TPA Revenue Sharing: Transparency & Fee Models

[0:15] Chad: It's that time. [0:16] JD: All right, we kick off every show. Chad, you know the drill. We got the beer of the show. [0:21] Chad: We do. And again we're going with something bold, dark and heavy. We've got another local. Well, local more than last time. Laganitas Brewing Company out of Petaluma. Undercover investigation. Shut down ale is what we're going after. I can already tell you by reading the label. Bold, strong, earthy, 9.3%. That's gonna be my guess. [0:47] JD: I didn't research that part of it. [0:49] Chad: Cheers. [0:49] JD: Here we go. [0:50] Chad: Cheers. Cheers. Let's make it a productive one. [0:54] JD: All right, here we go. Can we. Cheers to the warriors playoff victory last night. Not as strong as I thought. It goes down rather. Smoot. All right. This will work. [1:05] Chad: It's good. [1:05] JD: Yes. Marcus. Alright, so let's kick right into TPA revenue share. And I think this is a subject that doesn't get talked about a lot, at least historically. It's been around for a long time and record keepers have always, the great majority of them shared revenue with third party administrators. But it's starting to get a little more scrutiny and I think that's because a lot of new products are coming out from vendors that are insufficient institutional share class based and have removed the TPA rev share or have created some flexibility to turn it on or off. So obviously it becomes a bigger conversation. If you would have asked me 10 years ago, five years ago, you know, last week, what's the deal with TPA revenue share and are you offsetting your fees as a third party administrator? I would have told you that when we offer clients and our advisor partners a fifteen hundred dollar base and a thirty six dollars per participant with a balance fee structure that is cognizant of the fact that we'll be receiving some type of revenue share from the vendor. And the bummer is, is that it varies from vendor to vendor. And many of you know that in some of these situations you may have to earn it through different levels. So you may not even know when you're sell plan in January whether or not you'll reach level one or level two or level three based on certain sales quotas they've made for you. So it can be, it can be kind of a messy, kind of tangled web. But I want you to know that from plan design's perspective as we're fully transparent when we're working with our advisors, we're always cluing them in on this revenue share if it's reaching certain levels. I hate to give specifics here, but maybe beyond 3 million depending upon the vendor. We're working to create customized pricing to deal with it. What do we talk about? Silence and phones there. That's cool. So I want it to be an open conversation for our advisors, for our plan sponsors. And it's. It's nothing to not, not talk about or. [3:31] Chad: And I think it's. It's been fee disclosure that's played such a big impact on this. You know, now that this is, the fees are scrutinized and talked about in such great detail. If you look at something very simple like the proposals that are going out from each partner or each record keeper, you're seeing very clearly what the TPA is expecting to receive based upon the transfer assets. And that's opening up an entire new line of communication that may not have been there in the past. We've always been extremely transparent in what it is we're receiving and how we're expecting to account for that. The tough part now, and we're doing this with many of our RIAs, is to truly be revenue neutral. How do you offset those fees? As you mentioned a moment ago, there are certain qualifications. And so imagine sitting in that meeting with a client that chooses to go with vendor X and you're telling them that the expected revenue that we're going to receive is $3,100 this year. But then we go out and we don't meet the quotas that are being thrown upon us. And now the revenue share that we receive is $1,100. Do you believe that clients gonna like receiving an additional invoice for the extra two grand that we didn't receive? That's the tough part about this. We've taken a pretty strong stance to say we're gonna qualify the revenue share that we're gonna get. We know that we're all out there to help. We never want to feel biased or swayed toward one product. And when we come out, we have a revenue neutral model that we often run around with our RIAs and IAR partners. That is a 2000 base and 50 per account balance. That's our neutral ground. Anything above and beyond that revenue share that we receive from a provider, we directly offset on top of that. [5:12] JD: So any advice wants to work with us and work in a revenue neutral, or I should say non revenue sharing platform, we're game. We've got our fee schedule that matches that. I wish that was the future of the landscape. I mean, if it all went away tomorrow, it would make things so much easier because then us and any one of Our competitors can just quote the same fair price, and we can compete that way, but unfortunately, it's not that way. And that we do every time where we're gonna spin the. The wheel of ice. The famous wheel of ice. So if we can get our. [5:51] Chad: That magically floats in here. [5:53] JD: Staff over there to bring the wheel of Ice. Here it comes. Here it comes. It's coming in backwards. It's floating in. [6:07] Chad: Hey, O. It's mar. [6:09] JD: Shocking. [6:10] Chad: Imagine that. [6:12] JD: Mark, is the ice gonna magically float into this too? [6:20] Chad: You guys, seriously, I said last time. You realize that this is delicious. [6:24] JD: What does pounding or chugging a Smirnoff ice have to do with retirement plans? I'm not quite sure. [6:31] Chad: You have to do it on one knee. [6:33] JD: Yeah. It gives me the power to. To understand retirement plans. True. [6:39] Chad: Design them. [6:40] JD: Performance before every meeting. [6:42] Chad: This is what I do. Let's hope not. [6:46] JD: Usually this is the part where we'll fast forward through it. Watch. [6:51] Chad: You know where I was first introduced to this concept was on Brooke and I's honeymoon, and people were icing us. [6:57] JD: Yeah. You guys did this to me for the first time. I never knew it was a thing. [7:01] Chad: You'd be in the middle of the cruise ship doing an event, and someone would walk up the Smirnoff Ice. [7:05] JD: Chug, chug, chug. When this. If that wheel ever ends up on me, I'm gonna end up throwing right about this point. Very good. The watery eyes is the best part at the end. Hey, we have a technical difficulty. [7:20] Chad: We gotta do that again. [7:24] JD: All right, we're gonna scoot on to the next subject. This is a little bit of. Of self marketing here, but I'll keep it quick. I'm hoping everyone out there knows that our tagline for some time has been smart, easy, awesome. It's kind of our new modern twist on a tagline. Do you call it a tagline? It used to be, like, a company slogan or whatever. And I think now this is a tagline. So, you know, we started in 75, and we were quality administration by a company that cares, don't cry, which was great. And so by this guy right here, you know, by the man. The man. Cheers. Big ups. And so now we're smart, easy, awesome. And so I wanted to explain what that is and see if you guys have any different take. I mean, you're out there. I'm sure people ask you, don't forget the hashtag smarties. Yasa means hashtag. Not your typical tpa. So. But just to stick with the smart, easy, awesome part, the Smart of smart, easy, awesome means that our clients, no matter how awesome we are, still depend on us to do quality work. So they want the work that we do to be intelligent. They want us to dot our I's, cross our T's. They want to depend on us that their plan is compliant, you know, with DOL and irs. So that's. That's the smart type of work that we're doing around here. The easy part is the thing that we're excited about, which is creating an easier client experience. So the business that we work in is very complex. There's lots of twists and turns. There's lots of rules and regulations and deadlines and all kinds of scary things. And what we want to do is make the experience of the client and our advisor partner as easy and as simple as possible. So we're sticking to the. [9:30] Chad: Oh, my God. [9:31] JD: What? [9:32] Chad: Daniel, are you dying? [9:35] JD: Food poisoning, right? He just got a fart with someone in the background. [9:40] Chad: Oh, my God. [9:41] JD: He's waving it towards us. [9:44] Chad: He tried to do that in the [9:45] JD: first episode, but he just couldn't. [9:48] Chad: I think he was. He was preparing us by talking about having food poisoning for that. [9:54] JD: Jeez. Back to my story. Yeah, the easy part is the client easy experience. The awesome part is to deliver something entirely different from anyone else. Or what I like to say. The awesome part is just the fact that our CEO is super awesome. You guys can use that. [10:13] Chad: Stick with that. [10:13] JD: You can use that one I used on the golf course the other day. I went through the whole smart, easy, and it said. And the awesome part is we have a super awesome, awesome CPA guy looked at me like, cpa CEO. Sorry, I'm only bad, like, three quarters, I swear. But no, the awesome part is the entire overall experience that we're trying to deliver to our strategic partners, to our advisors, to our plan sponsors, and do something that no one can get anywhere else. And we won't do that today. But that centers around our easy speak, our edutainment, our advisor. Love the hashtag notyourtypical tpa, just reinventing what it means to be a tpa, disrupting this entire TPA marketplace and being something completely different. So that's the awesome part. So smart, easy, awesome. That's it. We want to wrap it. So here we are. We're wrapping it. We are on episode two. Episode two is probably once it's all been finished and done is a C plus. Episode one was a D minus. We'll get better as well. True. I'm hoping that for future episodes we can call Paul. [11:28] Chad: We'll get on a friend. We'll phone a friend. [11:30] JD: We'll call Paul and he'll hang up on us. Hey, Paul, it's the retireholics. Click. So we'll keep adding some fun. This time. We kind of followed the same process. We'll add some new stuff. So check out episode three. We'll get it up there super quick. And we definitely will have dcio, I call it suit and tie. So we're gonna put him sitting in a chair. We're gonna be cash, we're gonna be drinking beer. He will have to stick to the dcio protocol. Fortune 500 company mind is Ps and Q's. Act professional. Answer our questions, and we'll have fun with him. [12:08] Chad: That's Q A. I'm tough. [12:10] JD: Oh, no, big time. I think we should do real research, like explain to us the sub ga transfer credits and your exact, you know, international foreign large fund. We'll put him on the spot and see what we can come up with. It will won't go through his compliance at all, so he might lose his job. Hey, well, hope not gonna go for it. And then, you know, I'm not gonna say like, hey, right into our show. If you have any ideas, we haven't got to that point yet. So we'll get to episode three. We'll wing it. We'll keep cranking some out Comment section, [12:45] Chad: comments, topics, we'll cover them. [12:47] JD: I guess they could go to the YouTube part and write at the bottom. [12:50] Chad: I think the biggest point of this is we want to talk as if we're all sitting, having a beer, talking about a topic that you want to hear about. That's the concept we're trying to get across here. So it is completely improv conversation that is open. So if you have a topic that you want to hear, let us know. We'll bring it on. [13:07] JD: This is our version of some boring webinar, you know, with a PowerPoint deck slide. This is the way PDC is going to rock it. And the quote, bugs Bunny, shut up. [13:19] Chad: Shut. [13:30] JD: Yeah, everyone here thinks I drink a lot of coffee. Episode two, it's a wrap. Once again, jd, Chad. [13:44] Chad: Talk, talk, talk, talk, talk, talk, talk. [13:47] JD: Can I tell you what they were talking about the first 1800 minutes of the webinar? About two minutes in, I was thinking about what I was gonna go home and have for dinner. My watch is broken. Knock it off. Poke a who. [14:08] Chad: That's a shame. [14:16] JD: One good thing about this job, Free balls from Texas.