 Welcome everyone to the 41st episode of Bogelheads on Investing. Today our special guest is James W. Watkins III. Mr. Watkins is an attorney who specializes in fiduciary law. He's the owner of Watkins Law Firm and the founder and CEO of InvestSense, an investment education company. Hi everyone, my name is Rick Ferri and I'm the host of Bogelheads on Investing. This episode, as with all episodes, is brought to you by the John C. Bogel Center for Financial Literacy, a 501C3 non-profit organization that can be found at bogelcenter.net. Your tax-deductible contributions are greatly appreciated. Today our special guest is James W. Watkins III. Mr. Watkins has been practicing law for over 40 years. His law firm is the Watkins Law Firm. Prior to starting his firm, he has served as a compliance officer with several national brokerage firms and as the director of financial planning for the advisory industry of an international insurance corporation. He has extensive experience in the areas of forensic investment analysis, financial planning, asset protection, wealth management and preservation, and particularly fiduciary law and pension consulting. He publishes two blogs, Common Sense, InvestSense, and the Prudent Investment Fiduciary Rules. He's also published the 401K 403B Investment Manual. I'm looking forward to my conversation with Jim today because of his deep knowledge about fiduciary law, but not just for people in the investment industry, fiduciary duty for perhaps you, maybe a trustee over a family trust or the beneficiary of a trust. I'll also be talking about nonprofit organization fiduciaries and pension fund fiduciaries and of course, investment advisor fiduciaries. So with no further ado, let me introduce James W. Watkins III. Welcome to the podcast, Jim. Thank you for inviting me, Rick. Many questions today and I know there's a lot of misunderstanding about who is a fiduciary, what fiduciary means, who is not a fiduciary. I've always been confused by a lot of these things. But before we get into that, can you tell us a little bit about yourself? How did you get into this business? In 1994, for the first time, the SEC required broker-dealers to regulate and oversee the trading activity of investment advisors. It's a relatively new area. There weren't a lot of people who knew those laws. I happened to be one, so I had to work for one of the largest independent broker-dealers. And from there, I just gradually grew into the fiduciary duties, the fiduciary law, because I am an attorney. I have served as a compliance director both for broker-dealers and registered investment advisors. What I do right now is counseling services for pension plans. I also provide advice to high-net-worth individuals and I provide advice and counseling to trusts, trustees, and beneficiaries. I also do some work as an expert witness in 401K litigation cases. And we'll get into some of those in a minute, because there is at least one important case in front of the Supreme Court right now, which could change the way 401K trustees select investment options, correct? Correct. What I wanted to do today was to look at all of the different ways a person can fall under a fiduciary duty. And it's not just investment advisors or trustees of pension funds. A lot of families have set up accounts where there are irrevocable trusts and the trustees who are overseeing those accounts, usually the parents or the grandparents, have a fiduciary duty to those assets because they're not managing their own assets anymore. Those assets are actually in an irrevocable trust. So to start out today, let's start out with something as simple as that. Can you talk about family trusts, individual irrevocable trusts, and things that we are all maybe subject to at some point in our lives with our own family? Well, there are two main ways that someone becomes a fiduciary. One is by law, because a statute or regulation imposes the duty on that person. The second way is by contract. But when you talk about a trust, especially with a family, the assumption of a fiduciary duty is by law, because if you're serving as a trustee, whether it be of a non-profit or just a family like you see the irrevocable trust, it's less formal. So whoever the family agrees will serve as the fiduciary, serves as the fiduciary. The duties of a fiduciary come from the third restatement of trust. And the two main duties of a fiduciary are the duty of prudence. And then there's a duty of loyalty. The duty of prudence requires that anyone serving in a fiduciary capacity has to manage the assets that they're managing with the care, skill, and prudence of what they call the prudent man standard. The duty of loyalty requires that the fiduciary manage the assets with an eye solely to the benefit of the beneficiaries. So the fiduciary can't put their interest ahead of the beneficiaries of the trust itself. That said, even in a family situation, even though it's less formal, that person, that trustee of that trust still has the same duties. It doesn't matter how you become a fiduciary, the duties are going to be the same. Okay, so let me just circle back a little bit to irrevocable trust because it does affect a lot of people. Can you give us some examples of where a fiduciary who's managing an irrevocable trust might put their own circumstances ahead of the beneficiaries? The prime example of that would be a situation where if the individual, the person that serves as a fiduciary is a professional investment advisor. And by that, that means not only a registered investment advisor, it could be a stockbroker. And in that situation, if that person does work in the investment industry, it's possible that they could recommend products that are going to benefit them financially more than they may benefit the trust itself and the beneficiaries. Well, how does that reconcile with trust companies who are the trustees over these irrevocable family trusts? And yet they invest in their own mutual funds or they hire themselves to manage the investment portfolio and never really monitor the performance. How does that all reconcile? You as the beneficiary of the irrevocable trust still have a duty to monitor whoever is managing the trust from the trust company standpoint. They still have a responsibility. Remember I said that if you're a fiduciary, you have the same responsibilities, whether you're a professional trust company, whether you're a family member, that is the name fiduciary. So the responsibilities are the same. So the trust company, you manage your monetary funds. If a trust company does offer or a bank commercial trust division, if the company offers proprietary investments, it still has a duty as a fiduciary to make sure that the use of those funds, the selection of those funds is prudent. Again, the duty of loyalty of a fiduciary requires that they put the interest of the beneficiaries of the trust first, first and foremost. There may be a residual benefit to them, but the primary benefit has to be to the beneficiaries. So I've met with several people over my years who were the beneficiaries of these trusts and the grantor had passed and a professional trustee was named who also was working at a institution that had proprietary products and also fairly costly active money management strategies. And it never did I ever see the trustee say, our company is not doing a good job managing this money, even though the fees were considerably higher than what you could get someplace else. And it was beholden upon the beneficiaries to petition in some way to have this trustee fired and taken the money away. Explain all that to me because it really is difficult for me to get my head around how all this works. Well, as an attorney, I do that a lot. I'm quite often called in to analyze the portfolio that's been produced for the beneficiaries. And I believe the simplest way to evaluate the prudence of investments, both the portfolio as a whole or individual is by simply doing a cost benefit analysis. I compare the incremental costs of the investments, each individual investment to the incremental return. I use basically two tests and these are the two tests that I tell fiduciaries, especially family members, they quite often they'll ask me, how do I decide what to put in this trust? And I tell them, compare two investments typically and actively managed investment to an index fund. There are two basic questions. The first question is, is the actively managed fund outperforming the index fund? If it is fine, we'll move to the second question. If it isn't, then you're losing money. So that actively managed investment, you should get rid of it. If the investment is producing a positive incremental return, then the question is, do the incremental costs exceed that incremental return? And if the incremental costs are greater, you're basically losing money. So at that point, based upon what I find, I'll tell a family, we need to remove this trustee. The process itself is very simple. You go to the courts, in some states it's the probate court, in other states it may be the superior court. But basically you just file a petition, you have the beneficiaries of the trust say, we want to remove this person. And even if, let's say that the trust was created under a will, it's very hard typically to change, well the courts don't want to change someone's last request, but in a situation of a trust, the courts recognize that it's more important to carry out the decedent's last wishes. So it's basically very easy. You go to the court, if all the beneficiaries agree, they want this person removed for whatever reason. It doesn't matter if they just don't like him, it doesn't matter if they say, well, the investments aren't doing well. If all the beneficiaries agree, the court will remove that trustee. But at the same time, you have to inform the court who the successor trustee will be. Because they're not just going to leave a trust with nobody managing it. So if they're going to remove this one individual, be it a professional fiduciary or family member, they want to know going into that who's going to be taken over. What does the trust company at this point say? I mean, you know, they're going to be taken off this trust potentially. Are they there in the courtroom as well? They're in the courtroom as well, and that's a great question. One of the things that has always concerned me is that quite typically corporate trustees want you to sign a document. So let's say that family comes to me and says, we want to get rid of this trustee. And let's say it's a professional trustee. They can fight it if they want to. But just like I said, in most cases, the court says, no, if all the beneficiaries want you gone, you're gone. Like I said, they know that going into court, the court's going to grant the request. And it's overreaching. It's improper for a fiduciary to basically ask the beneficiaries to grant them immunity for anything they did. But they will try it unless you have an attorney that tells them we're not doing that. That's improper. That's unethical. That's interesting. How often do you see this? How many cases do you get involved with where a professional trustee, talking big banks, big trust companies, are fired because of the improved investing? You see it more than you'd think. When my father passed away, he left a sizeable trust, left a commercial trustee because one thing is, a lot of estate planning attorneys and attorneys that just handle these kind of things, they usually have associations or relationships with banks, trust companies. So you wash my back, I wash yours. In my case with my father, all the kids got together and I got a power of attorney from my mother and they didn't fight it. Unless you can show a really, really strong reason, the court, the courts don't want to force beneficiaries to work with people they don't trust because the most important element of any fiduciary relationship is trust. What happens if you have three children and two of them want to leave the trustee and one of them does not? How complicated does that become? Another great question. That doesn't happen all that often because usually the reason they want to get rid of a professional trustee is poor performance. In the situation where it does exist, if I'm involved, I meet with all the beneficiaries together and we try to clear the air. I want to find out why the one family member that does not want to remove the trustee, why is it? But usually in those situations and the more beneficiaries there are, sometimes it's the harder to get everybody to agree. If everybody doesn't agree, then you still go to court and you just be honest with the judge and you say, your honor, you can see from the petition, all but one or two of the family members want the trustee removed. And typically these kind of hearings about removal of a trustee are usually in probate court. Probate court is less formal than other court and in most cases the judge will just ask the beneficiaries that do not want to remove the trustee, why they don't want to remove the trustee and he has an informal discussion with them there and at the end of the day, he typically removes the trustee anyway since the majority of the beneficiaries, that's their wish. Great information, Jim. I just had no idea how it all worked and I have had so many situations with clients who got into this problem where their money was not being well managed by a professional trustee and they did not know what to do about it. So thank you for that. Let's go on to the next thing, which is nonprofit organizations. Here, a lot of us are asked to sit on nonprofit organizations and we're asked to be on the finance committee and maybe on the investment committee where we're going to oversee the foundation or the endowment. What duties do we have there and what laws oversee endowments and foundation to do share duty? Basically the same thing. You've got your two primary duties, the duty of prudence, the duty of loyalty. It doesn't matter what the investment is. When you get into a situation involving a nonprofit, I strongly recommend that you hire outside counsel and by counsel I don't mean attorney, but I mean someone who is more experienced and knowledgeable in the investment industry. When you do that, you have to be very objective in analyzing the analysts. Again, I think one of the important points that I always make to people on nonprofits, you can bring in third parties to help you analyze investments and to make recommendations, but the ultimate responsibility and liability is yours. So it's important to go back to the two-step process I talked about before. Whatever recommendations a third party makes, you got to, at the board itself, has got to make the ultimate decision and has to be able to analyze investments to determine if they are or are not prudent. And one of the important things about the restatement of trust, a lot of times professional investors, professional counselors, will look at the portfolio as a whole, but fiduciaries are analyzed not only with regard to the portfolio as a whole, but each individual investment. So it's important for anyone serving on a board to learn some basic fundamentals. Simplest one is what I talked about before cost efficiency or inefficiency. Reason is important is a lot of professional counsel or advisors will recommend actively managed funds. Unfortunately, the research shows that most actively managed funds do not outperform index funds and are therefore cost inefficient. Cost inefficiency is a violation of your fiduciary duty and will result in liability. So let me give you a case. This happened to me more than once. I am asked to go to a nonprofit organization, say a private school, and give a presentation about low-cost index investing because someone on the board wants to educate the other people on the board. So they're interviewing advisors to take over the management of their endowment, say a million-dollar endowment. Back when I was managing money and I don't do that anymore, but back when I was, I was asked to come in to be the passive indexing alternative. And I learned after doing this a few times and not getting the account, I learned to ask who else is on the board, besides the person who wanted me to come in, and what affiliations do they have with the local community, and also what company or what advisor or what bank is currently managing the money. Because nine times out of ten, if it's somebody local and they have some sort of a connection to that board, it's really difficult to move them off of that local advisor or local bank. And I'll give you one example. This one school had a local bank managing their portfolio, charging them 1% fee or some ridiculous thing. And they were not doing well. It was all active management. It was clear they were not doing well. But they didn't want to leave this bank because the bank every year held a fundraiser for the school. And they raised like $10,000 in a golf tournament. And they gave that money to the school. And they were afraid that if they fired the bank that they'd lose that fundraiser and the money that they took in from the fundraiser was greater than the money that they were losing by not being an index funds. How do you read into that one? I thought I had an answer into you through in that last part about the benefit. I mean, I couldn't fault them. I was like, okay, I understand why you continue to use this bank because they're raising money for you and they're giving money to the school. So, net-net, you're coming out ahead even though the bank does a lousy job managing the money. You know, I'm going to disagree with you there. It isn't a net-net. Because if, remember what I said that the fiduciary has a responsibility to act solely on the benefit. So the members of the board of the school have a responsibility to act solely for the benefit of the school. And even if the proceeds from the charity event exceed the loss, if I were the attorney in that case if one of the members came to me and said, what do we do? My argument would be, I don't have to incur that loss whether it be you or anyone else. As the member of the board, that fiduciary has a responsibility to look solely at the results produced by the bank serving as the fiduciary. I know what you said about the fact that the benefit produced more money. But if I'm looking, again, if I'm the attorney for the school, I'm going to argue that's an unnecessary loss. I can find some, and my argument, my personal argument would be I can find somebody else. I'm pretty sure Rick can find somebody to help produce that benefit and not lose money. So from a legal perspective, bottom line for me is you're unnecessarily losing money. And that's just not acceptable in a fiduciary role if it's preventable. Now sometimes, you know, things happen like 9-11 and things happen. But based upon what you're telling me right now, this was pretty much a situation where they were annually losing money and agreeing to lose that money in order to get the money from the golf, the golf tournament. I can tell you right now, I can't imagine a court not ruling that that's a fiduciary breach. Just to clarify, they weren't losing money. They were just underperforming index funds by just about the amount they were getting from the golf tournament. But anyway, these conflicts of interest in the small endowments and foundations where the people sitting on the board are brokers or some other insurance agents or something like that because they're not investment experts. They're salespeople. I find them to be really problematic and they have the right to sit on the board but how well informed is everyone else on the board? Ultimately, that's the real problem. I'm not going to get into details but there was a very famous case involving New York University and their 403B plan and that was exactly the situation. They're called third-party administrators. They basically oversee and manage a 401K account and it was a very well-accompanied. When the case was going to court, testimony came out that a lot of the members of the investment committee on the NYU board had no idea about investments. Some of them didn't even know they were on the investment committee or on the board. That's not an unusual situation and quite often I'll see a board like you said that either has the actual investment company, the mutual funds are representative on the board but I point out to the other fiduciaries you've got a responsibility not to let one member bully you. I hate to keep going back but it's an important point that a fiduciary, each individual fiduciary has an individual responsibility to ensure that they're doing their job and ensuring that prudent investments are what are being chosen not because of somebody's what they do for a living or affiliation with a bank or anything like that. Each individual fiduciary has to understand and it takes someone like you or me to remind them you're going to be held responsible so you can't sit over here and say, well, I just deferred to him. You can't do that. Let's move on to the next subject which is the advisors and these are the registered investment advisors and the brokers. How do you split up this world? There are those who have fiduciary duty those who don't have fiduciary duty those who accept some fiduciary duty for some of the things they do but don't accept fiduciary duty for other things that they do explain all of this. Explaining fiduciary duties vis-a-vis investment advisors is the easy part. The law is very subtle. They have the same responsibilities we've been discussing prudence and loyalty it's that cut and dried. On the broker side we're right in the middle of a change in the law. Historically there have been two standards if you're an investment advisor you have a duty of absolute fiduciary duty. Brokers on the other hand were held to a standard of suitability and people often ask me what's the difference between suitable advice and prudent advice and I think the best definition I heard was suitable advice is okay kind of okay whereas fiduciary advice has to be the best advice it has to be in your best interest. Broker dealers I mean brokers under the suitability standard could put their interest ahead of their customers. We're in the middle of a change right now back in 2020 the Securities Exchange Commission enacted a new rule because of all the criticism of the suitability standard. Right now brokers are under what's called Reg best interest. We don't have time to go into all the nuances but I'll tell you that basically what we've got now under Reg best interest they don't have the high level of responsibility that fiduciaries have but the problem is is that when the SEC enacted Reg they didn't define best interest so that's where we stand right now or we're using a common sense concept of best interest or is the SEC and they've recently said they're going to do this they're going to define what best interest is so right now brokers have a responsibility that somewhere between the low level of suitability versus the high level of fiduciary prudence arguably they have a higher standard now because the main element in Reg best interest that they didn't have under the suitability standard is now they have to consider costs. Okay so you have somebody they're both a broker dealer registered investment advisor part of the portfolio that they're managing is under an RIA agreement and part of the investments that are being managed are under the brokerage agreement so they might say in a court case or an arbitration against them that well that particular account is not a fiduciary relationship only this account is a fiduciary relationship one of my previous jobs was to serve as a compliance director for a very large independent broker dealer bottom line is brokers argue that they don't have a fiduciary duty that's been the typical argument we don't have a fiduciary duty investment advisors do so they try to draw this mythical two hats argument brokers are allowed by most broker dealers to either form their own independent RIA or a lot of brokers don't want that hassle they don't want management they just want to get money from providing those services so most broker dealers in this country now have a proprietary registered investment advisor that the broker can join and offer the same advisory services that other investment advisors provide so they can get they can get there and do it easily by working under the broker dealers RIA the term in the industry is duly registered so if you are registered with both a broker dealer and an investment advisor to answer your question there was a 1949 case so what I'm about to tell you isn't new it's been around for over 50 years actually 670 what anyway what the court said is that if you're a stock broker and you also provide investment advisory services you confuse your client and the court said we're not going to let you confuse the client if you're in a situation where you provide services both as a stock broker and investment advisor you're held to the higher standard that being the fiduciary standard oh interesting the last area that I want to touch upon are pension funds and this would include qualified plans they fall under orisa could you explain how they're special orisa is the law that governs as you said pension plans 401k plans 403b plans and it imposes very heavy responsibility on the fiduciary of those plans again it's the same we talked about beforehand prudence and loyalty but I'm a golfer and as I like to tell 401k boards there are no mulligans under orisa you either do right or you do wrong and one of the famous quotes that came out of a 401k case and judges like to throw this out if you as a fiduciary make a mistake and it costs the plan you're responsible and typically the fiduciaries for the plan will say well we didn't mean any harm and this is the quote that the courts like to use a pure heart and an empty head are no defense I want to get into recent court cases because understand the supreme court is in the middle of deciding something relatively important for trustees of 401k plans could you get into what the supreme court is working on the case before the supreme court a 401k beneficiaries the plan participants filed a lawsuit against north western university and they made the allegations that the investments were imprudent they lost money the case was thrown out in the lower court and the case went all the way to the supreme court and the supreme court decided to hear it there were two main issues before the court the lower court had thrown out the case because they had said that the attorneys for the plan participants didn't make the necessary disclosures or allegations the second issue and to me the bigger issue was the judge in the lower court had dismissed the case because he said that the plan had included both proper and improper mutual fund investments and so Lee called the menu of options defense he said as long as you offer some that are good and some that are bad it's okay one bad apple doesn't spoil the whole thing well the judge is wrong and so the court took on the issue of whether or not a plan can offer both bad and good investments suitable unsuitable investments cost inefficient investments to me that's the bigger issue because a lot of courts have been dismissing cases and denying the participants who've been hurt their day in court we obviously don't know what the court is going to say in this case but hearing Justice Kagan really got into questioning the attorney for Northwestern University and pointing out to him that this didn't make any sense and in fact it's contrary to Arisa what we talked about before the law that covers plans and she really got to the nitty-gritty and asked the attorney for Northwestern she goes this whole idea that you can include and offer bad and good investments you don't believe that to you and the attorney admitted no and yet almost every 401K plan 403B plan I look at has some index funds in it which are good because you can pick them out and you can say let's use just those index funds and it has a variety of higher cost funds that look like legacy type investments now not all 401Ks have this I've noticed that the newer companies a lot of the newer tech companies they don't have any of this oh legacy active management stuff in there it's the older companies where these funds are hanging around in there they probably have accumulated a lot of assets over the years and maybe there's a reluctance to take them out because a lot of beneficiaries are invested in those funds I mean is that part of the consideration I think there are two considerations here strangely enough Arisa talks about financial retirement readiness buzzer words like that but inexplicably Arisa does not require that an employer provide investment education for its employees so I think the reason a lot of those old time actively managed funds are in there is because the employees simply don't know how to properly evaluate a fund and don't know one may not be in their best interest I think the second the second issue is from a legal perspective I've talked to a lot of planned CEOs of corporations and the investment committees of their 401k plans and from a practical perspective the CEOs say well we're not going to go in and take out the bad funds because if we do then we're going to get sued and I have to tell them you've got a point if you want to try to explain it away but I tell them if you don't take them out then you're going to have that specter of liability hanging over you forever so from a practical perspective they don't want to get sued but you're not doing right by the participants and it clearly violates the stated purpose of ERISA and that is to help protect the financial wellness and retirement readiness of the planned participants is it some sort of a safe harbor for this lawsuit I think it's under 404C there is 404C says that if you comply with these 20 requirements then you're not you being the plan are not responsible for the actual performance of those investments so you have immunity and that's why a lot of the plans try to go for it because then once they provide the employees with these various investment options they're not responsible whether the performance is good or bad but Fred Rice who's one of the leading ERISA attorneys is on record he testified before the department of labor and Fred's been around as long as I have 40 years and Fred said that in all his years they have never found a 401K plan that satisfied the 20 or more requirements to become eligible for 404C so practically speaking yes there is a safe harbor but once a plan tries to apply for it they find out they're not in compliance with ERISA interesting are there any other noteworthy court cases that occurred in the last couple of years that you'd like to bring up yeah I'd like to bring up the case of Brotherston versus Putnam investments it was a first circuit federal court of appeals case and the reason it's important is that it was one of the few instances where a court instead of trying to protect Wall Street went out of its way to protect planned participants and Brotherston's noteworthy for a couple of reasons first and foremost it ruled in favor of the planned participants the lower court judge had said you can't compare actively managed funds to index funds because index funds will always win they've got lower costs and the first circuit court of appeals went to the restatement of trust section 90 which is known as the prudent investor prudent investor rule comment in in the restatement says you can compare index funds and active funds so this was one of the few times I can ever remember any court federal court state court saying index funds are fine and to build on that the first circuit court of appeals told the broker dealers and the investment advisors and mutual fund companies I know you're not going to be happy with that ruling but you know what there's an easy way to avoid this whole mess invest in index funds so that's a really big ruling and when you combine the court saying apples and oranges you can compare actively managed funds and index funds when you combine that with the ruling that we all expect the supreme court to make i.e. that there is no menu of options each individual investment has to be prudent that's going to pretty much help protect plan participants because it's going to hold the members of the investment committee and the plan sponsor to making decisions based solely on the merits of the investments let me ask one question before we move on to your book and that has to do with target date retirement funds and defaulting investors into target date retirement funds number one question is you know good idea or not good idea and number two is target date retirement funds and I've seen some pretty inexpensive target date index retirement funds why would you have actively managed target date retirement funds when you have index target date retirement funds again I'm going to give the answer that the investment committee choosing between the target funds doesn't understand doesn't know how to do the basic cost benefit analysis and plain and simple my feelings on target date funds I'm not a big fan of two primary reasons the way most target date funds work is that as you get older and closer to approaching retirement they gradually reduce the equity exposure in a lot of cases you may be exposing to people that own those target date funds to more risk than A they want or B that they need the other issue that I don't think a lot of people understand about target date funds is that typically a target date fund does not provide the same level of active management that an investment advisor or an actively managed funds management does most of these target date funds one reason they can offer lower cost but like you said a lot of them have higher cost but one reason that they can offer lower cost is that the fund basically only rebalances or just the equity or the investments in the fund once a year so take for instance right now we've seen a lot of increasing instability in the market and a lot of people are saying well I'm going to reduce my equity exposure a little bit some people are saying get out all together I don't agree with that but target date funds do not allow that opportunity except maybe once a year to adjust so if you want to adjust even just a little bit you've got to wait till the date that they say we're going to go back in and adjust one of the reasons I don't like target date funds is that they don't provide enough risk management opportunities for an investor and Charles Ellis who's a well known investment advisor has stated that the real secret of successful investing is risk management not the selection of investments in your book the 401K 403B investment manual what player and participants and plan sponsors really need to know the second edition just came out first edition was published back in 2010 there's just a tremendous amount of information in here for small business owners who have 401K plans and what their duties are and so forth but could you explain or talk about sure the reason I wrote the book is as I mentioned earlier, ERISA does not require 401K 403B plans to provide investor education there have been numerous studies showing that investors in general are not very knowledgeable about how to manage their investments in fact I had a CEO I gave a presentation at a conference once and after the presentation a CEO came up to me and complimented me on the presentation and he said I'll never voluntarily offer investor education in my company and I kind of gave him a look and he goes if I educate him they'll realize how bad our plan is and then you and the other attorneys will come in and sue us the reason I wrote the book was I've tried to cover as many topics as possible primarily about investments that are often chosen for 401K 403B plans but as we've talked about earlier one of the big problems with these 401K 403B plans is that the investment committee members themselves don't know how to properly choose investments so that was the reason I wrote the book I had several people ask me after giving presentation education presentations for 401K plans or at conferences they said okay loved your presentation why don't you share that information with everybody so that's the purpose of the book it's relatively short I'm a firm believer at conferences that if a book is more than 100 pages it's probably going to be placed down and you're going to forget about it so it's slightly over 100 pages and we're just trying to provide in simple plain English some techniques some concerns that you should look at in deciding on the various investment options and even though it does say 403B it's equally applicable to just your regular brokerage accounts or any kind of situation where you're going to be dealing with investments and you also have a website investsense.com where you publish a blog every month with some great information not just on retirement plans but financial plans broker dealers advisors and you name it the whole gamut we do and then quite often I'll speak or be called in to help a 401k plan like you yourself and they said we need a blog so we have a second blog that's more oriented toward investment professionals and 401k 403B members the other one is more consumer oriented the second blog is more oriented toward investment fiduciaries and is that also on investsense.com or is that a different website? No, the second website is called the prudent investment fiduciary rules and it's at i-a-i-n-s-i-g-h-t wordpress.com Any last words Jim that you want to impart on us? I mean you've got just 40 years worth of experience you've been around, you've seen it all you know what's right, you know what's wrong, you know where people are right behind any final words? A lot of people say they're intimidated by the idea of investing don't be. As I said earlier I think the simplest way to determine the prudence of an investment is simply to do a cost-benefit analysis it's the same thing we learn cost-benefit and econ 101 just compare the incremental costs to the incremental returns and if the incremental costs are greater than the incremental returns or the actively managed fund does not outperform the index fund then don't invest in it. Jim it's been great having you on Vocal Heads on Investing. Thank you so much for your time today and I appreciate all the comments that you made and I appreciate all the wealth of knowledge that you've given us. Thank you Rick, I appreciate you having me on. This concludes episode number 41 of Vocal Heads on Investing. Join us each month as we have a new guest and talk about a new topic. In the meantime visit Vocal Heads.org and the Vocal Head wiki. Check out the Vocal Heads new YouTube channel Vocal Heads Twitter Vocal Heads Facebook and find out about your local Vocal Heads chapter and tell others about it. Thanks for listening.