December 1, 2023 • 41 mins
Welcome to The Dental Wealth Nation Show with Tim McNeely, where we delve into the world of financial wellness and retirement planning for small business owners and their employees. In this episode, we have the pleasure of hosting Daniel Beck, co-founder of 401 GO, a revolutionary 401(k) platform designed for modern businesses.
As we explore the complexities of retirement planning, tax control, and the responsibilities of sponsoring a retirement plan, we aim to provide a deeper understanding of running a successful retirement plan while highlighting the importance of taking action for the future and the well-being of loved ones and employees.
With a focus on making retirement plans more accessible to small business owners and empowering individuals just starting out in their careers, our guest Daniel Beck shares insights from his experience as a serial entrepreneur, addressing the challenges he faced with retirement planning and his commitment to providing financial assistance to employees.
The episode also delves into the intricacies of setting up a 401(k) plan, the benefits of auto-enrollment for employees, and the new federal regulations making 401(k)s more accessible for small businesses and employees, including the establishment of an emergency savings account within a 401(k).
Delivering expert insights into the evolving landscape of retirement planning, Daniel Beck and host Tim McNeely explore the innovative solutions and simplified approaches to 401(k) administration, touching on the digital age of retirement planning and the importance of streamlined processes for small business owners.
With engaging discussions around automation, technology, and the responsibilities of retirement plan sponsors, this episode of The Dental Wealth Nation Show offers valuable perspectives for both small business owners and employees navigating the realm of retirement planning.
Tune in to gain essential knowledge and actionable advice on securing your financial future and providing support for your employees through savvy retirement planning strategies.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:05):
As a driven dentist, you see the world differently where
some see scarcity. You see abundance. When others wanna
give up, you keep going. You're building an amazing
life of significance. That means you can't rely on
ordinary advice from ordinary advisers to get to your goals. You
want advice that's going to help maximize your net worth, so you
(00:27):
can take even better care of the people you love, the causes you
care about, and make your dent in
verse. But the fact is this advice remains hidden
because relatively few professionals are well versed in them, and the extremely
Affluent don't care to let you know about them.
Join us as we pull back the curtain to reveal the often
(00:49):
hidden advice and strategies used by today's most
successful individuals and families. Welcome to Dental
Wealth Nation. Here's your host, Tim
kneeling. Hey. Welcome everyone to another episode of the Dental Wealth Nation
Show. And today, we're talking about something super Important for you,
(01:11):
your practice, your family, the people you love, your employees, and
that is retirement plans. And by the time we finish today, you're gonna know
What the opportunity is among retirement plans and how you can set one up
that's easy for your practice so you can better control your taxes. You're
gonna Have a much deeper knowledge of what goes into running a
retirement plan and the the roles and responsibilities that you
(01:33):
have In sponsoring a plan, but most importantly of all, you're gonna
feel inspired to take action, not just for yourself and and your future, but
for the people you love and and your employees And I couldn't
think of a better guess and someone better to talk about this important
topic than Dan Bagdad, his cofounder of 401 go, a
a modern 401 k platform, and he's also a
(01:55):
fellow financial wellness nerd. Dan, welcome to the show. Thank you. I'm
I'm excited to be here. Thank you, Tim. Oh, and and what an
important topic. And and before we dive into this, give me a little bit of
your background. You're you're out in Utah, probably on the Silicon
Slope somewhere and In in four zero one k business, like,
isn't that a boring business? You know, it is for
(02:17):
a lot of people, but we're we're trying to change that. You know, even the
concept of Like retirement, I think for many is kind
of a, retirement for my dad is very different than what retirement means to
me. And so we're trying to be cognizant of not just, like, what is
the function of a four zero one k and how do we, you know, make
it more accessible to small business owners, but also, Like,
(02:37):
what is what can we do with this, in terms of how do we
empower individuals that are maybe just starting out in their career? And so,
you know, we're taking Certainly a very holistic
view. And, you know, quite honestly, a lot of this just stems from, you
know, prior experience as a serial entrepreneur. I've started a
number of businesses, and this was a challenge that I, you know, came
(02:59):
across. And quite frankly, I was raised In a, you
know, a very blue collar household, I was taught to work hard and, you know,
to to save and stretch a penny. But I didn't really have a lot of
education around investing or just a lot of financial wellness
concepts until I got to college. And, you know, because I was
passionate about it, it was something that I would seek out, but then as I,
(03:21):
you know, started hiring employees and building businesses, I found
that, you know, knowledge that I was excited about and, you know, I thought was
fairly commonplace, It really wasn't. And so,
suddenly, you know, I I had these these employees and
their families and people that, you know, I feel some sort of a stewardship toward.
And when they come to me, you know, maybe asking for, like, a payday advance
(03:42):
or something like that, you know, I always viewed that as an opportunity to
Try to help them. Try to help them kind of change their relationship
with money. But, you know, I thought, hey, there's no better way
to do that than to do a four zero one k with a match Because,
you know, for me, like, it's an obvious yes. If if, you know, your employer's
gonna match a certain amount of contribution, you should at least max that out.
(04:04):
So I looked to set something up, and they're just there there wasn't anything.
And so it was a few years later, you know, I was exiting out of
a couple different businesses And just decided, you know what? This is a
big opportunity. I bet there's a lot of other business owners out there that are,
you know, kind of feeling the same pain that I am. Let's see if we
can build a product that they would actually use.
(04:27):
And I think that outsider perspective really helped, because in many ways, You
know, day in and day out, I talk to advisors, you know, like yourself and,
you know, some of the the industry incumbents about what we've built.
And, they're You know, when we were first working on it, a lot of
people just said you can't do it. It's too hard. It's complicated. The reason the
industry is this way is because that's just the way it is. But not
(04:48):
being from the industry, I kinda just didn't listen to that. And so, you
know, we set about building a platform and what we have, I think, is very
unique, And we're excited that, you know, people
sometimes say, how small is too small? They're, you
know, 1 individual. So in a lot of places, they you know, unless
you got 20, 50, 100 employees, they're they're not really getting it
(05:09):
to talk to you. For us, All businesses matter.
Small businesses matter. Yeah. And, I mean,
that's pretty common in the industry, at least it was, is most of
these plans are Geared towards larger plan sizes and the
small business really gets left behind, don't they? They
do. And, you know, I love that you have kind of a dental focus,
(05:32):
because the those types of businesses and practices are
definitely, hurt the most by kind of the way that it's Structured and
the reason why is oftentimes, for small
plans because you don't have a lot of employees to kinda defray some of those
costs And to get some economies of scale, you'll see
really high asset based fees, and those asset fees are going to the record
(05:54):
keeper, the third party administrator. And when you look at those four zero one k
plans, who's paying those asset fees? It's it's the, you know, it's the ones that
are contributing the most. It's the dentists. It's the, you know, it's the doctors. And
so, really, a lot of our first plans that came on the
platform, you know, once we started building this, were, you know,
practices like the ones that you work with every day. Yeah. Well
(06:16):
and and when it comes to the the the problems and challenges, what were
the things people telling you couldn't be done as you set out to to build
401 go? I think a lot of
it is we you know, not having any experience,
in the industry. We certainly you know, one of the businesses we had before
was, you know, ecommerce. We did, you know, massive volume of
(06:39):
transactions. We were selling, you know, 35,000 products on any given day.
And those transactions, 99.999% of them were all
fully automated, meaning, you know, from product to sell and shipment
and fulfillment, all of that. Like, it never you know, a human was not
involved. And so we kind of have that same thought that that that
existed within the financial services, sphere, and it simply
(07:02):
doesn't. You know, as I started doing research, we found that, you know, The number,
I can't remember exactly, but it's around 3 to 6%
of financial transactions are actually fully automated from beginning to end.
Everything else, there's somebody that's, You know, doing batch settlements or sending reports
or, you know, papers being passed. And so the bar
in many ways was set so low that when we came with kind of our
(07:23):
prior Experience of automation and technology, it was
just too big of a departure for a lot of people. Like, you know, the
best way to explain it is, You know, they viewed it as a 10 step
process, and we're looking and saying, well, why can't we just go 1310? You
know, there's all these processes in between that, you know, there are
People that are manually doing things. There's there's platforms and
(07:44):
systems. You know, so I I was listening to,
You know, the founder of Ubiquiti, they're one of the
kind of the early, four zero one k providers that that were, you
know, going after small businesses. And, you know, their platform, when they
first launched, it was connected to, like, over 20 different, you
know, systems from different vendors. And what that does is it adds
(08:07):
cost and complexity. And so, you know, the way the industries approach kind
of modernization or innovation Tech is, hey. Let's take everything that we've got, you know,
steps 1 through 10, and just make them digital. They never really think that
we can get rid of, you know, entire steps if we have, You know,
a a a true tech platform. So we were born
in, you know, kind of this this modern digital age without any of
(08:30):
those, You know, those anchors, if you will, of a lot of the legacy
systems and platforms. Like, even finding a custodian to hold the
assets was really hard because a lot of them said, yeah. We're, you know, we're
Check forward and we're modern and everything, but then once we start talking to them,
they these are big old banks that have been around for, like, you know, over
a 100 years. And they don't really understand even what, like,
(08:50):
an API is, and so we were only able to find really 1
provider that actually had an API. And then come to find
out, like, as we were working with them, they sold an API that didn't really
even exist. They were building it just a little bit ahead of us. And so
that was kind of, like, my first exposure into, you know, some of
the, you know, just just how
(09:11):
manual financial services are in general. And the more and more I talk
to people that have been in the industry, like our you know, we just hired
a new CRO. He's been in the space for over 25 years. And, You know,
as he's learning more about the system and the platform, he's just like, I can't
believe you guys have done this. And and so I really think it's just that
that fresh perspective by coming in and Not having any preconceived ideas of how we
(09:32):
get from, you know, steps 1 through 10, it allowed us to just
kind of leapfrog a lot of what was already out there. Yeah. Well
and I know as I I listen to you talk. Right? You kinda went technical
on some of those things, which is great, and and my thought is, well, that's
nice, but But what impact do those legacy systems have on the
the dentist, on the business owner? Right? Right? What does it matter to them if
(09:53):
they're on a legacy platform or A modern practice, like like, how
does that impact their day to day experience with running their business
and a plan? I love that you bring that up,
and, you know, I've certainly had to pick up a lot of vernacular being in
the space. But prior to that, there were things that just didn't make sense to
me, especially as a small business owner. And so we built the platform
(10:15):
in a way that it's very approachable. You know, A great
example is yesterday, I was talking to somebody who has, you know, kind of a
combo plan, and, you know, just talking about the complexity
of it. And she was mentioning, you know, Fidelity bonds, this, and all these different
things that she had to worry about. And if you were to go talk to
one of our, you know, Couple 1,000 customers, business
(10:38):
owners, and ask them about their Fidelity bond or some of these things, they're just
gonna they're gonna, like, what? You know, they they have no clue, and and I
liken this to kinda like automotive technology advancements. You
know, I remember my dad showing me
how to, you know, align a distributor and use a timing light. And,
like, a lot of these things, you had to you had to do quite a
(10:58):
bit of work, you know, To operate a vehicle, you gotta know kinda what happens
under the hood. And, you know, I know for some of my young kids, they'll
probably get in the car, push a button, and say, take me Grandma's house, and
they don't need to understand what's happening under the hood. And that's what
we're trying to do with the four zero one k is just remove all of
that complexity. You know, typically, you're having to work with a record
(11:19):
keeper, you know, who's separate from the third party administrator,
who's separate from, You know, the fiduciary and the custodian and the
problem is, like, they all need to communicate a lot and and and especially the
record keeper and third party administrator. There's a lot of information that
needs to flow back and forth. And when these are different service providers and
different systems, mistakes happen. And so,
(11:41):
by Eliminating all of that and and, you know, providing a single
source solution, already you're you're, you know, heads and shoulders
above anything else out there just because, you know, the other thing too that's an
Advantage for our clients is that when the problem
arises, you don't have 3 or 4 people all pointing fingers at each other. You
know, if there's a problem, we're gonna take care of it. And, you know,
(12:02):
if you look and and compare our reviews to, you
know, legacy providers or even some of the other, you know, tech solutions that have
kinda come on the scene recently, The big differentiator you're gonna see is service,
and that's really key, especially for a small business. You know, if you have an
HR team, yeah, there's somebody who's gonna push through all that minutiae.
But when you're trying to, you know, maximize and build your practice,
(12:24):
you don't have time to deal with these sorts of things. And so that's what's
that's what we're here for. Yeah. And I mean and that's really
a common problem with the the legacy side of things is
this business is inherently complex. There there's no question about it. I I
would argue it's probably one of the most complex pieces of the
financial services because you do have all those parties. And when
(12:45):
there is an error or something happens, You can't get the right people to talk
to each other, and and I found most of the time it actually falls back
on the business owner. And now the business owner is actually having to become
an expert in retirement administration instead of doing dentistry.
Yes. And and nobody wants to do that. Yeah. You know, they they they obviously
wanna focus practice even being, you know, financial wellness nerd.
(13:09):
I love the the outcomes and and, you know, what we're doing, but, like, the
min the the minutiae and all the little details of the Product or whatever. We
deal with them because that's our job, but, you know, it's in no way,
exciting. And so we certainly understand, And, you know, small employers, number 1,
they don't wanna learn it. Number 2, even if they did, they don't wanna do
it. So Wow. That's that's what we're we're taking over for them.
(13:30):
Yeah. And then the the financial wellness piece. Right? I I believe that's so
important. And and and talk to me a little bit about how concerned
employees actually are about Things like retirement, is that a big concern
for employees across the board? It is. And, you
know, certainly, it also increases in importance as those employees progress
their career. The one one
(13:53):
really interesting, data element that I like
point out is when we were looking at kind of the existing, you know, four
zero one k, industry and how well are they doing, you know, we wanna
look at not just The entire industry, and then also how are
they serving corporate America. But, like, what is the actual, you
know, the the, The outcome for those participants, because
(14:15):
really, they're the ones that are enjoying this benefit. And
it's pretty sad that when you look at, you know, the the the industry,
the rates for the lower quartile of both age
and wage. So those, you know, employees that are just starting out,
industry average is around 22%. On our platform, we're closer
to 51%. And so, you know, a lot of that
(14:37):
really is the ability to have a lasting impact. And so,
you know, somebody who's maybe just out of school and
they're 25, just starting their careers as a
dental assistant, you know, whatever it may be, they
don't have a lot to save, and quite frankly, they're not thinking about it at
the time. But if there's a four zero one k, especially with, you know, auto
(14:59):
enrollment, meaning they're automatically opted in, They're 15 times more
likely to save with that four zero one k than if there wasn't one in
place. And so what that does is, you know, with any,
In good habits, really, you know, whether it's it's exercise or, you know,
the gym or financial wellness, it it's sometimes hard to establish those
habits. You have Hurdles and barriers. And for us, we looked at it, and one
(15:21):
of the big hurdles and barriers is just that first dollar. And so
with the four zero one k, we can get that 1st dollar where suddenly after
a few months being at an employer, even if they leave, you know, a couple
years later, there's a a decent balance there, which For most
of, you know, good portion of our users, this is their 1st time ever saving.
And so now that there's money there, suddenly they're interested. Oh, what can I do
(15:42):
with this? And They'll start informing themselves,
and what we find is time and time again where, you know, you have employees
in maybe a a blue collar environment or Something like that who you know, the
the financial industry traditionally might just say, they're
not interested. We've gotten them interested. Wow.
And and what a powerful problem to solve and and really
(16:05):
make an impact. And, you know, I've certainly seen this across the The
practices I work with where, you know, the plan sponsor, the the doctor, the
owner will set up a plan, and we review it a year or 2 later,
And they're really surprised by all of a sudden the amounts of their employees who
have never made a lot of money. All of a sudden, they've got a couple
grand saved, and and for them, that's a lot of money. And it's it's
(16:26):
a huge win, and it shows them, hey. This is this is
possible. And I believe it really does motivate the workforce. It motivates
your staff, motivates your And the more secure they feel about
the future, the better they're gonna be working for you.
Absolutely. I mean, if you're showing up to work and you're worried about some financial
Dress at home. You know, most of the
(16:49):
time, I have a buddy who's a CPA, and, you know, he has to do
some kind of forensic accounting occasionally where, you know, somebody in
a small business, an admin of some sort is
maybe siphoning off some money, and then, you know, they end up a couple years
down the road with, You know, they they stole a $110 from the company.
That always starts with, you know, kind of some
(17:10):
innocence, meaning, You know, transmission was going out. I didn't know what I was gonna
do, so I just kinda moved some money. I was gonna put it back later.
And so those opportunities, those you know, They they
go away when you have your employees taking care of,
you know, kind of their own personal finances, and, You know, the four zero
one k is a great way to do that. There's also the
(17:32):
passage of Secure two point o, so that passed December of last
year. And that's really exciting for us because it's a lot
of regulation at the federal level that eases some of the requirements.
So number 1, it makes it, so four zero one k is much
more accessible for small businesses, but then also for those employees. So one of
the things we're excited about is you can have an emergency savings account built
(17:55):
Within that four zero one k. And so for a lot of people, their hesitation
to putting money into the four zero one k is often, well, I wanna have
an emergency savings saved up. But It doesn't happen a lot of the time,
and especially if it's too accessible, then, you know, suddenly, like, a new TV
becomes an emergency. Whereas if it's in a four zero one k, it's a little
bit harder to access, then it that tends to stay there
(18:15):
and actually be used for real emergencies. And so we like that, it
kinda removes some of those hurdles and create some incentives,
not just for the employer, but also for the participants. You know, the fact that
auto enrollment is going to be required, I've seen over and
over again The positive impact that has on employees. So,
we're very excited by the direction all this move is moving. And quite frankly,
(18:38):
a lot of it is driven from the fact that Social Security
is just it's it's broken. You know? It's it's a it's a
Ponzi scheme in many ways, and we don't know. I don't know if I'm ever
gonna see anything from it. And so the best way we can relieve some pressure
on that is get people taking care of their finances, you know, more,
especially at an earlier age. And so that's why you're seeing a lot of, activity
(18:59):
at the federal level. It's easier to try to fix, this through, you
know, 4 0 one k's than to actually Catch up Social Security, however that
may happen. Yeah. And I wanna come back to the SECURE Act in a moment
because it's got some very powerful things in there. And in fact, You're gonna share
with us at the end how actually the government will help pay for
your retirement and your employees' retirement. And I'm so excited about that there's
(19:21):
That there's actually funds available to help you implement these
plans. But coming back to just the solution you've built. Right? You you've relied
a lot on automation, which I think is great. I've never seen planned
documents and planned setup go so smoothly, but you also solve another
big piece of the problem. And and talk to me a little bit about what
typically happens with payroll and running payroll and transmitting
(19:43):
payments back and forth when when these smaller businesses are involved in
running a four zero one k plan. That ever create any problems?
It certainly does. You know, and I and I recall,
when we first launched this and started putting businesses on,
mine was you know, one of the businesses I had was plan 1.
And we didn't have a payroll integration, so I was manually doing that on my
(20:05):
own. And it wasn't too cumbersome. I mean, it only took, you know, maybe a
couple extra minutes Every time I ran payroll but the one thing that we noticed
with other employers is a lot of times, you know, they're they're subject to notice
fatigue. They have all these emails come in, and so, you know, when you don't
have a payroll integration, what happens is, let's say, you know, an
employee logs into their four zero one go account and says, I love what I'm
(20:27):
saving. In fact, I'm gonna, you know, increase my contribution from 3% to
5%. Well, we need to make sure that information ends up in the payroll
system so that the proper amount is being withhold so that it can be submitted,
you know, at the next Payroll. And so we would send a a notice to
the employer saying, hey. You know, because a lot of times, even with integrations,
we'll get that information from the payroll system. But because these are
(20:49):
older systems, we can't push, some data back. And so those that's
usually one of them is a deferral, change. And what we found
is it just wasn't happening because these employers, they've got a lot going on.
And so we would end up with situation where, you know, maybe a couple
months down the road, somebody found out, hey, the proper amount wasn't
being withheld. Now we have to look at, you know, making up
(21:12):
Lost earnings, there's, you know, there's all sorts of corrective action that has to go,
to to fix that. And so what we, you know, just discovered was, hey. An
ounce of prevention's worth a pound of cure. Why don't we go log in to
their platform for them if the if the platform won't let us do it through
tech, and actually make that change for them? So we built out what we call
the true three sixty team, And, really, the value proposition
(21:32):
there is that, again, like, if this all revolves around the idea of
a small business owner, You know, shouldn't have to have any 4 zero one k
knowledge, shouldn't have to, you know, necessarily put a lot of time into offering a
4 zero one k. And so we've always had a policy of, hey. If there's
friction, we wanna Take it on ourselves, and because
then us as an organization, we're motivated to fix that friction rather than, you
(21:54):
know, The the typical approach in the four zero one k industry is, hey. If
we can't do it, just push it on to the plan sponsor. The the business
owner, it's their responsibility to take care of those things. So Fidelity bonds, all
the payroll stuff. And so for us, we just decided, hey. We'll build this tree
this True 360 team, and the idea is that regardless of the technology that
we have in place, We will make sure that that employer's payroll
(22:16):
and all those things that need to happen are taken care of. And so they'll
typically grant us, like, some, you know, kind of accountants or CPA type access to
their payroll system, and that's enough to let us get in there, get the information
we need, make updates so that to them, it it's
it's magic. It's it's all automated. You know? And in
those situations, if we have to use people, we will. Yeah. I
(22:39):
I like to tell people you've done automation the right way. You you've out Source
of things that should go to to technology, but you've also got the
human component where humans should be involved. And with that
Payroll integration team, it's not just the payroll part, but it's also the year
end filings because these plans require you to get some data at
the end of the year. And once again, I see that So often shoved off
(23:02):
on the plan sponsor, and they're so busy running their practice. And like
you said, right, most of us have noticed fatigue, And we get email
after email, and these things just get lost in the shuffle instead of
just taken care of by a competent team. Yeah.
And, you know, you bring up the end of your filings. That's one where I
can't tell you how many plans we've won from that, you know,
(23:24):
year end filing process getting screwed up. And so some of these providers, they say,
we take care of it for you. What that means is they'll fill out the
paperwork, but then they send it to you and you put your signature on it,
as the owner. And so, you know, you get this this big document
that you really couldn't even understand, and you just sign it
because your provider says you need to sign this. And what we've seen
(23:45):
is some of the time, they don't have the right information, and so they you
know, the the whoever's the provider is, they will be submitting
Information that's instantly gonna be flagged, once it's received. So for
example, you know, going back to a Fidelity bond
plans are required to have Fidelity bonds to kind of protect those assets,
and the industry approach is not our problem. It's the owner's job to get that,
(24:08):
but the owner needs to notify The third party administrator,
whoever's filing that paperwork, because there's a box on there that needs to be checked.
And so, If they don't have a notice of that because maybe, you know,
they told you to go get the penalty bond and you did, but you forgot
to upload, like, that notice, well, they don't have a record of it in their
system, so they're gonna spit out, you know, a 55100 report, and they're
(24:29):
gonna have that box unchecked, and, you know, that's an immediate red
flag once that comes in. And so for us, Because we
are so involved, because we know that number 1, we're working off a
very reliable data, payroll data, I guarantee you, you know, if
Employees not paid the right thing, or the right amount or if there's some mistake
with payroll, they let them know right away. Like, if an employee is you
(24:52):
know, starts working for a company, They get added to the payroll system. They don't
always get added to these other third party benefit platforms. And so by
us using that data as kind of like our primary source. We know that we
have really good data, and so we actually are one of the very few
organizations, that will sign the 55100 On behalf of
the employer, because we have that level of confidence that we're going to take
(25:13):
that additional fiduciary responsibility to say, yes. We we
know this plan, is, you know, following all the the
onerous rules of, of the ARISA code. Yeah.
Right. And it's really powerful because, right, the the end result for
the the dentist, for you as the the practice owner, is you're able to
outsource a lot of these duties to to a competent party Because
(25:36):
you as a plan sponsor, you still retain responsibility, but you wanna work
with the team who's gonna get it done for you and get it done right
And not shove everything back on your plate so you can keep focused on dentistry.
And and that's what I love about what you've built and and why I believe
it's so unique in the marketplace today Because I see these
problems creep up all the time, and I'm always trying to solve these problems
(25:57):
because of the the inherent complexity, because I want my doctors to get back
to running their practice and growing their practice and doing what they love
doing. And quite frankly, you know, you bring up another element to,
Kind of our approach from day 1 is, you know, I'm
I'm a technologist. I love tech. You know, the other business that I built had
a very strong tech components to them. And I think it's oftentimes
(26:20):
just easy to assume that everybody thinks the same way I do, you know, and
that we're all comfortable using digital forms and whatnot, but the truth is
the vast majority of small business owners are not. And that's where we
decided, look, we're outcome focused. Like, there's no point in having a 4 one k
that's not being utilized and, or if it's being underutilized. And so
we felt, hey, the best approach is probably a hybrid approach where you have
(26:42):
High-tech, but then you also have, you know, the high touch of an
adviser, that is there to help with the plan. Because a lot of, you
know, saving for retirement isn't just, You know, the the
the transactions and the mechanics of of, 401 k or
an IRA or whatever it is you're using, There's a strong behavioral
element, and that's really where the human element is always going
(27:04):
to win. And we have proven data that shows
When we have, you know, the vast majority of our plans, over 70% of them
have a financial adviser, associated with them, and I prefer that number be
a100, and we try to do that. But we found that
those plans that have an adviser attached to them, we see
about a 15% higher participation rate and a 12% higher deferral
(27:27):
rate, And that's just because we're able to overcome some of those those hurdles
and burdens that just pure technology cannot. Yeah. No.
Human element is is so important. In fact, I I build virtual
family offices for driven dental entrepreneurs, and the the super rich when
they're putting together family offices, they're doing it Because they want
that human element. They want people who understand them, who are actually there
(27:48):
to support their goals, not the adviser's goals. And that
that's the beauty of of that human element is you get people who are
actually concerned about helping you. And you see the super rich do it all the
time, and this really brings it way down the scale And increases
that accessibility. Oh, very powerful.
Now Secure Act. Right? Very neat stuff going on there. How can I
(28:10):
get uncle Sam to pay for my plan? I'm
glad you asked. So, first and foremost, they were secure one point
o. This was, I don't know. 3 3 or so years ago.
And what that basically said is, you know, you can
receive 50% of your administrative costs back in terms of a tax
credit. So this isn't a tax deduction. It's an actual credit, so dollar
(28:33):
for dollar. So pretty big deal. And
we saw, you know, that being broadly used, but then,
you know, obviously, the industry said, hey. Can you can can we get more?
And so with Secure 2.0, that was increased to a 100%.
There is a cap on it, but honestly, anybody that's using our platform will never
hit that Cap that cap's intended more for, like, those traditional service providers where
(28:56):
it's really expensive. So with 401 go, it's a
100% of those administrative costs. So number 1,
like, the the admin costs of the plan, that's taken care of. But
then there's also this really adding part. A little bit more
complex, but, you know, if you've got a business with less than 50, it's pretty
straightforward. You can have a tax credit for the first
(29:17):
$1,000 of each employee's, you know, the
matching portion. So, you know, one of the the staples of a four zero one
k is I put in a dollar. My employer puts in a dollar up to
a certain percentage. Well, those 1st dollars will come from
Uncle Sam, you know, in in the form of a tax credit. So, again, it
really reduces those costs for the small businesses.
(29:38):
Now the start up, you know, credits, those are basically the the 100%
administrative, credits. Those apply for the 1st 3
years. So, you know, it's a great period of time. Whereas
the, you know, that $1,000 match, that's 5 years,
and it and it kinda steps down over the years. So the idea is it's
it's trying to minimize, you know, a big impact on the employer
(30:01):
By letting them kind of ease into, you know, the cost of
of offering this benefit, which still at the end of the day, it's way
cheaper than health care. It's cheaper than a lot of the benefits, and it's a
lot cheaper than going out and trying to find new employees. You know, it's way
easier to retain them. You know, census data from,
2021, Department of Labor shows that, employee turnover was
(30:23):
47%. So that's expensive. And one of the best
ways to prevent that is to retain your employees. And, you know, simple benefit
like a four zero one k, you know, certainly helps to
to improve those numbers. Yeah.
Well, and cost wise, even before these tax credits, you know, I I
would often find that, you know, the doctors I'm working with high income tax brackets,
(30:45):
If they're just maxing out the plan for themselves, the tax savings
alone for their personal taxes would actually cover the cost of the plan. So
Now not only are they offsetting the cost of the plan through their tax savings,
but the the government is actually giving you the tax credits to help offset the
fees. And once again, that 3 year period is so beautiful because
it allows the plan some time to to grow up, so to speak, and
(31:09):
accumulate some assets so those Hard dollar cost can disappear over time.
And and once again, that's what I find is usually couple years, the plan
will grow up, have some substantial assets, and you can take those, You know, some
of the the the additional hard dollar fees away because the
plan is now grown up. So no. It's Exactly. And the the
other thing too that we find,
(31:31):
is when when they get started, the probably the biggest hurdle is definitely
that matching component. And and so when employers
start to to look at that, some of the time, it it turns them away.
But the thing too is money that goes into the 401 k
Has, you know, there there's less tax burden on it than if it was just
paid as a straight comp. And so there's already again, before any of
(31:53):
these Tax credits. There's a lot of tax benefits to
the employer as they pay those employees in a four zero one k, because
oftentimes When you hire on, like my wife, she worked for the state of Utah.
You know, pay was what you would expect at at a state institution
or government institution, But the benefits are always really good, and everybody
knows that. And so, you know, when you're hiring on, people are looking at total
(32:15):
comp. And so if there's a four zero one k with a match, That's just
part of the compensation. So you're just choosing, do I pay them through a four
zero one k, which is a great way to help them be financially healthy,
or do I just pay it as straight comp? If you pay it as just
straight comp, then you're gonna actually be paying more for
it. So it's it's a It's always been a great tax benefit, but this has
(32:35):
just made it that much that much better. That's what I was gonna say. So
what I hear you saying is it was a good deal, now it's an even
better deal. Exactly.
So what do you think the hurdles of setting up plans for most businesses
are? Because, You know, you you probably have more data than I do, but, you
know, a lot of businesses still don't have plans, do they?
(32:57):
No. You're a 100% right. You know, the the
data you know, fortunately, that's changing, quite rapidly.
But when we got in this, it was fewer than 15 percent of small businesses
had a four zero one k, and that definition of small business is
quite broad. Like, to me, it's small businesses, you know, like, 20, 50
people, Whereas government, that's like a 150.
(33:20):
So, the yeah. Very few offer it, but what we're seeing is
there are 16 states now that have a Requirement,
or, you know, these state mandates or secure choice mandates that
require businesses of certain sizes to offer a
retirement benefit. And so, for example, in California, if you had
even 1 employee, it doesn't matter, you know, if you're headquartered where we are here
(33:43):
in Salt Lake City, Utah. If I've got an employee remote in California,
I've gotta make sure at least he has a retirement benefit, he or she.
And so that's creating a lot of demand where Previously, there wasn't as much, and
so, you know, that's also helping to, you know, kinda reduce
costs and just increase accessibility. So, yeah, across the board,
we're seeing far stronger demand than ever before. And the number
(34:05):
1 barrier, I you know, all day every day, it's not
It's not cost. We talk a lot about cost and the tax credits. It's the
complexity. You know, as an employer, you've got a lot of cost your office
and all these things, and you just kinda build that into, you know, your
your business plan. But the the administrative
burden is so hard to Predict and to understand, and, you know, just
(34:28):
the stress of of managing something like that. So
complexity is always the biggest concern. You know, when you don't have a a
an HR team to take care of it, that all falls on, you know, the
business owner. Yeah. So true. And,
yeah, I mean, it's just it becomes a nightmare to run these plans when they
go sideways, and I've seen it. And and like you, I I play a lot
(34:49):
of rescue and coming in and trying to get these things running the the
right way. So no. It it's an amazing platform. I've used
it. My clients have used it. Super, super beneficial.
And and, really, it it's that ease of use, and and and that's what I
love about it. And, thank you for for building that and bringing such a a
great solution. So what's next for the the the planned business? Where do
(35:11):
you see four zero one going next? So, you
know, we we're continuing to, just find as many advisers such
as yourself that we can work with. That's really, you you know, we we build
a platform, but we can't do it without, you know, advisors such
as yourself. So it's about just growing those relationships, and,
you know, becoming more ubiquitous within the industry. But, you
(35:33):
know, another exciting thing is some of these big you know,
these massive Fortune 100 companies and insurance conglomerates and giants, they're
they're now coming to us and saying, How is it you're doing what you're doing?
You know, like, a lot of times you hear about these promises of, you know,
like a a perpetual machine or something crazy like that. And so in many ways,
they're very dubious. But now they're coming and saying, and and how can
(35:55):
we work together? So, we will continue to improve the
product, and a a big aspect for us As well as knowing that
employee churn is, you know, roughly 50%, we wanna
make sure that when somebody starts, overcomes that first hurdle, that first
dollar, That they can continue saving for retirement even if they leave
that employer. And so, you know, the rest of the industry just says, look,
(36:17):
we're 4 zero one k providers. That employee leaves, not my
Problem. For us, we want them to continue to to
save for retirement. And so we have, IRA accounts that are being rolled
out, you know, within the next couple weeks. We're adding
HSAs, you know, other other products to kind of help with that long
term vision of financial independence, as well as a really robust,
(36:39):
you know, kind of budgeting and financial wellness tool, you know, kind
of those first few steps that people need to get through. It's got some
education. You can kind of Connect your outside accounts. It'll
help you do budgets. And so it's a very powerful tool, and now, you know,
the goal is just to get it in as many hands as possible. Wow. So
so really, once again, driving not just the the four zero one k piece, but
(37:01):
really that financial wellness piece So that your employees so
that yourself, right, you are prepared and that you do have some tools to
make even smarter choices with your money.
Exactly. And one of the most rewarding things as,
as an employer, I feel, is really Seeing the
positive impact that you can have in somebody's life, especially beyond just a paycheck.
(37:23):
I mean, the job and the paycheck, that's incredible. You know, small business owners
are doing a massive service to, you know, the workforce of America and just the
economy in general. But When when the 1st
company that we put on, we had a pretty big
warehouse staff. And these are employees who are making 12 to $15 an
hour, And I wanted to kind of really test, like, the full
(37:45):
automation of the platform. So I didn't gather everybody together and say, hey. We're launching.
This is what we do. We wanted to test, like, The, you know, the email
notifications, the text notifications, so we just let the platform do all
the magic. Well, You know, again, kinda showing
how often people read emails and texts, stuff like that. I
had, about 3 months after the plan went live, you know, one of the
(38:06):
warehouse guys came up and, you know, was talking to me and said, hey. We've
all noticed there's, like, this this four zero one go thing coming out of our
paycheck. What is that? And so first thing I did was log in to the,
you know, the portal as as the employer and say, I wanna make sure they
got the notifications, and our system does tell them, yep, they they were notified.
So I helped them find the email and I showed them how to opt
out. Not a single one opted out because they already went 3 months and then,
(38:28):
you know, they're missing what was relatively feel them
out, but I've since then, you know, been able to meet up with a couple
of these employees. 1 was just 2 weeks ago, and he's a full
on financial nerd just like myself, and he really said the thing that got him
going was seeing a couple $100 in his four zero one go account. And
now he's he knows a lot about the industry. He's saving, he
(38:50):
was telling me, like, with his, new employer who is also, you
know, using 401 go, He's saving, like, 30% of his paycheck, which
is incredible. So and and it's just because he got started at such
an early age when he was, like, 21. He's he's on
this incredible path, and to to be somebody that was able to kind
of help with that is really rewarding. Wow.
(39:12):
How exciting. No. And it does. It makes such a big difference and right?
It does. It it changes lives because like you mentioned earlier, Social
Security, I'm not sure I'm gonna get 1 penny out of that. And so I
think it really, you know, depends on us to save for our future and
not be dependent on someone else, which is About the most American thing I
know. That's right. So
(39:34):
well, hey. Thank you again. Any closing thoughts before we sign off here?
No. You know, I I always like to let people know you can find me
on LinkedIn. I love, you know, connecting with others. I try to Share, you know,
what I what I learned about the industry and just general
tips, especially around, kind of entrepreneurship and leadership, those
(39:55):
those types of things as well. And then, you know, we're easy to
find. Like, reach out to to Tim. You're you're gonna
take care of them. You know the platform, and and that's the recipe for success.
Yeah. Well, hey, Dan. Thank you for showing so generously. I know I certainly
have a a much better understanding of what's going on. I I thought I knew
before, but I know even more now. And so So thank you for that. And
(40:17):
I I feel more excited and more inspired to get out there and continue to
take action just to try to turn the tide a little tiny bit,
Impact even more lives and help people build that secure financial future so
they can continue to take better care of the people they love, Support the causes
they care about and really make that meaningful impact in the world. So thank you
again for sharing, Dan. I appreciate it. Thank you, Tim.
(40:39):
Alright. We'll see you all here soon again on the Dental Wealth Nation show.
You've been listening to Dental Wealth Nation. We hope you've gotten
some useful and practical information from the show. Join us
next time as we pull back the curtain to reveal the often hidden
hidden advice, and strategies used by today's most
(41:00):
successful individuals and families, and help maximize your net
worth so you can take even better care of the people you love. Till
next time. Make sure to hit the website at dentalwealthnation.com.
As a driven dentist, you see the world differently where
some see scarcity. You see abundance. When others wanna
give up, you keep going. You're building an amazing
life of significance. That means you can't rely on
ordinary advice from ordinary advisers to get to your goals. You
want advice that's going to help maximize your net worth, so you
(00:27):
can take even better care of the people you love, the causes you
care about, and make your dent in
verse. But the fact is this advice remains hidden
because relatively few professionals are well versed in them, and the extremely
Affluent don't care to let you know about them.
Join us as we pull back the curtain to reveal the often
(00:49):
hidden advice and strategies used by today's most
successful individuals and families. Welcome to Dental
Wealth Nation. Here's your host, Tim
kneeling. Hey. Welcome everyone to another episode of the Dental Wealth Nation
Show. And today, we're talking about something super Important for you,
(01:11):
your practice, your family, the people you love, your employees, and
that is retirement plans. And by the time we finish today, you're gonna know
What the opportunity is among retirement plans and how you can set one up
that's easy for your practice so you can better control your taxes. You're
gonna Have a much deeper knowledge of what goes into running a
retirement plan and the the roles and responsibilities that you
(01:33):
have In sponsoring a plan, but most importantly of all, you're gonna
feel inspired to take action, not just for yourself and and your future, but
for the people you love and and your employees And I couldn't
think of a better guess and someone better to talk about this important
topic than Dan Bagdad, his cofounder of 401 go, a
a modern 401 k platform, and he's also a
(01:55):
fellow financial wellness nerd. Dan, welcome to the show. Thank you. I'm
I'm excited to be here. Thank you, Tim. Oh, and and what an
important topic. And and before we dive into this, give me a little bit of
your background. You're you're out in Utah, probably on the Silicon
Slope somewhere and In in four zero one k business, like,
isn't that a boring business? You know, it is for
(02:17):
a lot of people, but we're we're trying to change that. You know, even the
concept of Like retirement, I think for many is kind
of a, retirement for my dad is very different than what retirement means to
me. And so we're trying to be cognizant of not just, like, what is
the function of a four zero one k and how do we, you know, make
it more accessible to small business owners, but also, Like,
(02:37):
what is what can we do with this, in terms of how do we
empower individuals that are maybe just starting out in their career? And so,
you know, we're taking Certainly a very holistic
view. And, you know, quite honestly, a lot of this just stems from, you
know, prior experience as a serial entrepreneur. I've started a
number of businesses, and this was a challenge that I, you know, came
(02:59):
across. And quite frankly, I was raised In a, you
know, a very blue collar household, I was taught to work hard and, you know,
to to save and stretch a penny. But I didn't really have a lot of
education around investing or just a lot of financial wellness
concepts until I got to college. And, you know, because I was
passionate about it, it was something that I would seek out, but then as I,
(03:21):
you know, started hiring employees and building businesses, I found
that, you know, knowledge that I was excited about and, you know, I thought was
fairly commonplace, It really wasn't. And so,
suddenly, you know, I I had these these employees and
their families and people that, you know, I feel some sort of a stewardship toward.
And when they come to me, you know, maybe asking for, like, a payday advance
(03:42):
or something like that, you know, I always viewed that as an opportunity to
Try to help them. Try to help them kind of change their relationship
with money. But, you know, I thought, hey, there's no better way
to do that than to do a four zero one k with a match Because,
you know, for me, like, it's an obvious yes. If if, you know, your employer's
gonna match a certain amount of contribution, you should at least max that out.
(04:04):
So I looked to set something up, and they're just there there wasn't anything.
And so it was a few years later, you know, I was exiting out of
a couple different businesses And just decided, you know what? This is a
big opportunity. I bet there's a lot of other business owners out there that are,
you know, kind of feeling the same pain that I am. Let's see if we
can build a product that they would actually use.
(04:27):
And I think that outsider perspective really helped, because in many ways, You
know, day in and day out, I talk to advisors, you know, like yourself and,
you know, some of the the industry incumbents about what we've built.
And, they're You know, when we were first working on it, a lot of
people just said you can't do it. It's too hard. It's complicated. The reason the
industry is this way is because that's just the way it is. But not
(04:48):
being from the industry, I kinda just didn't listen to that. And so, you
know, we set about building a platform and what we have, I think, is very
unique, And we're excited that, you know, people
sometimes say, how small is too small? They're, you
know, 1 individual. So in a lot of places, they you know, unless
you got 20, 50, 100 employees, they're they're not really getting it
(05:09):
to talk to you. For us, All businesses matter.
Small businesses matter. Yeah. And, I mean,
that's pretty common in the industry, at least it was, is most of
these plans are Geared towards larger plan sizes and the
small business really gets left behind, don't they? They
do. And, you know, I love that you have kind of a dental focus,
(05:32):
because the those types of businesses and practices are
definitely, hurt the most by kind of the way that it's Structured and
the reason why is oftentimes, for small
plans because you don't have a lot of employees to kinda defray some of those
costs And to get some economies of scale, you'll see
really high asset based fees, and those asset fees are going to the record
(05:54):
keeper, the third party administrator. And when you look at those four zero one k
plans, who's paying those asset fees? It's it's the, you know, it's the ones that
are contributing the most. It's the dentists. It's the, you know, it's the doctors. And
so, really, a lot of our first plans that came on the
platform, you know, once we started building this, were, you know,
practices like the ones that you work with every day. Yeah. Well
(06:16):
and and when it comes to the the the problems and challenges, what were
the things people telling you couldn't be done as you set out to to build
401 go? I think a lot of
it is we you know, not having any experience,
in the industry. We certainly you know, one of the businesses we had before
was, you know, ecommerce. We did, you know, massive volume of
(06:39):
transactions. We were selling, you know, 35,000 products on any given day.
And those transactions, 99.999% of them were all
fully automated, meaning, you know, from product to sell and shipment
and fulfillment, all of that. Like, it never you know, a human was not
involved. And so we kind of have that same thought that that that
existed within the financial services, sphere, and it simply
(07:02):
doesn't. You know, as I started doing research, we found that, you know, The number,
I can't remember exactly, but it's around 3 to 6%
of financial transactions are actually fully automated from beginning to end.
Everything else, there's somebody that's, You know, doing batch settlements or sending reports
or, you know, papers being passed. And so the bar
in many ways was set so low that when we came with kind of our
(07:23):
prior Experience of automation and technology, it was
just too big of a departure for a lot of people. Like, you know, the
best way to explain it is, You know, they viewed it as a 10 step
process, and we're looking and saying, well, why can't we just go 1310? You
know, there's all these processes in between that, you know, there are
People that are manually doing things. There's there's platforms and
(07:44):
systems. You know, so I I was listening to,
You know, the founder of Ubiquiti, they're one of the
kind of the early, four zero one k providers that that were, you
know, going after small businesses. And, you know, their platform, when they
first launched, it was connected to, like, over 20 different, you
know, systems from different vendors. And what that does is it adds
(08:07):
cost and complexity. And so, you know, the way the industries approach kind
of modernization or innovation Tech is, hey. Let's take everything that we've got, you know,
steps 1 through 10, and just make them digital. They never really think that
we can get rid of, you know, entire steps if we have, You know,
a a a true tech platform. So we were born
in, you know, kind of this this modern digital age without any of
(08:30):
those, You know, those anchors, if you will, of a lot of the legacy
systems and platforms. Like, even finding a custodian to hold the
assets was really hard because a lot of them said, yeah. We're, you know, we're
Check forward and we're modern and everything, but then once we start talking to them,
they these are big old banks that have been around for, like, you know, over
a 100 years. And they don't really understand even what, like,
(08:50):
an API is, and so we were only able to find really 1
provider that actually had an API. And then come to find
out, like, as we were working with them, they sold an API that didn't really
even exist. They were building it just a little bit ahead of us. And so
that was kind of, like, my first exposure into, you know, some of
the, you know, just just how
(09:11):
manual financial services are in general. And the more and more I talk
to people that have been in the industry, like our you know, we just hired
a new CRO. He's been in the space for over 25 years. And, You know,
as he's learning more about the system and the platform, he's just like, I can't
believe you guys have done this. And and so I really think it's just that
that fresh perspective by coming in and Not having any preconceived ideas of how we
(09:32):
get from, you know, steps 1 through 10, it allowed us to just
kind of leapfrog a lot of what was already out there. Yeah. Well
and I know as I I listen to you talk. Right? You kinda went technical
on some of those things, which is great, and and my thought is, well, that's
nice, but But what impact do those legacy systems have on the
the dentist, on the business owner? Right? Right? What does it matter to them if
(09:53):
they're on a legacy platform or A modern practice, like like, how
does that impact their day to day experience with running their business
and a plan? I love that you bring that up,
and, you know, I've certainly had to pick up a lot of vernacular being in
the space. But prior to that, there were things that just didn't make sense to
me, especially as a small business owner. And so we built the platform
(10:15):
in a way that it's very approachable. You know, A great
example is yesterday, I was talking to somebody who has, you know, kind of a
combo plan, and, you know, just talking about the complexity
of it. And she was mentioning, you know, Fidelity bonds, this, and all these different
things that she had to worry about. And if you were to go talk to
one of our, you know, Couple 1,000 customers, business
(10:38):
owners, and ask them about their Fidelity bond or some of these things, they're just
gonna they're gonna, like, what? You know, they they have no clue, and and I
liken this to kinda like automotive technology advancements. You
know, I remember my dad showing me
how to, you know, align a distributor and use a timing light. And,
like, a lot of these things, you had to you had to do quite a
(10:58):
bit of work, you know, To operate a vehicle, you gotta know kinda what happens
under the hood. And, you know, I know for some of my young kids, they'll
probably get in the car, push a button, and say, take me Grandma's house, and
they don't need to understand what's happening under the hood. And that's what
we're trying to do with the four zero one k is just remove all of
that complexity. You know, typically, you're having to work with a record
(11:19):
keeper, you know, who's separate from the third party administrator,
who's separate from, You know, the fiduciary and the custodian and the
problem is, like, they all need to communicate a lot and and and especially the
record keeper and third party administrator. There's a lot of information that
needs to flow back and forth. And when these are different service providers and
different systems, mistakes happen. And so,
(11:41):
by Eliminating all of that and and, you know, providing a single
source solution, already you're you're, you know, heads and shoulders
above anything else out there just because, you know, the other thing too that's an
Advantage for our clients is that when the problem
arises, you don't have 3 or 4 people all pointing fingers at each other. You
know, if there's a problem, we're gonna take care of it. And, you know,
(12:02):
if you look and and compare our reviews to, you
know, legacy providers or even some of the other, you know, tech solutions that have
kinda come on the scene recently, The big differentiator you're gonna see is service,
and that's really key, especially for a small business. You know, if you have an
HR team, yeah, there's somebody who's gonna push through all that minutiae.
But when you're trying to, you know, maximize and build your practice,
(12:24):
you don't have time to deal with these sorts of things. And so that's what's
that's what we're here for. Yeah. And I mean and that's really
a common problem with the the legacy side of things is
this business is inherently complex. There there's no question about it. I I
would argue it's probably one of the most complex pieces of the
financial services because you do have all those parties. And when
(12:45):
there is an error or something happens, You can't get the right people to talk
to each other, and and I found most of the time it actually falls back
on the business owner. And now the business owner is actually having to become
an expert in retirement administration instead of doing dentistry.
Yes. And and nobody wants to do that. Yeah. You know, they they they obviously
wanna focus practice even being, you know, financial wellness nerd.
(13:09):
I love the the outcomes and and, you know, what we're doing, but, like, the
min the the minutiae and all the little details of the Product or whatever. We
deal with them because that's our job, but, you know, it's in no way,
exciting. And so we certainly understand, And, you know, small employers, number 1,
they don't wanna learn it. Number 2, even if they did, they don't wanna do
it. So Wow. That's that's what we're we're taking over for them.
(13:30):
Yeah. And then the the financial wellness piece. Right? I I believe that's so
important. And and and talk to me a little bit about how concerned
employees actually are about Things like retirement, is that a big concern
for employees across the board? It is. And, you
know, certainly, it also increases in importance as those employees progress
their career. The one one
(13:53):
really interesting, data element that I like
point out is when we were looking at kind of the existing, you know, four
zero one k, industry and how well are they doing, you know, we wanna
look at not just The entire industry, and then also how are
they serving corporate America. But, like, what is the actual, you
know, the the, The outcome for those participants, because
(14:15):
really, they're the ones that are enjoying this benefit. And
it's pretty sad that when you look at, you know, the the the industry,
the rates for the lower quartile of both age
and wage. So those, you know, employees that are just starting out,
industry average is around 22%. On our platform, we're closer
to 51%. And so, you know, a lot of that
(14:37):
really is the ability to have a lasting impact. And so,
you know, somebody who's maybe just out of school and
they're 25, just starting their careers as a
dental assistant, you know, whatever it may be, they
don't have a lot to save, and quite frankly, they're not thinking about it at
the time. But if there's a four zero one k, especially with, you know, auto
(14:59):
enrollment, meaning they're automatically opted in, They're 15 times more
likely to save with that four zero one k than if there wasn't one in
place. And so what that does is, you know, with any,
In good habits, really, you know, whether it's it's exercise or, you know,
the gym or financial wellness, it it's sometimes hard to establish those
habits. You have Hurdles and barriers. And for us, we looked at it, and one
(15:21):
of the big hurdles and barriers is just that first dollar. And so
with the four zero one k, we can get that 1st dollar where suddenly after
a few months being at an employer, even if they leave, you know, a couple
years later, there's a a decent balance there, which For most
of, you know, good portion of our users, this is their 1st time ever saving.
And so now that there's money there, suddenly they're interested. Oh, what can I do
(15:42):
with this? And They'll start informing themselves,
and what we find is time and time again where, you know, you have employees
in maybe a a blue collar environment or Something like that who you know, the
the financial industry traditionally might just say, they're
not interested. We've gotten them interested. Wow.
And and what a powerful problem to solve and and really
(16:05):
make an impact. And, you know, I've certainly seen this across the The
practices I work with where, you know, the plan sponsor, the the doctor, the
owner will set up a plan, and we review it a year or 2 later,
And they're really surprised by all of a sudden the amounts of their employees who
have never made a lot of money. All of a sudden, they've got a couple
grand saved, and and for them, that's a lot of money. And it's it's
(16:26):
a huge win, and it shows them, hey. This is this is
possible. And I believe it really does motivate the workforce. It motivates
your staff, motivates your And the more secure they feel about
the future, the better they're gonna be working for you.
Absolutely. I mean, if you're showing up to work and you're worried about some financial
Dress at home. You know, most of the
(16:49):
time, I have a buddy who's a CPA, and, you know, he has to do
some kind of forensic accounting occasionally where, you know, somebody in
a small business, an admin of some sort is
maybe siphoning off some money, and then, you know, they end up a couple years
down the road with, You know, they they stole a $110 from the company.
That always starts with, you know, kind of some
(17:10):
innocence, meaning, You know, transmission was going out. I didn't know what I was gonna
do, so I just kinda moved some money. I was gonna put it back later.
And so those opportunities, those you know, They they
go away when you have your employees taking care of,
you know, kind of their own personal finances, and, You know, the four zero
one k is a great way to do that. There's also the
(17:32):
passage of Secure two point o, so that passed December of last
year. And that's really exciting for us because it's a lot
of regulation at the federal level that eases some of the requirements.
So number 1, it makes it, so four zero one k is much
more accessible for small businesses, but then also for those employees. So one of
the things we're excited about is you can have an emergency savings account built
(17:55):
Within that four zero one k. And so for a lot of people, their hesitation
to putting money into the four zero one k is often, well, I wanna have
an emergency savings saved up. But It doesn't happen a lot of the time,
and especially if it's too accessible, then, you know, suddenly, like, a new TV
becomes an emergency. Whereas if it's in a four zero one k, it's a little
bit harder to access, then it that tends to stay there
(18:15):
and actually be used for real emergencies. And so we like that, it
kinda removes some of those hurdles and create some incentives,
not just for the employer, but also for the participants. You know, the fact that
auto enrollment is going to be required, I've seen over and
over again The positive impact that has on employees. So,
we're very excited by the direction all this move is moving. And quite frankly,
(18:38):
a lot of it is driven from the fact that Social Security
is just it's it's broken. You know? It's it's a it's a
Ponzi scheme in many ways, and we don't know. I don't know if I'm ever
gonna see anything from it. And so the best way we can relieve some pressure
on that is get people taking care of their finances, you know, more,
especially at an earlier age. And so that's why you're seeing a lot of, activity
(18:59):
at the federal level. It's easier to try to fix, this through, you
know, 4 0 one k's than to actually Catch up Social Security, however that
may happen. Yeah. And I wanna come back to the SECURE Act in a moment
because it's got some very powerful things in there. And in fact, You're gonna share
with us at the end how actually the government will help pay for
your retirement and your employees' retirement. And I'm so excited about that there's
(19:21):
That there's actually funds available to help you implement these
plans. But coming back to just the solution you've built. Right? You you've relied
a lot on automation, which I think is great. I've never seen planned
documents and planned setup go so smoothly, but you also solve another
big piece of the problem. And and talk to me a little bit about what
typically happens with payroll and running payroll and transmitting
(19:43):
payments back and forth when when these smaller businesses are involved in
running a four zero one k plan. That ever create any problems?
It certainly does. You know, and I and I recall,
when we first launched this and started putting businesses on,
mine was you know, one of the businesses I had was plan 1.
And we didn't have a payroll integration, so I was manually doing that on my
(20:05):
own. And it wasn't too cumbersome. I mean, it only took, you know, maybe a
couple extra minutes Every time I ran payroll but the one thing that we noticed
with other employers is a lot of times, you know, they're they're subject to notice
fatigue. They have all these emails come in, and so, you know, when you don't
have a payroll integration, what happens is, let's say, you know, an
employee logs into their four zero one go account and says, I love what I'm
(20:27):
saving. In fact, I'm gonna, you know, increase my contribution from 3% to
5%. Well, we need to make sure that information ends up in the payroll
system so that the proper amount is being withhold so that it can be submitted,
you know, at the next Payroll. And so we would send a a notice to
the employer saying, hey. You know, because a lot of times, even with integrations,
we'll get that information from the payroll system. But because these are
(20:49):
older systems, we can't push, some data back. And so those that's
usually one of them is a deferral, change. And what we found
is it just wasn't happening because these employers, they've got a lot going on.
And so we would end up with situation where, you know, maybe a couple
months down the road, somebody found out, hey, the proper amount wasn't
being withheld. Now we have to look at, you know, making up
(21:12):
Lost earnings, there's, you know, there's all sorts of corrective action that has to go,
to to fix that. And so what we, you know, just discovered was, hey. An
ounce of prevention's worth a pound of cure. Why don't we go log in to
their platform for them if the if the platform won't let us do it through
tech, and actually make that change for them? So we built out what we call
the true three sixty team, And, really, the value proposition
(21:32):
there is that, again, like, if this all revolves around the idea of
a small business owner, You know, shouldn't have to have any 4 zero one k
knowledge, shouldn't have to, you know, necessarily put a lot of time into offering a
4 zero one k. And so we've always had a policy of, hey. If there's
friction, we wanna Take it on ourselves, and because
then us as an organization, we're motivated to fix that friction rather than, you
(21:54):
know, The the typical approach in the four zero one k industry is, hey. If
we can't do it, just push it on to the plan sponsor. The the business
owner, it's their responsibility to take care of those things. So Fidelity bonds, all
the payroll stuff. And so for us, we just decided, hey. We'll build this tree
this True 360 team, and the idea is that regardless of the technology that
we have in place, We will make sure that that employer's payroll
(22:16):
and all those things that need to happen are taken care of. And so they'll
typically grant us, like, some, you know, kind of accountants or CPA type access to
their payroll system, and that's enough to let us get in there, get the information
we need, make updates so that to them, it it's
it's magic. It's it's all automated. You know? And in
those situations, if we have to use people, we will. Yeah. I
(22:39):
I like to tell people you've done automation the right way. You you've out Source
of things that should go to to technology, but you've also got the
human component where humans should be involved. And with that
Payroll integration team, it's not just the payroll part, but it's also the year
end filings because these plans require you to get some data at
the end of the year. And once again, I see that So often shoved off
(23:02):
on the plan sponsor, and they're so busy running their practice. And like
you said, right, most of us have noticed fatigue, And we get email
after email, and these things just get lost in the shuffle instead of
just taken care of by a competent team. Yeah.
And, you know, you bring up the end of your filings. That's one where I
can't tell you how many plans we've won from that, you know,
(23:24):
year end filing process getting screwed up. And so some of these providers, they say,
we take care of it for you. What that means is they'll fill out the
paperwork, but then they send it to you and you put your signature on it,
as the owner. And so, you know, you get this this big document
that you really couldn't even understand, and you just sign it
because your provider says you need to sign this. And what we've seen
(23:45):
is some of the time, they don't have the right information, and so they you
know, the the whoever's the provider is, they will be submitting
Information that's instantly gonna be flagged, once it's received. So for
example, you know, going back to a Fidelity bond
plans are required to have Fidelity bonds to kind of protect those assets,
and the industry approach is not our problem. It's the owner's job to get that,
(24:08):
but the owner needs to notify The third party administrator,
whoever's filing that paperwork, because there's a box on there that needs to be checked.
And so, If they don't have a notice of that because maybe, you know,
they told you to go get the penalty bond and you did, but you forgot
to upload, like, that notice, well, they don't have a record of it in their
system, so they're gonna spit out, you know, a 55100 report, and they're
(24:29):
gonna have that box unchecked, and, you know, that's an immediate red
flag once that comes in. And so for us, Because we
are so involved, because we know that number 1, we're working off a
very reliable data, payroll data, I guarantee you, you know, if
Employees not paid the right thing, or the right amount or if there's some mistake
with payroll, they let them know right away. Like, if an employee is you
(24:52):
know, starts working for a company, They get added to the payroll system. They don't
always get added to these other third party benefit platforms. And so by
us using that data as kind of like our primary source. We know that we
have really good data, and so we actually are one of the very few
organizations, that will sign the 55100 On behalf of
the employer, because we have that level of confidence that we're going to take
(25:13):
that additional fiduciary responsibility to say, yes. We we
know this plan, is, you know, following all the the
onerous rules of, of the ARISA code. Yeah.
Right. And it's really powerful because, right, the the end result for
the the dentist, for you as the the practice owner, is you're able to
outsource a lot of these duties to to a competent party Because
(25:36):
you as a plan sponsor, you still retain responsibility, but you wanna work
with the team who's gonna get it done for you and get it done right
And not shove everything back on your plate so you can keep focused on dentistry.
And and that's what I love about what you've built and and why I believe
it's so unique in the marketplace today Because I see these
problems creep up all the time, and I'm always trying to solve these problems
(25:57):
because of the the inherent complexity, because I want my doctors to get back
to running their practice and growing their practice and doing what they love
doing. And quite frankly, you know, you bring up another element to,
Kind of our approach from day 1 is, you know, I'm
I'm a technologist. I love tech. You know, the other business that I built had
a very strong tech components to them. And I think it's oftentimes
(26:20):
just easy to assume that everybody thinks the same way I do, you know, and
that we're all comfortable using digital forms and whatnot, but the truth is
the vast majority of small business owners are not. And that's where we
decided, look, we're outcome focused. Like, there's no point in having a 4 one k
that's not being utilized and, or if it's being underutilized. And so
we felt, hey, the best approach is probably a hybrid approach where you have
(26:42):
High-tech, but then you also have, you know, the high touch of an
adviser, that is there to help with the plan. Because a lot of, you
know, saving for retirement isn't just, You know, the the
the transactions and the mechanics of of, 401 k or
an IRA or whatever it is you're using, There's a strong behavioral
element, and that's really where the human element is always going
(27:04):
to win. And we have proven data that shows
When we have, you know, the vast majority of our plans, over 70% of them
have a financial adviser, associated with them, and I prefer that number be
a100, and we try to do that. But we found that
those plans that have an adviser attached to them, we see
about a 15% higher participation rate and a 12% higher deferral
(27:27):
rate, And that's just because we're able to overcome some of those those hurdles
and burdens that just pure technology cannot. Yeah. No.
Human element is is so important. In fact, I I build virtual
family offices for driven dental entrepreneurs, and the the super rich when
they're putting together family offices, they're doing it Because they want
that human element. They want people who understand them, who are actually there
(27:48):
to support their goals, not the adviser's goals. And that
that's the beauty of of that human element is you get people who are
actually concerned about helping you. And you see the super rich do it all the
time, and this really brings it way down the scale And increases
that accessibility. Oh, very powerful.
Now Secure Act. Right? Very neat stuff going on there. How can I
(28:10):
get uncle Sam to pay for my plan? I'm
glad you asked. So, first and foremost, they were secure one point
o. This was, I don't know. 3 3 or so years ago.
And what that basically said is, you know, you can
receive 50% of your administrative costs back in terms of a tax
credit. So this isn't a tax deduction. It's an actual credit, so dollar
(28:33):
for dollar. So pretty big deal. And
we saw, you know, that being broadly used, but then,
you know, obviously, the industry said, hey. Can you can can we get more?
And so with Secure 2.0, that was increased to a 100%.
There is a cap on it, but honestly, anybody that's using our platform will never
hit that Cap that cap's intended more for, like, those traditional service providers where
(28:56):
it's really expensive. So with 401 go, it's a
100% of those administrative costs. So number 1,
like, the the admin costs of the plan, that's taken care of. But
then there's also this really adding part. A little bit more
complex, but, you know, if you've got a business with less than 50, it's pretty
straightforward. You can have a tax credit for the first
(29:17):
$1,000 of each employee's, you know, the
matching portion. So, you know, one of the the staples of a four zero one
k is I put in a dollar. My employer puts in a dollar up to
a certain percentage. Well, those 1st dollars will come from
Uncle Sam, you know, in in the form of a tax credit. So, again, it
really reduces those costs for the small businesses.
(29:38):
Now the start up, you know, credits, those are basically the the 100%
administrative, credits. Those apply for the 1st 3
years. So, you know, it's a great period of time. Whereas
the, you know, that $1,000 match, that's 5 years,
and it and it kinda steps down over the years. So the idea is it's
it's trying to minimize, you know, a big impact on the employer
(30:01):
By letting them kind of ease into, you know, the cost of
of offering this benefit, which still at the end of the day, it's way
cheaper than health care. It's cheaper than a lot of the benefits, and it's a
lot cheaper than going out and trying to find new employees. You know, it's way
easier to retain them. You know, census data from,
2021, Department of Labor shows that, employee turnover was
(30:23):
47%. So that's expensive. And one of the best
ways to prevent that is to retain your employees. And, you know, simple benefit
like a four zero one k, you know, certainly helps to
to improve those numbers. Yeah.
Well, and cost wise, even before these tax credits, you know, I I
would often find that, you know, the doctors I'm working with high income tax brackets,
(30:45):
If they're just maxing out the plan for themselves, the tax savings
alone for their personal taxes would actually cover the cost of the plan. So
Now not only are they offsetting the cost of the plan through their tax savings,
but the the government is actually giving you the tax credits to help offset the
fees. And once again, that 3 year period is so beautiful because
it allows the plan some time to to grow up, so to speak, and
(31:09):
accumulate some assets so those Hard dollar cost can disappear over time.
And and once again, that's what I find is usually couple years, the plan
will grow up, have some substantial assets, and you can take those, You know, some
of the the the additional hard dollar fees away because the
plan is now grown up. So no. It's Exactly. And the the
other thing too that we find,
(31:31):
is when when they get started, the probably the biggest hurdle is definitely
that matching component. And and so when employers
start to to look at that, some of the time, it it turns them away.
But the thing too is money that goes into the 401 k
Has, you know, there there's less tax burden on it than if it was just
paid as a straight comp. And so there's already again, before any of
(31:53):
these Tax credits. There's a lot of tax benefits to
the employer as they pay those employees in a four zero one k, because
oftentimes When you hire on, like my wife, she worked for the state of Utah.
You know, pay was what you would expect at at a state institution
or government institution, But the benefits are always really good, and everybody
knows that. And so, you know, when you're hiring on, people are looking at total
(32:15):
comp. And so if there's a four zero one k with a match, That's just
part of the compensation. So you're just choosing, do I pay them through a four
zero one k, which is a great way to help them be financially healthy,
or do I just pay it as straight comp? If you pay it as just
straight comp, then you're gonna actually be paying more for
it. So it's it's a It's always been a great tax benefit, but this has
(32:35):
just made it that much that much better. That's what I was gonna say. So
what I hear you saying is it was a good deal, now it's an even
better deal. Exactly.
So what do you think the hurdles of setting up plans for most businesses
are? Because, You know, you you probably have more data than I do, but, you
know, a lot of businesses still don't have plans, do they?
(32:57):
No. You're a 100% right. You know, the the
data you know, fortunately, that's changing, quite rapidly.
But when we got in this, it was fewer than 15 percent of small businesses
had a four zero one k, and that definition of small business is
quite broad. Like, to me, it's small businesses, you know, like, 20, 50
people, Whereas government, that's like a 150.
(33:20):
So, the yeah. Very few offer it, but what we're seeing is
there are 16 states now that have a Requirement,
or, you know, these state mandates or secure choice mandates that
require businesses of certain sizes to offer a
retirement benefit. And so, for example, in California, if you had
even 1 employee, it doesn't matter, you know, if you're headquartered where we are here
(33:43):
in Salt Lake City, Utah. If I've got an employee remote in California,
I've gotta make sure at least he has a retirement benefit, he or she.
And so that's creating a lot of demand where Previously, there wasn't as much, and
so, you know, that's also helping to, you know, kinda reduce
costs and just increase accessibility. So, yeah, across the board,
we're seeing far stronger demand than ever before. And the number
(34:05):
1 barrier, I you know, all day every day, it's not
It's not cost. We talk a lot about cost and the tax credits. It's the
complexity. You know, as an employer, you've got a lot of cost your office
and all these things, and you just kinda build that into, you know, your
your business plan. But the the administrative
burden is so hard to Predict and to understand, and, you know, just
(34:28):
the stress of of managing something like that. So
complexity is always the biggest concern. You know, when you don't have a a
an HR team to take care of it, that all falls on, you know, the
business owner. Yeah. So true. And,
yeah, I mean, it's just it becomes a nightmare to run these plans when they
go sideways, and I've seen it. And and like you, I I play a lot
(34:49):
of rescue and coming in and trying to get these things running the the
right way. So no. It it's an amazing platform. I've used
it. My clients have used it. Super, super beneficial.
And and, really, it it's that ease of use, and and and that's what I
love about it. And, thank you for for building that and bringing such a a
great solution. So what's next for the the the planned business? Where do
(35:11):
you see four zero one going next? So, you
know, we we're continuing to, just find as many advisers such
as yourself that we can work with. That's really, you you know, we we build
a platform, but we can't do it without, you know, advisors such
as yourself. So it's about just growing those relationships, and,
you know, becoming more ubiquitous within the industry. But, you
(35:33):
know, another exciting thing is some of these big you know,
these massive Fortune 100 companies and insurance conglomerates and giants, they're
they're now coming to us and saying, How is it you're doing what you're doing?
You know, like, a lot of times you hear about these promises of, you know,
like a a perpetual machine or something crazy like that. And so in many ways,
they're very dubious. But now they're coming and saying, and and how can
(35:55):
we work together? So, we will continue to improve the
product, and a a big aspect for us As well as knowing that
employee churn is, you know, roughly 50%, we wanna
make sure that when somebody starts, overcomes that first hurdle, that first
dollar, That they can continue saving for retirement even if they leave
that employer. And so, you know, the rest of the industry just says, look,
(36:17):
we're 4 zero one k providers. That employee leaves, not my
Problem. For us, we want them to continue to to
save for retirement. And so we have, IRA accounts that are being rolled
out, you know, within the next couple weeks. We're adding
HSAs, you know, other other products to kind of help with that long
term vision of financial independence, as well as a really robust,
(36:39):
you know, kind of budgeting and financial wellness tool, you know, kind
of those first few steps that people need to get through. It's got some
education. You can kind of Connect your outside accounts. It'll
help you do budgets. And so it's a very powerful tool, and now, you know,
the goal is just to get it in as many hands as possible. Wow. So
so really, once again, driving not just the the four zero one k piece, but
(37:01):
really that financial wellness piece So that your employees so
that yourself, right, you are prepared and that you do have some tools to
make even smarter choices with your money.
Exactly. And one of the most rewarding things as,
as an employer, I feel, is really Seeing the
positive impact that you can have in somebody's life, especially beyond just a paycheck.
(37:23):
I mean, the job and the paycheck, that's incredible. You know, small business owners
are doing a massive service to, you know, the workforce of America and just the
economy in general. But When when the 1st
company that we put on, we had a pretty big
warehouse staff. And these are employees who are making 12 to $15 an
hour, And I wanted to kind of really test, like, the full
(37:45):
automation of the platform. So I didn't gather everybody together and say, hey. We're launching.
This is what we do. We wanted to test, like, The, you know, the email
notifications, the text notifications, so we just let the platform do all
the magic. Well, You know, again, kinda showing
how often people read emails and texts, stuff like that. I
had, about 3 months after the plan went live, you know, one of the
(38:06):
warehouse guys came up and, you know, was talking to me and said, hey. We've
all noticed there's, like, this this four zero one go thing coming out of our
paycheck. What is that? And so first thing I did was log in to the,
you know, the portal as as the employer and say, I wanna make sure they
got the notifications, and our system does tell them, yep, they they were notified.
So I helped them find the email and I showed them how to opt
out. Not a single one opted out because they already went 3 months and then,
(38:28):
you know, they're missing what was relatively feel them
out, but I've since then, you know, been able to meet up with a couple
of these employees. 1 was just 2 weeks ago, and he's a full
on financial nerd just like myself, and he really said the thing that got him
going was seeing a couple $100 in his four zero one go account. And
now he's he knows a lot about the industry. He's saving, he
(38:50):
was telling me, like, with his, new employer who is also, you
know, using 401 go, He's saving, like, 30% of his paycheck, which
is incredible. So and and it's just because he got started at such
an early age when he was, like, 21. He's he's on
this incredible path, and to to be somebody that was able to kind
of help with that is really rewarding. Wow.
(39:12):
How exciting. No. And it does. It makes such a big difference and right?
It does. It it changes lives because like you mentioned earlier, Social
Security, I'm not sure I'm gonna get 1 penny out of that. And so I
think it really, you know, depends on us to save for our future and
not be dependent on someone else, which is About the most American thing I
know. That's right. So
(39:34):
well, hey. Thank you again. Any closing thoughts before we sign off here?
No. You know, I I always like to let people know you can find me
on LinkedIn. I love, you know, connecting with others. I try to Share, you know,
what I what I learned about the industry and just general
tips, especially around, kind of entrepreneurship and leadership, those
(39:55):
those types of things as well. And then, you know, we're easy to
find. Like, reach out to to Tim. You're you're gonna
take care of them. You know the platform, and and that's the recipe for success.
Yeah. Well, hey, Dan. Thank you for showing so generously. I know I certainly
have a a much better understanding of what's going on. I I thought I knew
before, but I know even more now. And so So thank you for that. And
(40:17):
I I feel more excited and more inspired to get out there and continue to
take action just to try to turn the tide a little tiny bit,
Impact even more lives and help people build that secure financial future so
they can continue to take better care of the people they love, Support the causes
they care about and really make that meaningful impact in the world. So thank you
again for sharing, Dan. I appreciate it. Thank you, Tim.
(40:39):
Alright. We'll see you all here soon again on the Dental Wealth Nation show.
You've been listening to Dental Wealth Nation. We hope you've gotten
some useful and practical information from the show. Join us
next time as we pull back the curtain to reveal the often hidden
hidden advice, and strategies used by today's most
(41:00):
successful individuals and families, and help maximize your net
worth so you can take even better care of the people you love. Till
next time. Make sure to hit the website at dentalwealthnation.com.
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