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Retirement plan advising is full of conventional wisdom. Powered to Grow™ is here to challenge it. Two advisors. One hot topic. Powered to Grow is RPAG's debate-style podcast where growth-minded retirement plan advisors go head-to-head on the issues shaping the industry. Expect bold takes, real disagreements, and zero sugarcoating — because the best ideas come from the sharpest arguments. Subscribe and bring your own opinion.
Nate Moody (00:00)
From a purely selfish perspective, if you are an independent advisor, trying to understand what's your role going to be in the marketplace, as we see continued exponential consolidation, I will just leave you with this.
And Billy Beane put it perfect. He's the baseball manager of the Oakland A's. He had a great quote that said, if we think like the Yankees in here in their scouting room, we'll lose to the Yankees out there. And I love that quote because if you're an independent firm trying to replicate all the tricks of a national firm with their with their thousands, CFA's, their thousands of JD's.
You, can promise you, will lose to the national firms when you compete against them. So you gotta be different. And I think a PEP lends itself to a larger advisory firm focused more on efficiency and less so on objectivity. And so as an independent advisor, be careful who you replicate.
Hi everyone, Nate Moody and Brandon Budd coming to you live. this is the inaugural podcast within the RPAG and great gray family. We're trying to sort of take a fresh perspective on some of the the ⁓ myriad of topics within our industry, which are seemingly becoming increasingly polarizing. And I think there's probably ⁓ elements of
why that is that we'll cover in today's conversation. But Brandon and I will be covering specifically pooled employer plans and whether they represent the next evolution in retirement plans, or if they feel like they're a step in the wrong direction, or even one might say a reversion back to times gone by. And so with that, Brandon, maybe you can quickly introduce.
yourself, your role, and your relationship with RPAG.
Brandon Budd (01:58)
Yeah, perfect. Thanks, Nate, and thanks to everyone who's listening today. Some of you probably have seen Nate and myself in the past on other panels, have the opportunity to battle back and forth. So this is a little bit more of an official one today in today's podcast. So we look forward, again, to talking about a topic that continues to have a lot of traction, obviously, but a lot of conversations around it as well, both from an industry standpoint, conferences.
and with employers. so Brandon Budd, I'm with intellicents I'm the president of our retirement services division. And we're going to talk again, as Nate mentioned, about pooled employer plans. And for those of you that aren't familiar with pooled employer plans, just from a short introduction, we really look at it as a new offering.
Nate Moody (02:35)
you
Brandon Budd (02:47)
that came out of the Secure Act, the original Secure Act, Secure 1.0. And it's
Nate Moody (02:51)
You
Brandon Budd (02:54)
an option for employers to ⁓ join a solution that can help...
focus on outsourcing administrative burdens, as well as fiduciary liability. So something that is a little bit
Nate Moody (03:03)
Okay.
Brandon Budd (03:07)
familiar from a single employer plan to multiple employer plans. We now have pooled employer plans, as well as now what the definition is of a PPP. And so we're gonna dive through and discuss some of those things today. But with that, Nate, I turn it to you to see if there's anything else you would add to that.
Nate Moody (03:24)
No, I think that's a great lead in and for anyone who's not familiar with myself, which is probably a lot of folks, Nate Moody, I'm one of the senior retirement advisors at LeBell & Heron.
We're Tyron Advisors, we're a financial advisory firm based up in Portland, Maine. I'm also one of four partners there. And I think Brandon, maybe congratulations is in order. I think you just recently became one of the partners at intellicents. Or am I making that up?
Brandon Budd (03:52)
Yep, Just back back in 2018, but we've continued to grow our ownership. Well, it's been it's been exciting, but then but you are correct to move to the president for the retirement services has just been the last few years.
Nate Moody (03:57)
Okay. ⁓
Okay,
that's what it was. All right, Brad finally got out of your way. ⁓ One last shameless plug before we sort of dive into today's topic. You know, I think Brandon and I are probably a little bit biased, but we recognize that, you know, lot of the folks that have been leading our industry are approaching retirement and we're starting to see a transition, a pretty meaningful transition to a younger group of
Brandon Budd (04:07)
Yeah, right, exactly.
Nate Moody (04:31)
advisors, service providers, and potentially new perspectives. so with that in mind, both Brandon, myself, and one of our other advisor colleagues, Michaela Scott from the Strategic Benefits Retirement Group will be joining Kellen Foley from RPAG and ⁓ Great Gray, at a panel at NAPA. It will be Monday morning at
Napa and it'll be in room one. Exactly. Yep. 715. And so we'll have an opportunity to talk about some other things that we have going on from a business development sort of a practice management standpoint. And so if anything we talk about today resonates with you for good or bad, there's an opportunity to continue the conversation or or you know, if you want to dig your heels in and fight us on something, you know where to find us.
Brandon Budd (04:56)
7.15 a.m., I think, is the kickoff.
Absolutely, I think that's gonna be an exhibit room 120 but as always I would check the agenda when you show up in Tampa Alright, so look let's kick things off Nate. I'll start here and you know the way that intellicents is looking at it We think peps are really the next step
in this evolution of retirement plans. So from an outsourcing fiduciary administrative responsibilities so that employers can kind of focus on the things that really matter to them. Many of the times when we engage with groups, they're very overwhelmed with all of the things that they need to handle and do from a fiduciary capacity. And we try to help wrap our arms around what those one things they need to be doing are and making sure that we're doing them and tracking them accordingly from a diligence
standpoint and so we kind of think of this a little bit in the essence of that right there have been multiple employer plans Peos around for a long period of time. I'm actually here at one of the you know, the top record-keeping conferences today and a crazy stat that I heard was two of the largest payroll providers, which we know those two names had 40,000 new employers joined last year and 25,000 which dwarfed
Nate Moody (06:28)
You
Brandon Budd (06:36)
the plans of this specific record keeper that's a premier partner in the space. it's pretty, ⁓
Nate Moody (06:41)
you
Brandon Budd (06:42)
you know, exciting to see with the growth of Secure Act, obviously trying to help Americans and business owners be able to offer these retirement plans to give great benefits to their employees. But with that, there's liability, there's risks, there's administrative burden. And I believe, you know, our stance has been that these PEPs can be a way to help.
Nate Moody (06:53)
Okay.
Brandon Budd (07:03)
with that process over time so that you can really focus then on things that we think drive the needle with plan design, employee education and advice.
Nate Moody (07:05)
Okay.
Brandon Budd (07:13)
And then yes, of course, we think there's some efficiencies there from that stand structure of a pooled employer plan because you're able to really encompass all of those key parts that go inside operating a 401(k plan efficiently.
Nate Moody (07:28)
I think the challenge I have with a couple of those points, and I don't want to come across as like the ultimate pep.
hater, ⁓ despite what it might seem like on LinkedIn. I do think there's the potential time and place for them. And I also try to peps in sort of the lens of like, what is the alternative? If we're positioning peps as an industry, as a way of helping a small business offer a plan that wouldn't otherwise offer it absent a pep.
then I think that that is a legitimate reason and benefit of PEPs. And the corollary I would make is as much as people like to hate on the state auto IRA programs as being potentially more expensive than what somebody could do by just opening an IRA through Vanguard, the reason why those programs exist is because people don't open up accounts through Vanguard. And so yes, are they paying a fraction of a fee higher to be auto enrolled into the state IRA program?
100%. Are they better off because they've actually started saving for retirement versus what they would do on their own? 100%. Both things can be true. One can be slightly more expensive, but if it actually leads you to take a positive action in your life and in your savings journey, that can be a benefit. And that's kind of how I view peps. If ultimately we're positioning them as an industry for those...
those small employers that don't have the overhead or whatever the case might be to be able to offer a plan absent that PEP, then I think there's some legitimate benefit to it. That being said, I think this idea that they are magically more efficient from a plan sponsor perspective than what you could achieve through a standalone plan with proper payroll integration, proper payroll data, leveraging.
the benefits of your record keeper in a 316. I think that the efficiencies are often more at the record keeper and advisor level and less so at the actual plan sponsor level. So that's kind of one of my issues and then the whole idea of outsourcing fiduciary responsibility. One of the challenges I have with that Brandon is whether we like it or not, a lot of those fiduciary responsibilities serve a purpose.
and they are put in place because people did not take their retirement plans seriously dating all the way back to the 1960s with the Studebaker Car Corporation, which ultimately went bankrupt, ransacked their employees' retirement accounts. And that was basically what precipitated the passing of Arissa in 1974. And so I'm wary to outsource too much of an employer's responsibility.
when that responsibility is something as sacred and as important as their employees' savings. So that's kind of my one sort of like concern with, if we kind of outsource this and make it too easy, are they going to lose sight of the importance of the work in those fiduciary responsibilities and what their original purpose of coming into existence were?
Brandon Budd (10:43)
I think those are some great points, Nate, and I think you're right, just for the audience as well, too, to understand.
Even with the acceptance of a pooled employer plan, you still have the responsibility then to monitor that pooled plan provider, that PPP. so, hoping that both advisors as well as employers don't lose that sight, that there still is that governance, there still is that prudent fiduciary responsibility. You don't just completely wipe your hands clean of having a 401(k plan and hey, it's going to help succeed and make all your people be able to retire with full incomes and be able to replace
their needs, but there are those factors. And then I think just, you know, kind of piggybacking on some great comments you made as well too, it definitely is a discussion on an employer by employer basis, just as you said, because there is not necessarily a perfect, you know, arrow. It doesn't fit everyone. There's other considerations to think about.
Nate Moody (11:41)
Okay.
Brandon Budd (11:42)
both from small, mid-size, large employers. And I think that engagement as us, as advisors
in the community, is really important to make sure that the way that we kind of look at it, at least have the conversation alongside your single employer plan as well too.
Nate Moody (11:55)
So for my claim, we're sort going back and forth. My claim, and it somewhat dovetails with your comment about not a true absolution of your fiduciary liability because you are still
liable as an employer for ultimately selecting the PEP that you participate in and then continuing to monitor and determine that PEP to be prudent. And my claim as it relates to that potential issue is that PEPs are almost inherently flawed and conflicted because so often is the case that the PPP or
Cool plan provider, which is the 402A named fiduciary in charge of overseeing the other fiduciaries within the PEP is often either the exact same party as one of those other fiduciaries they're supposed to be monitoring, which is literally the definition of the fox guarding the hen house or has a financial and business relationship with one of the other
fiduciaries related, most notably the 338 fiduciary, which is almost always the advisory firm that comes to the record keeper to build the PEP. They represent the PEPs distribution and the old plan provider either contractually or wink wink is never going to fire the 338 off the PEP that the 338
brought the pull plan provider. And so if as an employer, you're voluntarily opting into a plan arrangement in which there are those inherent conflicts that exist. Are you truly absolving yourself of your fiduciary liability or asked or said differently? Are you really meeting your duty of care to your participants if you're actively
electing into an inherently flawed and non-independent arrangement. So that was a really long statement. But I guess that's probably my biggest issue with pooled employer plans is not necessarily that they exist, but they're marketed as somehow this fiduciary safe haven when I would argue they represent significantly more fiduciary flaws than a true standalone plan.
Brandon Budd (14:17)
Yeah, no, some great points there, Nate. You know, from a rebuttal standpoint to that, a way that I've, you know, many times simplified as I'm talking to an employer and, you know, explaining what a pooled employer plan is and weighing the pros and cons from a current single employer is my wife is in charge of our master bathroom remodel right now. And we work with a general contractor.
Nate Moody (14:21)
Hahaha!
Brandon Budd (14:41)
And that general contractor ultimately then is working with all the subcontractors for the tile, for the shower, for what faucets we're using, the paint colors, et cetera. So we went through that process of hiring that individual as the expert or the specialist to then tap into the other parts to complete the project. Because we see that employers a lot of times are very busy on a day-to-day basis with
so many needs that are part of their roles. it also seems that post 2020, some of these HR benefits teams aren't getting maybe the resources in the past that they used to as well too. And so they're looking for opportunities to consolidate, to bring in help that is able to do multiple things for them. But I think you made a great point that there's a lot of different ways that these pooled employer plans are set up and structured right now.
Nate Moody (15:12)
Okay. Okay.
Brandon Budd (15:36)
in the world of the fully bundled record keeping
solutions that as you mentioned, right, the PPP, the record keeper, the 316, you've got some of these solutions that have outside PPPs that are generally in some capacity like a TPA that's also then doing the 316 and then the record keeper is really just the custodian and the website for the employees and it's gonna be, you know,
Nate Moody (15:40)
Okay.
Brandon Budd (16:03)
really important and interesting to watch ⁓ being again a new offering just with Secure 1.0 as we push forward, who are the winners and losers? I kind of compare it to AI a lot of times, right? We're seeing all of these huge booms within AI. Everyone's doing AI. Well, who's doing it right? Who's doing it efficiently? Who's gonna succeed? Because like in any change in business, there is success and there's failures.
Nate Moody (16:15)
Okay.
Brandon Budd (16:28)
So being able to see that I think is going to have a massive impact on what happens as
this is a part of the overall industry, but that will be a big driver for sure.
Nate Moody (16:39)
I might push back a little bit on the contractor. like it in principle. The difference is, is when you're hiring a general contractor to work on your own house, that house is there for your own benefit. With a retirement plan, the house, guess to carry that metaphor, would be for the benefit of like, your kids or your siblings or like, you know, somebody, somebody else who's living there besides you.
And I would argue that if you're hiring somebody to work on that house, that to the extent that they do a shoddy job, the house might collapse on your children, just to really dial off the personal. In my mind, I would want to be able to understand exactly who in every single...
party who's working on that house and make sure that each of those parties were hired because of their true merits, independent of any back dealings. And I wouldn't feel comfortable hiring a general contractor who's gonna have their shady brother-in-law do all the electrical work because they're paying a little kickback to the general contractor knowing that the next time my daughter plugs her hairdryer in, she's gonna get electrocuted.
And again, I'm obviously being a little hyperbolic, but I guess that is taking that contractor. It's one thing if you do it for yourself, because ultimately, if you screw yourself, hey, that's on you. You should have done more research and you're gonna learn your lesson the hard way. But when you are in charge of somebody else, whether it's your employees or your kids, there is a certain expectation and responsibility that in my mind, you need to hold yourself to. And it's almost impossible.
to understand the relationships between some of these different PEP providers when you're an employer entering into it. And so again, I think you lose that opportunity as an employer to know whether it's a shoddy plumber or whether it's a shoddy electrician. And by the way, if you go in and say, hey, I love the tile person, I love the painter, I love everybody except I hate the electrician, he is a sketch ball.
Well, you can't get rid of them without firing every single other provider and going out and building a completely new house because guess what? When you join the PEP, you give up all autonomy over each individual service provider and you give up your own plan document. And so if you want to leave, you have to go build a new house. You're not able to remodel or renovate your existing one.
Brandon Budd (19:12)
I love it.
Nate Moody (19:14)
I so excited, I've heard of that. You can cut this part, TJ, my little celebrated. hahahaha
Brandon Budd (19:15)
⁓ If I were
to rebuttal that aspect, I love your point of right fiduciary and what's good for all. So when you think about what's good for all from an industry standpoint, we look at how much we have to provide fiduciary guidance
Nate Moody (19:34)
Mm-hmm.
Brandon Budd (19:42)
to provide fiduciary training to our employers to understand what their responsibilities are. Do you find, least what we find at intellicents and have seen is that so many employers are needing so much guidance and don't even understand what those responsibilities are, right? So.
Nate Moody (19:54)
Thank
Brandon Budd (20:03)
It's really been a challenge for them to understand the Xs and Os of, wait, I've got to get the notices out at this time. I've got to sign the 5,500 by this deadline. Got to work with the auditor if I've got to work with an auditor. That's where we see for a large mass, and again, it's not going to be everyone, that a solution like this brings in encompassing a lot of those responsibilities to be completed.
Nate Moody (20:04)
Okay.
Brandon Budd (20:30)
Again, still needing the governance, because of course the governance is always gonna
be incredibly important and I think it is important to point out just for the listeners as well too, if you do go into a pooled employer plan, very much like a PEO or a multiple employer plan, you can get out. Now there's things you have to do right to get out, you've got to still make a change, you've gotta change providers, could have document changes, termination fees, but that's also pretty ⁓ consistent with any change, with any type of provider.
Nate Moody (20:34)
Okay. Okay.
Brandon Budd (20:58)
So that's where I guess if I were to rebuttal back on the second part of this, I would take that direction being a pro pooled employer plan supporter.
Nate Moody (21:08)
Yeah, and I'm willing to give that there are potential efficiencies to be had. And part of that maybe is a necessary evil as a result of the fee compression within our industry.
Brandon Budd (21:24)
Yeah,
great point.
Nate Moody (21:25)
But I think the challenge I have is when these peps are marketed, it's not simply around, they're more efficient. It's, hey, it's less liability. They're less expensive. They're less, and it's like maybe one or two of those things could be true, but it's almost impossible for all of them to be true. And so that's where it's like, it's not maybe the concept itself, but it's the way in which they're marketed and sold. I would draw a corollary to another hot topic, which is alternative.
assets and investments within 401(k) plans. Like could you make to me an empirical argument that there is a net benefit of having alternative assets within a professionally managed account? 100%. Like it is a fact that we're seeing less and less companies go public. It is a fact that we're seeing indexes become more concentrated. There is potential value. Is that ultimately why they're being pushed as aggressively as they are today? Of course not.
Right? Both things can be true at once. So again, I don't want to go down. We have another hour talking about it. I think you have the next the
Brandon Budd (22:27)
I know, I think you did
make a great point there though, Nate, because...
It is true, I think the way that they're marketed is an important aspect and it is not, as you mentioned, always gonna be the lowest cost or yes, the institutionally priced investments. Quite frankly, in this day and age, every platform has the ability to be institutionally priced investments and just as you shared, there's so many levers in pricing with proprietary products, non-proprietary products, there's no guarantee that it's always gonna be the lowest cost option as well too. All right, let's pivot to another part.
Nate Moody (22:45)
Exactly.
Brandon Budd (22:59)
of this podcast, I'd love to propose and something that I've thought about and this comes from some of the risk attorneys out there like the Fred Riches of the world and so forth is if the industry had started with the pooled employer plans and then Secure 1.0 would have came out and added single employer plans for ⁓ employers to adopt, what would that...
Nate Moody (23:08)
Okay. Okay.
Brandon Budd (23:22)
have looked like both from our industry, from an adoption rate with employers as well too. So kind of reframing if this, know, the chicken before the egg, the egg before the chicken, in that change and seeing if
in that world of okay, I'm allowing these things to be done on my behalf as the employer because I'm hiring the expert to do these things for me. Or okay, I want to move into a model of I'm going to make these decisions, I'm going to choose these.
Nate Moody (23:44)
Okay. Okay.
Brandon Budd (23:48)
providers, I'm going to choose these services on something that I might be only spending four, eight, 12, 15 hours a year on from a time standpoint. How would that look like? And then ultimately, like in anything in life, right? And this comes from the attorney side of things. Does anyone ever want to opt into more liability or more risk at the end of the day when you look at it from the lens if the pooled employer plan were the first?
Nate Moody (24:15)
Okay.
Brandon Budd (24:17)
iteration and then the single employer plans
were to come just here and secure.
Nate Moody (24:21)
I feel more and more like a philosopher, but I guess I reject the claim that peps are inherently less liability than a standalone plan, which is I think kind of what one of those comments was like, would anybody opt into an arrangement that has more liability, which is basically insinuating that a standalone plan is inherently less liability. I think...
Again, when you're leveraging a PEP in PEPs, I feel like from an objective standpoint, many, if not the majority of them have inherently conflicted service provider relationships in place that you're actually potentially exposing your company to more liability by opting into that than you would under a standalone plan where you can independently select
monitor and evaluate each and every service provider, especially any outsourced fiduciary service providers, whether 316, 321 or 338. But I guess holding that logical debate aside, I would say I do think that you would still see a somewhat similar marketplace because I do believe that most
businesses, for better or for worse, appreciate having the autonomy to select their own providers, whether that's for their retirement plan or any other business partner that they leverage. And if you needed any more reason than that, I would say look at the healthcare system in America. Our current healthcare system makes absolutely zero.
sense and yet the vast majority of Americans continue to maintain like the most pardon my French, ask backwards healthcare system ever. One in which leads to significantly worse outcomes and significantly higher prices all under this idea of employer and employee choice. So if employers haven't gotten together and asked for sort of a single payer healthcare system, I don't know why
401Ks would all of a sudden be any different and PEOs have been around for what 30, 40, 50 years and yet we still continue to see significant attrition from those, particularly as an employer grows in size. Now, why is that? It's because the PEO gives up a level of flexibility, optionality and choice. And so again, I think over time, whether we had started
With the base case being all PEPs or the base case being all standalone, we probably still would have ended up in some sort of equilibrium, which is one in which I feel like we're sort of arriving at already. So no, I don't believe if we had started in all old plans, unless it was like an Australian program where was a truly fully integrated approach that I don't think we would have never gone towards standalone plans. And no, I don't.
believe that you're opting into more liability by not participating in a old employer plan where the PPP is also your 316 and you're theoretically giving up liability for oversight of the 316 when that's obviously objectively flawed.
Brandon Budd (27:49)
Great. So I think that I guess I would, I'd come back on with that. Cause think there's some, some, some great points to that is, you know, thinking about
the evolution and the selection of the PPP and the providers, I think is really, really important as you shared, Nate. And I think that is going to go back to are all PPPs created equal? And just like are all record keepers created equal? Are all advisors created equal, right? I mean, we talk about all the time, you talked about fee, fee concessions ultimately, right, within our industry. Well, if, you know, ABC advisor is gonna be doing
Nate Moody (28:12)
Okay. Okay.
Brandon Budd (28:29)
on-site employee education and XYZ advisor shows up once a year to collect the check, right? And it's the same price.
Well, what value are you getting for those fees and those services at the end of the day? So when we start to look at
these next handful of years and write some of the data, guess, that we've seen just in the first few years with these solutions. It will be very interesting for the individuals that have moved from single employer plan into pooled employer plan, do they continue to stay within that structure? one, are they happy with their PPP in that capacity?
Nate Moody (28:44)
Okay.
Brandon Budd (29:01)
do they decide to go back to single employer plan or I also am gonna be interested to see and I'm sure you are too is, well I've selected the wrong PPP based off of my monitoring and governance. I do like the idea of the pooled employer plan because.
Nate Moody (29:10)
Okay. Okay.
Brandon Budd (29:15)
maybe they're an audit size plan and they don't like the audit aspect. And so they're gonna say, well, we're gonna actually now make a PEP transfer and move from one pooled employer plan to the next pooled employer plan. So that will be something that's gonna be really compelling. think like
anything data is gonna be great for advisors, it's gonna be great for the industry, for employers, just like the benchmarking stats on automatic enrollment, automatic escalation match, we'll probably start to see a lot of that same data.
within this pooled employer plan, single employer plan world as we move forward, which will be great for everyone in the room.
Nate Moody (29:50)
So it's a perfect segue because my next statement is related to what you just
⁓ mentioned, which is one of the major marketing purposes or marketing terms used for selling PEPs is alleviating the burden of an audit. And I would contend that the audit serves a very important process. And by avoiding the audit, you could potentially exasperate underlying compliance.
problems that once they are finally discovered, because they won't be discovered until much longer down the road, that the correction could potentially far outweigh any potential audit savings or any potential time savings from giving up the audit. And so I guess reject the claim that by avoiding the audit, pooled employer plans are somehow benefiting employers. And to take it a step further,
and this will probably piss off a few employers. If you have 100 or more employees and you can't afford an extra 75 to $100 per person per year for that independent audit, there's probably an opportunity for you to improve your business. I'm being a little bit tongue in cheek, but again, we make the audit out to seem like it's this massive, massive expense and it's not an insignificant amount, right? 10K a year is not insignificant. I understand that.
But again, in the reality of 100 to 200 to 300 employee company, it's a relatively small, we're talking fractions of a percentage of payroll. And then the time aspect really depends on how well you manage your retirement plan. And if it's taking that much time to do your audit every year, you're probably not running your plan as efficiently as possible, which makes the purpose of the audit.
probably even more important because there's probably even more potential gaps or things that you're missing that your auditors probably catching on an annual basis. And those problems don't just go away simply because you join a PEP. It's just the level at which the audit at the PEP level gets to is significantly more shallow than a true standalone independent audit.
So again, all my statements have been more like paragraphs. feel like Michael Scott where he like gives the headline, it's just the entire article. But my claim is that, you know, a major marketing ploy of peps is the avoidance of the audit. And I don't believe that avoiding the audit is necessarily an employer's or their employees best interest.
Brandon Budd (32:33)
Perfect. So as the other side of that coin.
What we've seen, especially over the last handful of years, and think it started with the massive layoffs of Ernst & Young, is that the auditor pool continues to thin. You talked about older advisors and needing more new younger advisors within the industry. In that audit world, very, very similar. I can think of multiple clients that have a different auditor every year, even if they're with the same firm. I can't imagine that your clients would not want to work with Nate every year and just
Nate Moody (33:01)
Okay.
Brandon Budd (33:07)
be passed around to another advisor every single year. so that's something that we've seen from a relationship standpoint, as you mentioned, has just not been consistent. To go along with, and yes, there's a cost, I agree with you, doesn't mean that it's a crazy cost. You probably can find an auto, depending on the size of the plan, anywhere
between 10,000 and 20,000. And again, the level of scope of that work and the value of the work that they're gonna do for you.
Nate Moody (33:29)
Okay. Okay.
Brandon Budd (33:37)
that we're seeing those efficiencies within a pooled employer plan is that because of that structure, you've got very established audit firms that are the auditing firm that's associated to these pooled employer plans. So from in-house efficiencies, from the consistency of the teammates
and the individuals you're working with, ⁓ and then ideally from the capabilities of those individuals, because it does seem that a lot of times,
Nate Moody (33:56)
Okay. Okay.
Brandon Budd (34:03)
heard, well we just got the newest graduate is who our auditor is this year. And what are they able to then really efficiently point out, correct, check, make sure that the employer is doing all the right things so that it is in the best benefit of the employee because that of course at the end of the day is part of that fiduciary governance and idea that every
retirement plan, rather it's a pooled employer plan, single employer plan, MEP-PEO should be hopefully helping your employees and your participants.
move forward with a better path for retirement.
Nate Moody (34:34)
I love it.
Brandon Budd (34:35)
All right. So it's been a lively discussion with Nate and myself as all of our discussions are. So hopefully people have been able to get some good from both the four pros and cons against. Because I think they're all incredibly important things for us as an industry to be talking about as advisors and consultants, but also sharing with our employers as well too. So my final.
stance as a pro pooled employer plan supporter is do we look at this pooled employer plan as the next evolution within the retirement plan industry? So just like our
Nate Moody (35:01)
Okay. Okay.
Brandon Budd (35:12)
I don't know if my iPhone's, I think I only have a 12, but there's like an 18 iPhone. Have we moved down that progression of previously it was just brokers working on plans. There wasn't a 321 and then it really went to 321 fiduciary and then 338 fiduciary. Then the conversation of 316 fiduciaries came into the world. And then 402A, have we now moved into the PPP, the pool plan provider and the pool pool plan solution as that kind of next step up?
Nate Moody (35:29)
Okay. Okay.
Brandon Budd (35:42)
or at least an option for employers that are a good fit that could take the benefits of some of this administrative outsourcing and ⁓ reduction of fiduciary liability. It's not removing fiduciary liability, but reducing some of that liability. Nate, turn it to you.
Nate Moody (35:57)
So my last word to continue on your phone metaphor is the iPhone no doubt represents a significant technological innovation, but we're I think just now as a society starting to realize a lot of the negative consequences that have come as a result, a direct result of both addiction to our phones, but also social media. And I think what you find and what you realize is as you see
consolidation and those you trust that behind a lot of that consolidation is Corporations and a lot of these corporations are ultimately looking to maximize profits. They're not looking to maximize employee Outcomes and so I know this is a bit of a slippery slope argument, but it makes me incredibly nervous as somebody who lived through that post for a p2 2012 era in which we worked so hard over the last
decade to establish clear lines between each of the different service providers, having each one of them independent of one another and stripping out as much conflict and soft dollar revenue that the PEP feels like a step back in that direction. And I'm worrisome that while people might view it as the next evolution in the retirement
innovation, I would view it as potentially the next step in a devolution of our fiduciary objectivity. And one last bonus point, and I'm not supposed to have a second last word. From a purely selfish perspective, if you are an independent advisor, trying to understand what's your role going to be in the marketplace, as we see continued exponential consolidation, I will just leave you with this.
And Billy Beane put it perfect. He's the baseball manager of the Oakland A's. He had a great quote that said, if we think like the Yankees in here in their scouting room, we'll lose to the Yankees out there. And I love that quote because if you're an independent firm trying to replicate all the tricks of a national firm with their with their thousands, CFA's, their thousands of JD's.
You, can promise you, will lose to the national firms when you compete against them. So you gotta be different. And I think a PEP lends itself to a larger advisory firm focused more on efficiency and less so on objectivity. And so as an independent advisor, be careful who you replicate.
Brandon Budd (38:38)
Perfect. I also am going to agree with you. I know we've we've been battling pros and cons back here, but I do want to give kudos to what you mentioned and to the retirement industry as a whole. It has come a long way over the last 20 years for 8b to just disclosures, you name it. So I think both of us could say this at this time, it seems like it would be a much better time to be focusing more on the health insurance side of things as we add a little bit of rent as well.
Nate Moody (38:43)
shit.
100%.
Brandon Budd (39:08)
There's a lot more inefficiencies on that side that I think both from an industry standpoint and as a global, we could really do a lot better for all the Americans that are out there.
Nate Moody (39:17)
100 % I mean, I feel like as an industry where we're bickering over pennies and nickels while they're cashing in, know dollars and and and I don't know 50 cent pieces I ran out of currency, but You understand it is a $2 bill.
Brandon Budd (39:30)
Look.
Nate Moody (39:34)
Like we like to close the great a great podcast with you know, what's a piece of advice that you'd want to give your younger self? Brandon, I know you're already kind of your younger self. But any advice you'd be you'd be willing to give you know, a younger advisor joining this industry, whether yourself or anyone else.
Brandon Budd (39:53)
With all the mistakes I've made, we don't have enough time on this podcast. ⁓ But I think when I think about advice and the things that have really helped me in just my career, professionally, personally, it's finding good people and finding good mentors. I don't know about you, Nate. I didn't grow up thinking I was going be a retirement plan specialist. surrounding and immersing yourself with people.
Nate Moody (40:14)
You
Brandon Budd (40:18)
within the industry, within your own organization, and really learning from them, and getting into those conversations is, there's no better way to learn, there's no better way to build your brand, to understand how you can impact and help employers and employees by getting into those situations, because I think when you run into one, and then you see it again down the road, you can tell them exactly how you handled it in the past, and it's a huge value add for you going forward professionally.
Nate Moody (40:45)
Awesome. And I would say, I would say, never forget your purpose. I think so many of the folks in this industry, to Brandon's point, never intended to work in this industry, but fell in love once they sort of fell backwards into it. And I think the reason people get so passionate about this industry is because
ultimately the people we're helping are the employees at the companies we work for and with. And it's often the very same employees who exist in our communities, whether it's friends, family, cousins, up here in Maine, those are all one in the same. It's people that wouldn't otherwise get the help or wouldn't otherwise be able to afford the help.
Brandon Budd (41:25)
You
Nate Moody (41:32)
And through the retirement plans, through these economies of scale, through plan design, we're able to have a material impact in people's lives. And not always a tangible one that they're gonna come around and say, hey, Nate, thanks for auto-enrolling me 30 years ago. I have so much more money than I know what to do with. But you'll know deep down, the multiplier effect when you help a company in turn help their employees is second to anything else you do in the financial services.
space. And again, coming back to this idea of the pooled employer plan, you're going to be tempted with a number of shiny toys throughout your career, some with really compelling marketing stories. But don't ever forget what the ultimate purpose and passion you have for this industry and where that stems from, which I hope is helping people. And I think that'll help keep you on the straight and arrow and avoid the temptation.
Brandon Budd (42:26)
Perfect. Well, one last wrap up here as a reminder, again, Nate, this at the beginning, but the Napa 401(k) summit breakfast, the advisor edge panel is on Monday morning, 7 15 a.m. currently in room 120, but always check of course the agenda when you get there in Tampa. And then if you have questions as it relates to pooled employer plans, of course, ⁓ feel free to stop there.
Nate Moody (42:42)
And it's a opportunity to share some of the things we've the past. So, to a from
Brandon Budd (42:49)
questions for myself, for Nate, reach out to the RPAG team as well too. ⁓ And then I think if you are interested in being part of a podcast in the future and you have some ideas on some topics, also reach out, provide some of that feedback ⁓ as these sessions continue to bring value to all the members here. So thank you very much
Nate Moody (42:49)
a of She's a at the of Michigan. She's the of She's She's a student of She's
Brandon Budd (43:07)
for the time and hope everyone took some value out of today Thanks Nate for battling with me.
Nate Moody (43:12)
Ha!