my point. JD I listened to Kelsey Mayo today in a, in a session and she was fantastic and she talked about some of the proposals For Secure Act 2.0 and some potential tax credits, some potential tax credits for even first year and beyond company contributions, which was super interesting to me. But if you think back to last time, the Democratic party kind of ran things. We had Senate Bill 1234 which was all about coverage and state mandated plans. If we see that like we are in California, then I think the third party administrative community needs to grab onto that like we are doing in California and show the difference between the state ran plans and what a 401k can mean for you. And that that was my only rebuttal to the lookup market because I agree we are looking up market, everybody should. But I think with a Democrat in office and coverage being the primary component they talked about in Inauguration day that we're going to see state ran plans come full circle. Federally ran plans perhaps I should say, and we're going to see a shit ton of startups again just like we are in California right now. [47:59] JD: To Jerry's points, of third party administrators focusing on being a value to advisors and meshing it with this going up market. Jerry, at Future plan A Census, was there ever discussions in those fancy boardrooms around the fact that because you, you all work with numerous record keepers and you know how important data is these days, right? Like the industry is obsessed with data and the value of it isn't, it isn't a third party administrator check swing kind of strategically positioned to have access to that data no matter the record keeper and was Was that, was there ever any strategies talked about that at future plan where you could somehow leverage that going into the future or. [48:52] Jerry Bramlett: No, no, I would say, you know, no, not, not really, not that I can remember. I mean you, you know, every reckeeper is focused on data mining and that kind of thing, but I think that with a third party administrator, what you're looking at is they're working in conjunction with the record keeper. The data they have, you know, they, you know, it's more the recordkeeper using that data for targeting specific things. [49:23] JD: But, but if I wanted to support an advisor, say a large advisor that plays in the mega market or a bigger market, one of my values to that advisor might be, hey, I have access to that data no matter the record keeper. And instead of the record keeper providing those services and leveraging that data, that large advisor shop could. [49:47] Jerry Bramlett: Well, it depends on what you want to do with the data because primarily what they want to do with the data as a rentkeeper is to cross sell. Right. [49:54] JD: That's exactly what a large national advisor shop would want to do. [49:59] Speaker B: Yeah. [50:00] Jerry Bramlett: And so they're there, you know. Yeah, I can see that that was really not a big part of our strategy. Not to say that it wouldn't be, but that's not a big focus because there's, you know, there's, you know, the, you know. Yeah, you can, you could basically bundle up and the data for the advisor and help them strategize on how to. But you know, the way that it typically works is the advisor knows that there's like, and you all know this, I mean, they're not interested in the person out there with a $5,000 account balance or a $10,000 account balance or $25,000 account balance. They're interested in the three or four people that have large account balances that are the principals of the firm or if there's an executive team, executives. But even those executives and those principals typically have their own advisors. They're not like sitting out there with, you know, a million dollars sitting in an account somewhere, but nobody to help them, you know, to manage it. So, you know, I think the cross selling opportunities is really kind of overrated in terms of what opportunities actually exist. [51:08] JD: That's cool. [51:08] Jerry Bramlett: And you know, most of the firms, you know, it just, you know, you know, you talk to advisors and oh, I want to enroll everybody in the, in the plan. Really? Okay, well you need to show up and it'll take a week. What? A week? Yeah. And you got to talk to this guy over here and this lady over here and this person here and they got little tiny account balances and you know, they're like what I mean, even a 401k plan itself, an advisor may say, okay, the $2 million 401 plan, how much do I have to work for it versus a $2 million high net worth individual? And how much can I charge a 401 plan versus how much can I charge a high net worth individual? So I may be able to charge a high net worth individual 75 basis points. They can only charge 35 basis points to the same assets and it's more work. So it's really about making it very easy for them to acquire these plans and to manage them and not have to take a lot of their time because a lot of them are better served in their minds by focusing on high net worth individuals. Four 1k plans are complicated and they carry risk. [52:14] Chad: I have a thought and a question for you Jerry. First thought is I would disagree on advisors moving forward, only be focused on high net worth or high account balances when it comes to a distribution phase. I think with automation they're going to be excited for a $5,000 rollover because they're going to be able to automate that process so simply. And that's the person that doesn't have an outside advice. [52:41] Jerry Bramlett: That's not data mining, but that basically. No, but that would know. That's not data mining, but that is if you're, if you're going to go after a $5,000 account balance as a rollover, you better do it in a managed account and you better never talk to that person or you'll get hurt. [52:58] Chad: That's the point. And my point is the 401k is the access to that participant. It's not the data that they want. That advisor doesn't want the data. They want the access to that participation participant so they can cross sell automate this. [53:14] JD: Jerry, I know you know companies like Empower make a shit ton of money off of these little rollovers. They have entire wings of their business that are built on this. And I think everything, everything you said was totally accurate and there's a bit of kind of old school in a cool way in that a realism of like the industry and the way you've seen it. And I agree with you and that's going to be true going forward in a lot of spaces. However, if you move past kind of the single advisor that's in any town, usa, and you start to pay attention to these aggregators and these large Nash Almost like the, they're almost like future plan of advisors. They're aggregating all these smaller advisor shops and you know, the firms out there and they have eyes on this participant data and they have eyes to monetize it before the record keepers. And I apologize to all the attendees that have heard me talk about this damn subject for weeks and weeks and weeks. But Jerry, I just think the world's changing a little bit in that space and I think that the world that you explained will still exist for sure, especially for years to come. But there is this battle over the data and I think long, long, yeah, the days will be long gone where it's just the record keeper that's using that, that information. You're going to find other entities using it. [54:43] Jerry Bramlett: So anyway, no, no, I agree and I think that was what's going to happen is that. And they're going to see it with the Pepsi and what have you and there I go. So Pepsi, the, but the, the, the thing is retire. [55:03] JD: Holograms are so angry with Jerry right now, I figure he's what, five back? Is that true? Is that audience, Let me know audience. How many, how many drinks do you think Jerry's behind? Just throw a number in the chat bar. Go ahead, Jerry. [55:18] Jerry Bramlett: But no, so you know what, you know what the messaging to the advisor should be from the third party administrator is that as your plan becomes more and more bundled, you lose more and more control and it becomes an investment client to that firm. Right? [55:37] JD: Yes. [55:37] Jerry Bramlett: And so but if you stay with me and work with me, we'll keep the client, we'll keep them happy, but we'll also, we'll make sure these clients are your clients and that you can get the rollovers and you can get, you know that. So I'm not, I'm not questioning that desire. I'm just questioning, I've just seen through decades and decades, advisors talk about all that they want to do with these plans and all they want to do with these participants. And we have all the data and I was a record keeper. Right. And but the reality is that you know that they, when you sharpen, they start looking at the numbers. They say, oh, $5,000 plan. I didn't want to waste my time talking about it a person because it's just not that much money they're going [56:16] JD: to have to use, they'll have to build, they'll have to use tech, they'll have to build efficiencies, they'll find third party technology that they can snap on. Chad you private message me. I lost it. I don't know what you're asking me. [56:30] Chad: I said I want to ask Jerry the next question because your comment about your time at future plans, not wanting to cross sell and that not being a big part of the conversation was. Was honestly mind blowing to me because I look at what future plan charges as a whole base per participant, no asset play, no managed account play, no proprietary requirement play. And I went, how are. I know the third party administrative space. I know what it takes to service these plans. How are they going to be profitable at that margin? [57:06] JD: Let's save it for the after show because. Save it for the after show because I'm with you, Chad. I was also shocked and it was cool how future plan told me straight to my face several times. And it's true is that I thought for sure you guys are going to try to wrap that stuff up into a census from a record keeping standpoint. [57:23] Chad: Yeah. [57:24] JD: And clearly that was never, never the goal, which is interesting to me. Okay, let's vote chat bar. [57:30] Jerry Bramlett: That's not going to happen. [57:31] JD: Yeah. Let's vote chat bar champion and we'll wrap this up and then we'll do a little. Little after show and hopefully some of you are ready to get on video. No. Justin's got no video. I'm so disappointed in all of you. Right, Justin, Right now. Craig Eddy. Craig Eddy, get your damn video set up and ask a question. Question of our iconic guest, for Christ's sakes. Chad. Bar champion. Chad, your vote is to whom? [57:59] Chad: I wrote two names down and honestly, I can't read my writing very well, but the first one was Greenfield, and I'm going to stick with that. It was a specific comment that caused me to write it down. [58:10] JD: Okay, Brandon, sorry to throw this on you. I'm hoping you can slap together a poll. Right. And Greg G. Is in this poll. Okay, Shannon, your vote for chat bar champion to go to the finals. [58:23] Speaker B: I'm going with Greg too. [58:25] JD: Okay, so Brandon just won. Greg G. Justin, come back to me. [58:29] Chad: I'm split between Greg and Tony right now. Tony was spot. [58:33] JD: So Tony Davis makes the final. We'll give it. We'll give Tony to it. Brandon, Greg G. Tony Davis. Jerry, pick someone from that chat bar man who's going to make the final? [58:45] Jerry Bramlett: I mean, I would. A chat bar is. I'm gonna go. I know I see the chats, but I mean, I don't see how I pick somebody out of there. [58:58] JD: Oh, you just got a name. Any name you recognize that you thought did an Intelligent comment you thought were funny. You just like the way their name looks. I don't give a. Brandon, Mary Fitz [59:09] Speaker B: wants somebody to vote for her. [59:11] Chad: Dustin almost won my chat bar challenge with one of his. [59:14] JD: Brandon. I'm gonna choose David. I'm gonna choose. I'm gonna choose David K. Brannon to add to that list of three. So we've got three so far, and Jerry's got five seconds to pick Sherry Fitz or he's out. [59:26] Jerry Bramlett: Five, four still. So. I mean, I see Chad Johnson on here, but. [59:34] JD: All right, Jerry picks Chad Johansen. Brandon, can you throw up a poll? Can you throw up a poll? And then I'll ask a question from the audience while Brandon tries to throw up this poll. Oh, he's what a stud. Okay, everyone vote for your chap. Our champion. [59:53] Chad: Oh, why can't I vote? Damn it. [59:56] Speaker B: Why can't we vote? [59:59] Chad: We don't count. [1:00:01] JD: Brannon. It'd be really unfortunate if what is wins and, like, nobody wins. But I guess that's did the way [1:00:07] Chad: just chime in because, Sherry, I was dropping your praise earlier about your session today. I did. I did learn. Even though I qualified myself as a rock star of zoom, I learned a lot. I really did. [1:00:21] JD: Mark Laurette. Mark Laurette. If there's a Ky Lenny video out there, I've already seen it, buddy. I'm on YouTube watching that shit every day. The winner, Chat bar champ Greg G. Wins from the damn audience. All right, Greg G. Pass. [1:00:36] Chad: That's like a three, Pete, right? He's got three, I think three. [1:00:40] JD: Now he's a stud in the chat bar. [1:00:42] Chad: Okay, we're doing for the actual nominees here because Greg could have his iPad up, his computer, his phone just be. Oh, right. [1:00:53] JD: Well, then you win. Then you win. Every week we've been playing, since the beginning, we've been playing a song at the end of the show. A song and a video just kind of wrap it up. What we're gonna. We're gonna mix it up. And each week, one of the retireholics will get to choose the song that they wanna play for the week. This. This week was gonna be Mark's choice. And since Shannon is filling in on Mark's spot on the couch, the virtual couch, Shannon picked the final song. So, Chat Bar, let Shannon know what you think about her choice for the closeout song. And then we will see you all in the after show. But make sure some of you have your videos on and join us for some chat. Play that. Play that song. [1:01:40] Speaker B: Oh. [1:01:44] Jerry Bramlett: Oh, gee, [1:01:50] Speaker B: You gotta love. [1:01:58] JD: Jerry you can dance if you're comfortable. I figured Brandon could only handle that for so long. [1:02:46] Chad: I said, 45 seconds. I do love me some Pink, so it's a good choice. [1:02:49] JD: Shannon, she texted me. I said, hey, can you pick a song? You know, she was drugged up from her carpal tunnel and she's like, oh, I don't know. I'm like, pick someone you like. You know, someone you're into. And she wrote, like, pink and this song. And I texted her, ha, like three lines. I was cracking up. I was. I'm like, we're playing Pink. Pink's going on the damn show to close it out. [1:03:17] Chad: I recall a similar text exchange with you last night. Did you not like my choice? What happened there? [1:03:22] JD: No, Brandon, as usual, as the producer overruled me. He said, hey, we have Shannon. Shannon should pick the song. No one wants to hear what Justin wants to listen to. You're next week. You're next week, buddy. So if you're sticking with your song, you're all prepped for next week. I don't know if I totally agree with your song choice, but the reason I say that to you right now is because I know that'll keep you up at night for the next six days. I was going to ask you, Jerry. I guess Chad had. I promised you he'd finish your question to him? I kind of jumped all over you then, talking about how they weren't going to push it to record keeping. You're surprised, Chad, that they weren't looking at data that was shocking to you? [1:04:06] Chad: I was surprised that they weren't trying to monetize in a different way. And my thought was through cross selling because I didn't see you guys pushing out a proprietary product. I didn't see any investments. I didn't see managed account. So, yeah, I was surprised to think that the margins you're creating on the admin business was enough to sustain those acquisitions. [1:04:29] Jerry Bramlett: Well, I mean, there's. There's a. There's a lot of benefits from scale, right? So it's the volume and so. And so you can. If you, you know, if you have a larger shop, then you can functionalize areas and you can make them very efficient. You can standardize your training. You can do so many different things. And so, you know, generally speaking, the bigger you are, the more scale. The more you can take advantage of scale. [1:04:55] JD: Except for when you're talking about ERISA law and compliance. No, I think that's true for sure. You can't argue with that. I think my own company has been the benefactor of scale. Scale. I don't know if that. It continues on a steep curve. I think that really starts to flatten out a little bit. But what do I know? I don't create companies and sell them for 115 million. So who the fuck knows? But. [1:05:19] Jerry Bramlett: Well, I mean, we. That. That is true, that, you know, it's not exactly linear in terms of scale. You know, the 401k company, we show that, you know, as few as 300,000 participants, we could be making more money than people with 2 million participants. So you, you have to be, you know, you can be highly efficient and be smaller, and you can be very inefficient, be larger. But, you know, the way Feature Plan is focused is really on, you know, creating a centralized workflow, creating a centralized, you know, admin approach, centralized policy, centralized billing, centralized, these things. So if you, you know, there are certain advantages you can achieve by scale, and then you can also have, you know, larger relationships with the John Hancocks of the world, the empowers of the world, so you can have people exclusively on them. [1:06:18] JD: Are you suggesting, Jerry, that because of those larger relationships, that the Hancocks, the Voyas, the empowers, are somehow sharing more revenue with Future plan than other TPAs? [1:06:30] Jerry Bramlett: No, no, no. They don't share a nickel more revenue with Future Plan than they would with any other TPA. They can't afford to do that. They don't want TPAs out there saying, you're giving a better deal of Future Plan, you're giving to us. So the revenue sharing is going to be whatever the revenue sharing is, and it's going to be based upon the formula. And there's not going to be some special formula for Future Plan, but it's really basically achieving the efficiencies by standardizing and functionalizing. And you can do that on, you know, and you can have a profitable business. You don't have to sell, you know, sell products directly to this. [1:07:11] JD: I'll spin this to my own benefit, though, Chad. I really want to. I don't want to lose this thought. I think that that's true. I think what can equally be true is that the bigger you get, the more inefficient you get at times, you know, it's harder for you to move. And so you create these standardized approaches that in a business that's very complicated, you know, this business is constantly bobbing and weaving the compliance work, the questions of the clients, if you try to fit. I see this with bundled providers. So this is why I'm commenting on this. I've seen this for the last 20 years with bundled providers. If you try, and I've experienced this, being a CEO of my own company and trying to set up systems right, sometimes those systems are too rigid, that they don't work as well as something that's more flexible and less rigid. And I think you have to strike a balance there. And maybe if your goal is just to make a ton of cash, then, okay, you get away with it, right? You let it burn. It's fine. Like, you create systems. It works for the most part. Retention is not too bad. You make a ton of cash. But the reality is the service and the solution and the quality of the care that you're getting can be. And I'm not saying it is, and I'm not accusing future plan of this, but it can be worse. And I think an intelligent person understands that that's a possibility. And I'm sure in Jerry's position, you're looking out for that and you're watching out for that and that sometimes you're just accepting it as it is. Russell Hooker's got a paragraph. Go ahead, John. [1:08:47] Chad: I was going to say for Russ, who's tuning in for the first time, that's too long for us who are intoxicated to pay attention to. [1:08:55] JD: Kick Russell out of the chat. [1:08:56] Chad: Bart. [1:08:57] JD: Brandon, kick him out. Kick him out. He's writing novels. [1:09:00] Chad: Jerry, my thought. And Shannon, this is in part for you, too. When we look at our business, I think, and JD you comment on this, the vast majority of our time is spent on data collection and accuracy of data collection. And when I look at what you built with a census and you're talking about scaling, I say the scaling doesn't help much when you're going after the average plan that has 30 people and you're still doing that data collection and validating, whether it's schedule C or K1 and trying to get accurate data. We can't scale that as a tpa. That's just hard shit to get and to get accurately. And so that's why I go back to the how are you monetizing it? That one's tough. [1:09:46] JD: You can try to. You know how he's going to answer that, John? Go ahead, Jerry, give him the answer. [1:09:53] Jerry Bramlett: Well, I mean, I would not reflect so much on future plan because I'm no longer there. And, you know, they're doing whatever they're doing and, you know, but I know what the intent is. You know, as far as, you know, David Mustow, the CEO and that kind of thing. But I can tell you from personal experience of the 401k company, we had 350.