Very big news to relay about the firm this afternoon…
It is my honor to introduce you to the new Director of Corporate Retirement Plans at Ritholtz Wealth Management, Daniel McConlogue. Dan is the principal and founder of Eleven O’Clock Associates, a financial planning, asset management and retirement plan consulting firm based in Estero, Florida.
Dan joined Ritholtz Wealth Management on January 3rd, bringing over approximately $70 million in assets under management, not counting the thousands of 401(k) participant clients whose assets are under advisement.
And now I’m going to tell you a quick story about the 401(k) biz that you’ve never heard…
Once upon a time, decades ago, a group of six OBGYN doctors in Bethesda, Maryland were looking to put away pretax income in something outside of the then-typical pension format. Their accountant, who probably should have been involved with the space program or something, somehow found a loophole and created a way to use it for exactly this purpose. This, my friends, was the invention of what we now call the 401(k).
But here’s the thing – the 401(k) was not created for the extent to which it is now being used. The scale and scope of the industry goes far beyond the original capacity of the happy accident that gave birth to it (pun intended). As Dan tells it, “the whole thing has been held together with bandaids and duct tape for years.”
And now, the rules are all changing.
Business owners – the plan sponsors – have no idea what their level of fiduciary responsibility is now or will become in the near future. Dan believes that there will be more changes to the rules in the next five years than we’ve seen in the previous 25 years combined. Everything is up in the air and up for grabs. There are several factions fighting for oversight and control of the rule book – from the Elizabeth Warren / Barack Obama faction that supports the Department of Labor’s Fiduciary mandate to the bank and brokerage lobbies that, along with securities industry groups, are fighting them tooth and nail.
If you’re a plan sponsor, you’re just trying to understand where your responsibility ends and the third party administrators’ starts. Due to complexity, opacity and the highly conflicted nature of anything financial services, these answers are never clear. Most business owners don’t even know the right questions to ask.
And don’t even get us started on the composition of the plans themselves and the investment fund choices within…forget about it.
And into this breach, on our firm’s behalf, steps Dan McConlogue.
Dan has over twenty years’ experience working with 401(k) and 403(b) planning on behalf of both sponsors and their employees. He was a pioneer of the open architecture movement and among the first (if not the first) advisors to create a platform using lower-cost, commission-free Dimensional Fund Advisors products with a TPA. Dan was also the first financial advisor in the state of Connecticut to earn the AIF designation from the Center For Fiduciaries.
Here’s the bottom line: The 401(k) industry is an $8 trillion behemoth that does a lot of good for its users and for America. But it is in a state of flux and there’s as much bad guidance being offered to businesses as there is good guidance at the current moment. Dan teamed up with Ritholtz Wealth Management to bring his expertise to our firm’s clients and beyond, while shedding light on the important truths of the marketplace. You’ll be hearing a lot more from him on the subject going forward.
Welcome aboard, Mr. McConlogue, we’re thrilled to have you on the team!