Solving the Money Problem with Chad Parks

Unknown Speaker 0:00
Come on

george grombacher 0:12
leopard, this is George G. And the time is right. welcome today’s guest strong, powerful Chad parks Chad. Are you ready to do this? Am George, let’s go. Let’s go. Chad is the founder and CEO of ubiquity, retirement and savings. They’re a pioneer in highly customizable, flat fee retirement plans for small businesses. Thank you been going at it for over 20 years now, at this point, Chad, tell us a little bit about your personal life some more about your work and why you do what you do. Oh my gosh, yeah, I asked myself that every day. No, just kidding. Um,

Unknown Speaker 0:45
wow. So to keep it high level and synced.

Chad Parks 0:49
Let’s see, I went moved. I went west young man, I went to grad school got a degree in personal finance and corporate finance. My first job was as a retail stockbroker out of school hated that cold calling people selling the muni bonds at dinnertime, I realized there must be more to life. Before that my background was hospitality grew up in the restaurant business. And my actually, my undergrad is in hospitality management. So what I ended up doing was pairing my hospitality background with a personal finance degree. And I became a certified financial planner. And so that was much more satisfying by sitting down and helping people with their overall life goals, you know, the six pillars of financial planning, retirement tax savings, insurance, estate planning, you know, investing the whole the whole nine yards. And so with that experience, a lot of my clients for small business owners in the San Francisco South of Market area, and I would recommend, you know, you’re not saving for retirement, and you’re not saving on taxes, you’re paying more than you need to. So let’s get you something. And so they said, Sure, go find me something. So this is mid to late 90s. And I’m looking, I don’t know much about this retirement saving space, I don’t know who the players are, I don’t know what a third party administrator is, you know, I just know that this problem needs to be fixed for my clients, I go to market, and I’m literally appalled at what I saw, you know, it was like it was disapproved around pre internet. Okay, so heavy paper based, you know, just really expensive solutions, paying me a fat commission if I wanted to, you know, but again, I’m independent advisor at this point, I don’t want to earn commission. And the internet was coming along, and I was in San Francisco. So I kind of research the market saw that 72% of small business owners under 100 employees didn’t offer any workplace savings plan to their employees. The and the reason was because our industry was not providing solutions to the small market, because they have an asset under management business model. So you have to have a lot of money for them to make money to be able to support you. And what we found was that, you know, small plans, no, no plans, small dollars, no dollars, they can’t make money. So they ignored the market, the internet comes along, I see that as the great equalizer, leveling the playing field, I can distribute over the internet, I can charge a different fee structure. And so I started a new company, it was called the online 401k. And what differentiated us was that we were a flat monthly fee for service providers subscription based, if you will, we were SAS before SAS was cool. And didn’t matter if you had an buck or a million bucks. And it didn’t matter what you invested in because I wasn’t going to steer you one way or the other, I was going to facilitate that. And that was our hypothesis for a business model. And 22 years later, yes, here, we are still doing it, chipping away at that amazing number of uncovered employees in our country. And to you know, to bring that fast forward to today, there’s about 5 million small businesses 60 million employees who don’t have the ability to save that work today, 22 years later after I started the company. So obviously I failed in my mission. But we’ve talked more about that, because it’s getting better. Nice.

Unknown Speaker 3:51
So that I mean, kudos to you, for you know, to be how many years were you in the business? When you said you know what, there’s just no good solution. I’m going to do it.

Unknown Speaker 4:05
Three, yeah. 25 When I started as a retail broker, and I was 28 when I started this company, so

Unknown Speaker 4:12
Oh, that’s that that’s that’s pretty audacious.

Unknown Speaker 4:17
When you’re that young, you don’t have much to lose, you don’t know the difference? You know, you take a few more risks than you would today. Right. Well, I appreciate that. Certainly, everything you’re talking about. We’ve We’ve certainly spent a good amount of time on the show talking about exploring the different challenges. And I know that we’ve had on Andrew Meadows from your firm a couple of times and he talked about your documentary that you made some years ago broken eggs, and his detailing a lot of the problems that people have been facing, I think that was in like 16 or so it’s been 567 years. How has your perspective shifted since since making that film if if at all? Oh my gosh. Yeah. No, thank you for bringing it up. That was a

Unknown Speaker 5:00
A

Unknown Speaker 5:02
pet project that, you know, came from the heart really. And we. So again, as broken eggs film, the looming retirement crisis in America, you can go watch that on YouTube, just type in broken eggs film, and watch the feature length 80 minute documentary. And just a little quick background is that we focus on what is the current state of retirement for three to three generations, Boomers, Gen X and millennials. And what’s the reality and we looked at the three legged stool that is supposed to be there for people in retirement, which is pension, Social Security in your own personal savings? And we broke that down by each generation to see what is the reality? And it was just eye opening? I mean, clearly that some boomers have all three, some of them are in a good spot. We can talk more about why Social security’s a shaky Lake, you know, and but then the reality for Gen X. And what Yeah, and millennials is that, you know, pensions, no, no one’s gonna see those, you know, almost no one unless you working in the government, and some very few private companies, and forget about Social Security for the millennials, even for us, I mean, I’m guessing you’re about my age or older, younger, you know, I’m not really counting on Social Security, even so it’s never meant to be the primary source of retirement income for me, right. So what that does is it puts all the onus on us individuals to personally save for our future, while those other two legs have gone away. So that was, that was the thing we wanted to shine a light on, to get people to really understand, you know, it’s up to you, you know, don’t be thinking that the government’s gonna be there to bail you out. And you got to start taking that seriously now. So we did start production on that in 2012. Okay, we were on the road, we did a road trip, travel 6000 miles across the country with a camera crew, to put the camera in front of people’s faces and say, tell us your story. What do you know? And that was very eye opening, because that actually then wrote the story, if you will, we then hire a producer to go out and find, you know, more interesting subjects than just watching a Talking Heads video, right? And to develop the storyline and bring that story to life. And that’s what we did. And so how is my perspective changed? So we’re going into our 10th year of production since production, we’re going to do a follow up this year. And we’re going to go and reach out to our characters in our film, and ask them where are they now? What has changed? You know, our, our Boomer characters, the

Unknown Speaker 7:33
oh my gosh, I’m blanking on the name all of a sudden, the Beardslee is

Unknown Speaker 7:36
they were 65. We filmed the birthday in the film now they’re 75. What’s changed for you? You know, the the people who were in their 40s or now their 50s? You know, there are millennials in the film, who was 24 year old Nick Triano, who was in Washington who eventually tried to run for Congress. Now he’s 34, what’s changed for you? You know, Michael Tubbs, the mayor of Stockton, California. He was actually a councilman in the film. Now he’s mayor and he’s moving his way up, right. And he’s all his life experiences and the things that he shared in the film we’re going to catch up on. And so my perspective has changed in that.

Unknown Speaker 8:11
There’s people’s lives move on, we will check in and see how things have changed for them individually. But the reality is in the sad part of this is that we look at the statistics in the film, and we look at the problems we highlighted in the film. And we said that Social Security was going to have a shortfall in 2034 in the film, and that was 10 years ago. Nothing has changed. Nothing. I mean, seriously, not even measurable change. Pensions are still in shambles. Social Security, still gonna have a cut, cut in 2034, personal saving grace haven’t changed, actually, what’s changed, it’s gotten worse, right? Because of the pandemic. People didn’t have emergency savings, all the layoffs that occurred and people losing their jobs. Now, you know, it’s just on and on and on. And in the film, Nick Serrano’s organization that he was behind was called the canned kicks back, because it was a millennial led group who’s like trying to have accountability from our policymakers in Washington to say stop kicking the can down the road on this problem. 10 years later, we can got kicked, I don’t see anybody raising their hands to try to fix this stuff. I know, Biden administration got some ideas, but the politics are just killing it. And that being said, I don’t want to be totally Debbie Downer. There are some glimmers of hope. And we should talk about actually those things that have changed. And I’ll pause here in a second. But just so you know, I see you taking notes, these will be good things to think about is that there has been movement, but it hasn’t come from the federal level. A lot is come from the state level and has come by competition is coming in from investment into our

Unknown Speaker 9:42
space

Unknown Speaker 9:44
and

Unknown Speaker 9:47
helped a little bit

Unknown Speaker 9:50
of tax credit. We can drive down into those savings. Did I lose you there? I think I’m sorry. Okay. States have started mandating retirement savings in theirs.

Unknown Speaker 10:00
In the borders, the federal government has increased the tax credit for small businesses as an incentive to pay for these plans in the first few years, you know, at least 50%, right now may go to 100%.

Unknown Speaker 10:10
And there’s competition and investment in the space, which now validates this and says, This is a big deal. It’s a big market, and it needs solutions. So those are the positive things that have come. But we’re still you know, it’s like an aircraft carrier, man, it’s moving slow. Yeah, I appreciate them. Has it? Has the tax credit from from your estimation, has that catalyzed or helped small businesses get started? Is it a combination of the tax credit? And then the state sponsor, not state sponsor, but maybe state sponsored? Is is the right term?

Unknown Speaker 10:44
Not yet, you know, these, these things are still coming online, the enhanced tax credit. Let me just explain that a little bit. So the government now the math is a little backwards, but the short answer is they’ll pay up to 50% of your plan costs in the first three years. There is some math to calculate that.

Unknown Speaker 11:05
But that only began in it was put into law at the end of 19. So we’ve already seen, you know, we’ve barely seen two years of it actually being in effect. And frankly, it’s, you know, not many people know about it, you know, there’s like they’re out there flying airplanes with the banners on it and get your tax credits for your retirement plan. So it’s been up to us as industry to leverage that knowledge to educate those prospective businesses that, hey, this is on the table for you, it does help when we have the opportunity to talk to somebody it takes away this thing of having to write a check. But it’s when we explained it to them, right. It’s not like they’ve been really told a lot about it. And as far as the state mandates go, that’s also sort of a mixed bag a little bit, because some of these states sort of wimped out and didn’t put any real teeth into it. You know, a guy you got to do this. Well, what if I don’t? That’s that’s a good point. You know, like, there is no stick to the carrot. However, some states have put a stick in California start to get serious about it. Where you know, an example your small business in California, you do a California state tax return, there’s going to be a questionnaire did you put a retirement plan in place, if no pay penalty, right. So though, but those things are only now coming through. So I think we’re still ahead of this, I would say another five years before this, these mandates and these credits really probably start to make a big, big difference. The one thing that the feds are contemplating right now, which we are Fingers crossed. And this by the way, this act, this bill that they’ve done is called secure, secure act in 2019. Now, we’re calling that 1.0. Because they’re looking at revising it, secure act 2.0, which may pass this year, in which they would then raise that tax credit to 100%. Right, that changes the story again, it’s like what do you got to lose? Why aren’t you putting this in place, the government is so serious about getting you and your employees into the saving system, they’re willing to pay for it. In this case, they might move it up to five years. So the government will pay my fees for five years to get you and your employees into the savings system because so security’s.

Unknown Speaker 13:09
Nice

Unknown Speaker 13:11
in terms of different interventions that the you look out and see, I see certainly paying all the costs associated with it is is is certainly a good one. And you have all these other automatic features that that companies have been trying to put in place to to motivate savings habits.

Unknown Speaker 13:34
What, what, what else? What, what? What is missing? Are there additional levers to be pulled?

Unknown Speaker 13:43
Well, gosh, I, you know, I’m sure a lot of our fathers used to tell us this one, you can lead a horse to water, but you can’t make a drink. Right? Right. So it’s, um, it’s just there’s such a combination of things that are working against us as much as there are things working for us. Um, you know, it’s, it’s the reality of, you know, wages, you know, can people afford to save is the reality of student loan debt? You know, why would I save for my retirement when I’m still paying off my student loans? It’s, it’s lack of knowledge and information by some of these business owners who maybe have misperceptions about what it really means to be in volved in retirement savings plan on behalf of their employees. One of the big misperceptions we have is that they have to do a match, but that’s not the case you just you as the business owner, or a conduit. Unfortunately, that’s how our system has been designed. Fortunately, it has been proven that salary deferral is the best way to accumulate savings. So you business owner, like it or not, you’re in you’re the conduit for that. You’re the one breaking the paycheck. Take a little bit of that aside, drop it in the retirement account. That’s basically all it is. That’s all you got to do at the bare minimum. If you want to do more, and you want to offer it as a fringe benefit.

Unknown Speaker 15:00
to read, attract and retain your employees, you can that’s what you mentioned the beginning of this flexible plan design, flexible, customizable plants. Absolutely. If you have a good year and you want to reward your employees and you want to do some matching or profit sharing, you totally can, but you don’t have to. Right. So all these things. And then frankly, the other big, big thing is people look and they get deer in the headlights when it comes to the investments, you know, oh my gosh, it’s you know, what mutual funds What are ETFs stocks, bonds, I don’t understand any of that I’m not qualified to do this. Investment in investing scares me. And or I don’t, I don’t know what to invest in, I don’t want to invest, I don’t want to lose my money. So therefore, I’m not going to participate in this plan. That’s where we go back to its tax savings. Okay, and it’s retirement savings, investing is only one component of a retirement plan don’t get in was a doctor investing tail wag the dog, right? Because if you’re not putting money away on a tax deferred basis, you’re paying Uncle Sam more than you have to. That’s what we call the government match. You know, for every dollar you put in, you’re gonna get about 2025 cents back from the government in terms of tax savings, and if nothing else, let that money be earmarked and put aside for your future. And if you want to invest, you can, right. So same thing, you don’t have to do a match. You don’t have to invest prudence would say you better invest because you need to grow your money, especially in an inflationary environment. But you don’t have to. So all these misperceptions and then just the reality that,

Unknown Speaker 16:31
you know, the inertia, you know, is that this, we’re stuck, right. And I think you even state mandates because they don’t have the teeth aren’t going to be enough to get the ball, we’re moving down the hill, so to speak, we were very, very close this year to the Feds having a mandate that would have been very, very interesting. If it becomes a federally mandated thing that every business have X number of employees or more in this country must offer workplace savings plan, that would have been the thing to push it over politics got in the way, build back big better, whatever it was called, it got put on it was proposed, but it got put on the cutting room floor. And they didn’t have the political will to push for it. And they kick the can down the road. You see, you see the theme here, right? So this is one of those things where it’s not an exciting subject. It’s not sexy. People are not instantly gratified by saving money today, imagining your future and imagining having some dollars put away is not easy for the human brain to get its head around, so to speak. And we’re all stuck in and out. And that’s really I mean, it’s a weird conundrum. What’s the ultimate solution? Bring back the pension plan? Right? Just do it for you fix Social Security, maybe double triple Social Security, right? If you guys won’t do this, yourself scary taxes, tripling. And we will earmark this account, and there’ll be your money in the future. But you know, there’s no political will to do that either. Right? I mean, it’s just there are solutions. There are ways to fix this. Other countries have been more successful at it than we have. It’s just we’re kind of stuck in this quagmire.

Unknown Speaker 18:09
kicking the can oh

Unknown Speaker 18:13
my gosh. Now, anything else? Any other good news you want me to share?

Unknown Speaker 18:18
So when when when should we expect or when are you hoping, anticipating that the the new iteration of broken eggs will be up?

Unknown Speaker 18:29
Yeah, maybe mid year? q3. Yeah, we’re hoping to be able to sit down with those folks. Virtually, obviously, you’re not sending gamma crews around again, in today’s environment. But um, so yeah, it’s on our roadmap. It’s definitely something we’re committed to and, and we will be very happy to share that one. It is out. Love it.

Unknown Speaker 18:48
When people are ready for your difference making tip. What do you have for them?

Unknown Speaker 18:53
Well, as I said, in my long tirade here,

Unknown Speaker 18:59
it’s not up to the government. It’s not up to your employer to take care of your future self. It unfortunately is up to you. There are plenty of tools, there are plenty of vehicles, there’s plenty of education, there’s plenty of tax savings. It’s all there. So there is no excuse except you have to do it. I understand. It’s complicated. I understand that it’s hard to understand what the future looks like. There are so many moving parts. But you got to start somewhere in the bare minimum, nothing else, open an IRA and transfer 50 bucks a month, 50 bucks a week, whatever you can do. And if you’re going to do more, do more. The idea of planning for your future is so important. But it’s also so impossible, because you don’t know how long you’re gonna live. You don’t know what you’re calculating for. You don’t know what your bookend is. And so it’s a it’s a very frustrating zero sum game here, but

Unknown Speaker 20:00
You got to do something, it’s better to have something accumulated and figure it out as you go than to wait 20 3040 years and say shit, nope, sorry, you can bleep that out. Now, what am I going to do? Because it’s going to be bleak. And I can use my own mother as an example. She worked throughout most of her career, and she had a 401k available to her, she did participate in it, the company did match, she does have a little bit of a pension because she was on that era. And of course, she’s drawing on Social Security. She just turned 78. Last year, she’ll be 79 this year. And it was last year that she ran out of her 401k money. And it wasn’t because she was going to Vegas and rolling the dice, it was just because it ran out. And, you know, luckily, I’m in a good position to be able to help her as well as my sister is, but that’s what most that’s what a lot of people are going to be facing. And you know, and she did things relatively right. So can imagine if you’re not doing things, that’s what may happen. So it’s up to you. That’s, that’s my main tip.

Unknown Speaker 21:06
I think that is great stuff definitely get to come up. That’s the only way to put it. I mean, nobody’s coming to save us, Chad, no matter if it’s the state that you live in, or the federal government or whatever, you need to accept the personal responsibility to, to be paying attention to this stuff. And to your point, just get started open an IRA and throw 50 bucks in it and just just get started. Thanks so much for coming on. Where can people learn more about you? How can they engage with you and ubiquity? Yeah, well, Thank you always for that opportunity. So our website address is www.my ubiquity, NY, you bi qu i t y.com, where you will find all about our organization, our values, what drives us our products, and really, you know, how we’re trying to make a difference in this world. And, of course, you can learn about our team and everybody else too. So that’s, that’s the best bit you know, I think, you know, I think that’s like pretty sure we’re out there on social media too.

Unknown Speaker 22:08
Instagram and Facebook, for sure. I think we actually might even be on Tik Tok. Now GA see how how cutting edge we are as an organization. I am not a Luddite. I do know what these things are. So anyway, that’s where we’re at. I love it. If you enjoyed as much as I did, such as your appreciation and share today show the friend who also appreciates good ideas go to my Ubiquiti calm that’s myubiquity.com and check out other great resources that they have keep an eye out for broken eggs coming out later on this year. And if you are a small business or you work in a small business that does not currently offer a retirement plan.

Unknown Speaker 22:50
Check out ubiquity and see if it makes sense. Thanks again, Chad.

Unknown Speaker 22:55
George, thank you. And until next time, keep fighting the good fight. We’re all in this together. You

Transcribed by https://otter.ai