How can retirement plan advisors leverage technology to drive efficiency and increase profitability when conducting RFPs? My guest today is Benetic CEO Ray Conley. Benetic is a new advisor-centric platform that brings together recordkeepers, asset managers, and other service providers. Advisors can search for and select plan service providers, choose a fund lineup, and generate a proposal in minutes making the selection and maintenance of retirement plan services easier and more efficient.
On today's episode, Ray and I discuss his background as a venture capitalist and fintech in the ERISA space. We also take a deep dive into Benetic, how the platform works, the revenue model, how data and privacy is handled, as well as much more.
“This is an industry based on relationships.” - Ray Conley
“You can’t break relationships. Business gets done through these relationships.” - Ray Conley
“This is a technology arms raise. The only way [record keepers] are going to survive is by continuing to invest in technology that’s going to make them more efficient.” - Ray Conley
Josh Itzoe: Ray Conley, thank you so much for being a guest on The Fiduciary U™ Podcast. I'm excited about today's conversation.
Ray Conley: Josh, thanks for having me. Excited to talk to you today.
Josh Itzoe: So, you are CEO of Benetic, which is a new platform that is advisor centric, but you have a great tagline that says that advisors can turn things that take months into minutes. It's really a way to that and RFP, record keepers and asset managers. I'm really excited for the audience to learn a little bit about Benetic. Why don't you just describe in your own words, what is the Benetic and why now? Why did you create the platform?
Ray Conley: Great. Josh, thanks for the opportunity and appreciate the question. Benetic is a marketplace for retirement services. It's a way that retirement plan advisors can very quickly find record keeping services, investment lineups, and compose complex retirement plan proposals for their clients. When we talk about turning months into minutes, as anyone who's been through this process knows there's a long process of requesting quotes from various service providers, collating that into an apples-to-apples comparison, especially at the detail level, and also thinking through what's the best investment lineup to offer your client, and then following up on that process to deliver those types of results.
What we've done is automate that entire process so that the advisor can focus on client service and not on filling out a spreadsheet or a PowerPoint or having to do a lot of this redundant non-value added work. So, we took an approach to recognize this is an industry based on relationships. We're respecting those relationships and in fact, making them more effective, so that advisors can communicate more effectively with their wholesalers on both record keeping and the fun side and allow them to get more information and be more effective in their decision making process but for all of those parties.
The things that just simply take a lot of time to enter data, get it entered correctly, and process that information. we've simplified it and automated it. So, that's a real angle. The best part is, at least for advisors, accessing the marketplaces is free for them to use it.
Josh Itzoe: That's great. We'll get into that a little bit later. I will ask one question and then I want to get a little bit of your background, because I think it is interesting how you came into the space. Certainly, there's from a time allocation and that helps from profitability and scale, but how does Benetic help advisors actually be better fiduciaries to their clients?
Ray Conley: There's a few ways we can help them. The most significant is making sure that they are getting the best solution for their client. When I say that solution, this industry has been stuck in a race to the bottom on fees. The consequence has been a lack of focus on service and a lack of focus on value. The participants suffer as a consequence of that. Just because an investment fund might have the lowest fee doesn't mean it's going to deliver the best outcome for the client or record keeping service might be listed as the lowest fee, but is that really what that particular demographic of clients need as they approach retirement?
So, the first part is helping the advisor see multiple attributes of the service providers that's not simply price. So, how do they do on participant education? How do they do on security? How do they do on technology? How do they do on administration? All of those things matter. It's not simply a question of price. So, we allow the advisor to make sure that they understand the plans, requirements, what their needs are. Maybe they had a correction. They're like, "God, I really need to have better administration this time around."
So, let's identify service providers that have that capability, so that they can better serve their clients. So, it's a focus of not simply price alone. It's a focus on all the things that go into delivering a great outcome for the clients. So, that focus on value is really important.
The other thing we do because of the automation is it allows the advisors to see a lot of other vendors very quickly, so that you can truly do a good benchmark or a good coverage in the market. Also, because it produces amount of time required to do that, it allows you to do it more frequently. So, instead of waiting every five years to do a plan review, you can do it every day if you want to, but we allow you to really speed up that process and stay on top of it better and monitor it better.
Josh Itzoe: All right. So, Benetic was founded in 2018. Is that correct?
Ray Conley: Yes.
Josh Itzoe: Okay, so here's my question. You've mentioned VC. Before 2018, had you ever heard of EPCRS?
Ray Conley: No, no.
Josh Itzoe: Okay. That leads into actually a really good discussion about your background, because you've been in the investment world, but you were more from the venture side as an investor. Is that correct?
Ray Conley: Yes. So, I started investing in tech companies in 1997. I was with a venture capital firm on Sand Hill Road, right in the middle of Silicon Valley. I did my first fintech... Well, it wasn't the first FinTech investment, but the first one in the retirement market was Financial Engines. So, our firm was an early investor in that company.
Josh Itzoe: You guys did pretty well. You guys did pretty well on that investment.
Ray Conley: I didn't know much anything about the 401(k) market at the time. It was more of an investment and shares idea for how to do portfolio optimization. We learned a lot of hard lessons through that, because the original business model didn't work. The original business model was, "Hey, we're going to charge $150 online for people who want to improve their portfolio." No one used it. We're like, "God, why wouldn't someone want to spend that money to get a better portfolio outcome?" There were a lot of reasons why they wouldn't do that. But it wasn't until the company pivoted to say, "Let's go to the plan sponsors and use this as a way to improve."
Back then they didn't have the term wellness, but it was, "How do you help the employees do better job?", that the business really started get traction. But as we were doing that, we made another investment in a company called M Planet. Doug Manchester had been leading a lot of Fidelity's efforts at the time. We were creating the first online record keeper. This was back in 1999-2000 timeframe. That was when I learned about that record keeping even existed. I didn't know what record keeping was. It was a big learning experience to us, because the industry wasn't ready for the change. That was 21 years ago. Everything else was moving to the internet, but we weren't ready to do it then.
So, it was those early experiences helped me recognize that the venture capital model, I'll say, Silicon Valley and you could apply this for most VCs, is not well suited for the retirement industry. It's because as a VC, you might have a wealth manager. You know the wealth management industry. You look at how inefficient that is. So, ideas like Wealthfront are no brainers. You're like, "Wow, that's a great idea," because they know that market, but most of them don't have 401(k) plans. That's a minor thing when they think about it. They definitely don't understand the retirement industry.
So, a lot of I'll say Silicon Valley startups that have attempted to go after the retirement industry have failed, both because investors don't understand this market because it's arcane. They come at it without realizing that this industry operates very differently than most financial services businesses. I think that's because you're governed by ERISA.
This is one of the only industries that has both the Department of Labor and the Internal Revenue Service looking over your shoulder. As a consequence, there's a lot of rules and a lot of things that happen that are not intuitive. So, to your point, when I came into this, I knew enough to recognize it was a great idea, but it was a steep learning curve in the early days as well. So, there's a lot of industry lingo and jargon I had to learn pretty quickly to get up to speed.
Josh Itzoe: Yes, it's funny. I actually started my career, first real job was in the late '90s for a technology startup through the go-go days. We wound up going public and whatnot. We worked with a lot of government agencies. I would say that the government is probably the only industry that uses acronyms more than in the 401(k) world. So, from that perspective, how did you originally come up with the idea for Benetic? Where did that come from? There isn't a lot of money flowing. That's actually the idea a lot of this inefficiency, I think, as 401(k) advisors. I think there's probably a data access element. I want to explore that a little bit with you as well.
On the private client side, you've got the big custodians, the Fidelity's, the Schwab's of the world, that there are clients that they serve. They've opened up the data pipe. So, now you've got a proliferation of really good private wealth focused FinTech that is able to easily access data and then turn that data into insights for advisors to be able to scale and to be more profitable.
The challenge and I think it's only going to get worse with a focus on cybersecurity is a lot of the big record keepers, even a company like Fidelity which serves both the 401(k) market and the IRA market, on the retirement side, vendors have been much less open about giving access to data. I think there's a number of reasons for that. You seem to have been able so far at least to crack the code with getting those vendors to be more open about giving up data. But where did the idea from Benetic originally come from? How did you stumble across it?
Ray Conley: So back, again, 20 years ago, a fellow who was an MIT fraternity brother of mine and then worked with me at the venture capital firm had gone on to work at Google and a few other places. He had a friend who was one of the premier attorneys in this industry. They've been putting their heads together talking about the problems of the market and this data issue. So, between them, they came up with the idea. So, my buddy Duke came to me with, "Here's the idea."
Josh Itzoe: That's a solid name, by the way. Is that the only guy named Duke that ever graduated from MIT?
Ray Conley: That's a good question though. I'll have to search the database. There's this challenge, because we have both been involved in that record keeping deal in the past, there's 400 different types of services a record keeper can provide and they charge for it six different ways. Is it per participant? Is it on asset basis? Do you do it monthly, quarterly, one time? Even though he ran Google's mobile ad business, he said, "This is by a factor of 10 the most complex data model I've ever conceived of."
So, if anyone in retirement industry thinks it's complex, I've got independent validation. This is an insanely complex problem and explains a lot of reason why it hasn't been automated in the past, because the computer science problem we had to solve is actually really hard to embrace the variations of how everyone works together here. That's why it's traditionally been a manual paper process, where you have people having to think through all those exceptions and corner cases. So, Duke figured it out. He laid out that opportunity saying, "If we can create this standard interface, we could then allow record keepers, asset managers, the advisors to come together and have this unified digital experience."
But the piece that the legal side brought in or the industry experience was you can't break relationships. You still have to respect that business gets done through those personal relationships. There's a lot of trust involved. So, how do you leverage technology to bring efficiency to the things that should be made efficient, which is what it's great for, but also allow the business model and the way you deliver it in a way where everyone actually makes more money and no one gets squeezed out? Of course, from a fiduciary point of view, benefit the client first and foremost or the participant.
So, when he presented that to me, that's when I was like, "Wow, this is an enormous idea, because one, no one's ever really figured out how to crack the code on this. It's a huge market. It's one that is desperate for someone to deliver a good solution that can help people."
Josh Itzoe: Yeah, the 401(k) side needs more and more innovation. There's no doubt about that. What you've mentioned before, we really see it. I've mentioned this on prior shows and prior discussions, but having previously been a co-founder of a large IRA that we scaled and having both sides of the business, all the private wealth folks, they were the cool kids. They got to play with the cool toys. We were on the 401(k) side. Our attacking tools, we're playing with a slinky on the steps, while all the kids on the other side of the business were playing Xbox.
So, I think it is a market that is desperate for innovation and that's desperate for more investment and more tech, because that's the real challenge we have as advisors on the retirement side is it's hard to raise fees on clients, but clients are asking advisors to do more. Part of that, I think, is the response to what you said. I do think record keeping and I'll probably take some arrows in the back for this. I think the single most important participant in the entire fiduciary ecosystem, not surprisingly, is a fiduciary advisor, because I think they provide the leadership and the accountability to clients that really no one else in the system is really willing to step up and do.
Recordkeeping, you'd mentioned corner cases, I often refer to that as edge cases. I'm assuming we're talking about the same thing, where it's more of this exception, not the rule, these more obscure issues that pop up that are really hard to predict ahead of time. Is that a fair way to describe corner case in your opinion?
Ray Conley: Yes.
Josh Itzoe: Yeah. So, that does create challenges. It does absolutely create challenges at times, but I think record keeping has become... They won't want to hear this, but has become more commoditized. Just like for advisors, investment selection and monitoring in many cases has become much more commoditized than it was maybe 10 or 15 or 20 years ago. But the challenge as an advisor is declining service levels on the record keeping side. I think that's in response to transparency around fees and this race to the bottom as you described it. So, what's happening is more and more record keepers are hiring more junior people who don't have the same experience.
I think they're moving clients more towards self-service, because they're trying to maintain their margins and their profitability. But what happens is advisors have this indirect fee compression, because they can't raise fees, but now they're having to do more. I think if you can crack the code with Benetic and you can get hours back for advisors that they can redeploy into high value activities or high payoff activities instead of valuable activities like monitoring service providers, but that are low profitability activities, I think that there's a lot of success. Who's been the target market for you with Benetic? Is this any financial advisor? Is it more up market? Is it down market? Where do you see the target for you being?
Ray Conley: So, we have as a design criterion when we built this that if you were a consultant working on a billion dollar plan with all types of bells and whistles, we could allow you to do that. And then if you can solve that, I'll say extreme case to introduce a user interface and a simplification. So, if you're only doing a couple plans a year and this isn't your core business, but you just need to be a good fiduciary and get it done, you could come in and get it done quickly and not get confused.
So, when you use this initially, literally in five minutes, you could go from zero to done with a proposal. But you can dig deeper into the plan and really create something beautiful and complex if you wanted to do that depending on your level of, I'll say, experience and how much you want to do in plan design and that type of thing. So, what we've found initially are a lot of the folks who were with aggregators have started to use this, because there's a focus on both efficiency. There's a certain degree of flexibility and how they tend to be organized. Each office will pick it up and use it. Some of the home offices have already said, "Hey, this is a great way for our teams to get leverage and grow faster."
We've started to have a couple of broker-dealer start to use it. The BDs tend to be a little bit slower just because they have much more bureaucratic approval processes to let the rest of the organization use it, but the ones who get it and are early adopters are already getting some great leverage on it. I mean, we've only been live for almost three and a half months now, but quite a few independents have come in and started using it as well. If you're an advisor who's serving retirement plan, this is a no brainer.
Josh Itzoe: So how many advisors across the spectrum would you say, just ballpark, you think are using the system right now?
Ray Conley: I've seen 85 logins in the past, a little bit here just in the past few days. That is across over 50 firms. We've had a few 100 million of proposals run through in the past few weeks.
Josh Itzoe: Right. How many record keepers do you currently have in the system, ballpark? I think you've launched with 7, about 20 now. So, you launched I think with 7. So, in three and a half months, it sounds like you've tripled that.
Ray Conley: Limited by our team's ability to get people on board, but it's pretty easy.
Josh Itzoe: One of the things that's interesting and as I understand it is you mentioned that billion dollar plan. That's true specialists that are working with billion dollar plans that I'm not so sure the advisor that only has two plans can actually be that good of a fiduciary. So, I'm not sure they actually have the depth of experience to really know. It's not just what you know. It's what you don't know. In a lot of ways, that can sink the battleship. But there is the ability, it seems like to.... I'm a big golfer. So, with the tech now, with drivers, you can take your wrench and you can tweak your driver. You can change the loft. You can change the lie angle and so on and so forth. If you're so inclined, you can really dial in the way you want your driver set up. I sense that that's similar with Benetic.
You've got a lot of these data inputs. Obviously, the more data that you put in as an advisor about your client, it seems like there's a dynamic pricing element that record keepers have that you give them more information and they're going to be able to dial in their specific pricing. Is that a fair way to describe it?
Ray Conley: Exactly. So, as an example, when you put something together, you just directly contact the wholesaler to discuss the particular details of the plan. And then there's a way for them to do the feedback loop and then update their capacity based on those specificities.
Josh Itzoe: So, how did you get record keepers to agree to do this? I mean, everybody knows record keepers hate giving benchmarking pricing. They want real deals. If they do it, they do it begrudgingly in many cases. How did you convince record keepers that this would actually be good for them as opposed to bad for them?
Ray Conley: Right. So, the record keepers by and large recognize that this is a technology arms race. The only way they're going to survive is by continuing to invest in technology that's going to help them be more efficient. They also have a desire, but until Benetic, really didn't have a way to communicate their differentiated value, because a lot of advisors just look at it saying, "Well, what's the price? What's the price?" They're not recognizing that different record keepers have distinctly different business models, different service delivery.
There is a reason that someone might be more expensive than you'd be willing to pay for that more expensive solution, because there's something special that you get with that. So, the two things that we brought to the record keepers were number one, a way to be more efficient and still serve your client, maintain that relationship. So, it's a cost savings play for them. And then the second one is a way to get your message out and show your differentiated value.
Josh Itzoe: So, a broadened distribution, maybe reaching advisors.
Ray Conley: So, at the end of the day, they're getting shots on goal that they never had a chance to see before. From a data point of view, the record keepers still hold on to their data pretty tight. So, we have very strict walls we put around what data is allowed. So, the record keepers aren't really giving up information they wouldn't otherwise be giving up in a particular proposal. We've designed the user interface in a way where they're not just going to get scraped for prices as well. So, there's some thought that went into how to do that.
Josh Itzoe: How do you do that?
Ray Conley: Record keepers configure their solutions. They can define what type of market the solution gets proposed to in terms of number of participants, amount of assets. They can tier it. They can say different solutions get priced different ways and different scale. They can also version it by firm.
Josh Itzoe: So, If I have 25 plans with a provider, I'm probably going to get better pricing than-
Ray Conley: That's exactly right.
Josh Itzoe: ... somebody who has two plans with that provider.
Ray Conley: Yup. Yeah. So, allowing them to tailor their solutions for the relationships was a key part of this.
Josh Itzoe: That's all configured by the record keeper on the back end.
Ray Conley: That's right.
Josh Itzoe: It seems pretty plug and play for advisors, but it's maybe the work on the back end with the record keepers. Since it really is probably all these different business models by record keepers, it's going to be truly a unique custom setup. I'm sure there's maybe a standard out of the box, but they're wanting to tweak on the back end-
Ray Conley: Getting them up and running is really easy. It's literally a few hours. It doesn't take much at all. You get out what you put into it. So, the more time they put in different solutions they're versioning, then they can get really complex with how they operate. So, it's easy to get started-
Josh Itzoe: So, it's easy to get started, but the tuning on the back end is where it can take more time. They have the choice on whether or not they want to do that or not.
Ray Conley: Exactly. We enabled them to get real time data analytics on how they're performing on the marketplace. So, I can roll out as a record keeper new solution with a different set of services. And then I could say, "Hey, how did the solution with the stable value fund do compared to the one that didn't?" Maybe I need to tweak the pricing to see which one the advisors are looking at more.
Josh Itzoe: So, you're actually helping them from a product market fit perspective in some ways.
Ray Conley: We turned Google Analytics into a dashboard for record keepers.
Josh Itzoe: Interesting, interesting. Okay. So, the third constituent is asset managers. I want to talk a little bit about... I don't want you to take this the wrong way, but one of the concerns that I've heard from some advisors, certainly a lot of interests in Benetic, one of the concerns is the fact that it's free to advisors. I've heard some people say, "Well, if it's free, I feel like I'm the products." So, what's the revenue model for Benetic? How are you guys making money? How are you guys getting paid? What's that structure look like?
Ray Conley: There's a few elements to it. On the asset management side to at least follow that part, what we've done is go out to some of the most premier investment firms, investment managers, and put together collective investment trusts that have their assets in there that are now awkward at some of the best pricing in the market. So, we get some economics in the distribution of those funds. From a fiduciary point of view, we're able to meet everyone's needs, because it's still the best price the advisor is going to get on those funds. I always tell an advisor, "Hey, if you can get better pricing on the fund as a fiduciary, you need to go use that better pricing.
But at the same token, if we've got the best pricing in the market, you should probably use our funds." So, there's that side of it. At the same time, the advisor can use any fund they want. As long as it's available on the record keeping platform, we don't restrict them from doing businesses they normally do. It's our job to find funds that are both good and compelling prices. So, that's one piece. Because we've created a marketplace, there's a lot of additional services that can be distributed as well. 3(38), for example, great way for the advisor that needs that extra fiduciary coverage to find a 3(38) advisor to help them out. So, there's options to distribute for that.
Also, for the advisors, well, we don't have it today, coming soon, I'll say it's the equivalent of the in-app purchase. So, in the same way, you referenced to Xbox, there's a lot of games you can play for free right now. But after you do it for a while, there's other things you can buy to make your experience even better.
Josh Itzoe: I know because I get from Microsoft. I get the emails from my kids, my little guys when they're playing Minecraft. And then I get this debit. I'm like, "What is going on?" Texture packs, I think they call them. So, I'm very familiar. There's always a cost to everything in life.
Ray Conley: Right. So, the basic service where the advisor can go in and do what they do, that's always free. There's additional services that frankly, they already pay for probably today or certain types of data analytics, that type of thing that we'll be offering in the future. So, if they want to use that extra stuff, it will be better than what they've already got access to and they'll choose to do that.
Josh Itzoe: Okay. So, it sounds like part of your value prop to record keepers and asset managers is we're going to help you drive distribution. You're going to get at-bats and opportunities that you wouldn't otherwise have, especially as we get the advisors ramped up, as more and more of this becomes the industry standard for how advisors run the RFP process. As an asset management and record keeper, you better not be locked out of the marketplace, because that's where business gets done. Are you guys getting compensated at all from record keepers? Are they paying a listing fee or anything like that, or transaction fee will be part of the platform, or is it free to record keepers?
Ray Conley: The same thing, free for record keepers today. There is a similar concept, I'll say, the in-app purchase for the record keepers for enhanced data analytics and some additional services that we'll be rolling out soon. But for them to be able to list their services and solutions and get the basic efficiency and distribution on this, that's free for them.
Josh Itzoe: Okay. So, that makes sense, providing them some of the data and analytics from an intel perspective so that they can get a better handle on their business and how they're performing and how they can improve it, it sounds like.
Ray Conley: That's right.
Josh Itzoe: And then asset managers, it's been really interesting, just as you see within the industry, the Vanguard effect is real. A lot of asset managers, especially if they don't have a target date series or if they do, but they don't have a proprietary distribution platform. I mean, there's a reason that over half of target date fund assets are with Vanguard and Fidelity and T. Rowe. They happen to have their own proprietary suites, and then they've got these huge distribution mechanisms. But if you're an asset manager and you have a target date series, but you don't have any way to actually distribute it, they've been locked out of that.
So, I'm assuming that's partly why this is a way for them maybe to get back in the game. Is that partly why the revenue model they're willing to... Essentially, Benetic becomes a business development person for these asset managers by helping them potentially get into opportunities, again, that they wouldn't otherwise have the ability to do and do it in a much more scalable way than just one individual advisor at a time. Is that fair? That's partly why they're willing to share a little bit of their revenue with Benetic because you're giving them access to distribution they wouldn't otherwise have.
Ray Conley: Yes. BlackRock, for example, was one of our first asset management partners, because they recognize that opportunity. The target date arena in particular is something that lends itself well to active management. There's a lot of passive strategies out there, but I think any advisor who's looking at this recognizes that the actively manage target date series tend to do better over the long run, because that's really what you need to think about. I mean, there are obviously some good passive strategies out there as well. But how do you analyze those? How do you compare them? Wat are the demographics of this plan? How well do they match up to the glide path or objectives of those participants? That's where the advisor can really step in and help and target date selection.
I think as a fiduciary, if you haven't said, "Here's the reason I'm picking this series and this glide path for the following reasons for all of these plans," they shouldn't use target dates. So, they really need to know what they're doing before they pick one. We want to help them in that process of making sure they're making good, targeted selections if they go down that path.
Josh Itzoe: I mean, I think for this generation of fiduciaries, the QDIA selection is the single most important investment decision that you can make. I mean, 60% of dollars each year and growing are flowing into QDIAs, especially with the increase in automatic enrollment and automatic escalation. So, that is the single most important decision. Do you guys provide analytics tools within the system for advisors to evaluate funds? Is that part of the package as well, or is that going to be one of those in-app purchases? What does that look like?
Ray Conley: There are a set of tools for evaluating the funds in terms of looking at their different performance characteristics. That's something that we are continually innovating on and improving and offering new, I'll say, analytic tools. So, certain advisors look at funds in one way. Depending on their philosophy, others would use different types of analytics. So, we're taking a lot of feedback from advisors today to say, "What do the majority of folks look for?" We want to give that back to them in different types of tools.
Ray Conley: So, right now, you can sort the funds by all different types of performance ratios, metrics, that type of thing. We'll continue to improve that. Frankly, the visual interface and making that a lot simpler is something that's a big priority for us right now. Especially with target dates and glide paths and thinking about that, it's complex. We want to make it not only easier for the advisor to use, but easier for them to communicate to their client why they did what they did as well.
Josh Itzoe: Yeah, one of my big mantras is that too many advisors sell information and data instead of insights. What clients really want is they want intelligent insights. So, I think that's what you're saying a lot of well. The most successful advisors that I've seen in my career, there's this innate ability to make the complex simple. At the end of the day, this is a really complex business. You can overwhelm clients who, quite frankly, it isn't their core business. I would imagine, when you came into this space, you were overwhelmed at, like you said, the complexity. Even Duke, he was overwhelmed with the complexity of the data model, right?
Ray Conley: Yes.
Josh Itzoe: So, let's talk about data a little bit, because I think that is important. There's such a focus in the industry now on what I would consider to be cybersecurity, which is how you're protecting data, but then also, I would say, data privacy, how that data is then being used. What's your take on data? How are you guys using that? What are you guys doing from a privacy perspective? So that advisors know that from a cyber, we're hearing left and right. I think the Department of Labor just released within the past week or so some recommendations around, "What cyber questions should be asked? What controls are in place?"
So, how are you guys handling data? What are you using it for? And then how are you protecting it? So, advisors can feel competent from a fiduciary perspective that they're honoring their clients, if you will.
Ray Conley: Sure, sure. So, there's two layers to consider. First is we take data very seriously, as any tech company should. We've got some pretty good technology around protecting that. I'll say the engineering folks on the team have quite a bit of experience with it. So, I'll say, at least on the tech side, happy to go into deep due diligence with anyone who wants to see how we've done that. Next level though is from a business point of view, how do you think about data? How do you manage where the lines are? One of our principles is, I'll say, transparency.
So, if anyone ever wonders, "Hey, what are we doing with the data?", we don't sell people's data. We use data to help people make better decisions. We use it in aggregate for understanding market trends, as I gave that example, for record keeper who said, "Hey, I put out a solution that included a stable value fund. Which one works better?" So, you can use aggregate data to help make those types of decisions, "Why do I win? Why do I lose?" type of analytics. What we don't do is we don't touch participant level data. So, that stays behind the record keeper's firewall. We don't pull in any of that. So, at least our platform is insulated from that type of fiduciary risk.
Josh Itzoe: So, no personally identifiable information.
Ray Conley: Exactly, no PII.
Josh Itzoe: Yup, perfect.
Ray Conley: None of that stuff. And then that's how we keep ourselves clean and protected. The data that does matter is who are your client, which plans they are. If you knew how to actually parse the 5500 database, then most of that stuff's out there. Of course, the data is always stale. People still want to keep their client data protected in terms of who their clients are, that type of thing. So, we obviously have a lot of good safeguards in place for that.
Josh Itzoe: Great, great. As we start to wrap up, what's the future for Benetic look like? Where do you guys want to take this? What's your vision for what the future looks like?
Ray Conley: Sure. So, think of Benetic as the Amazon.com for money. So, we start with retirement market. We're enabling investment managers to get their funds more efficiently distributed into the marketplace. Same thing for record keepers. It's because we're making it more efficient for everyone who participates. So, that visibility, transparency, and a neutral platform is the things you need to make the marketplace work. We've now got critical mass where that's happening. So, the next few years, our focus is squarely on the retirement market and making that a success, because it's sorely needed. Longer term, expanding in other ERISA areas. We could say, defined benefit market is a place we could go to next and expanding from there, but this is really-
Josh Itzoe: Financial wellness providers, I would imagine could be part of that potentially.
Ray Conley: We're not going to try and replicate things that have already been done well. So, I'm not going to create another Financial Engines, but I'm going to create a way where Financial Engines could get better distribution of their services to plans that they could use or someone that has a better Financial Engines, that type of thing. So, we're helping people get distribution of their services across the marketplace. That's what we're creating.
Josh Itzoe: Great. Now, you've been in this world for a couple of years, what would be your single best piece of advice for ERISA fiduciaries who listen to the podcast? What would you tell them?
Ray Conley: So, I would say COVID has fundamentally changed the ballgame for everyone, because this industry has gone into warp speed online. People are now comfortable doing Zoom meetings. Conferences have gone online. People will still probably go to Napa and that type of thing, but you have to recognize the world has changed. It's gone online and it's not going back. So, you got to adopt the technologies that are going to allow you to be competitive in the digital world. It's not just Benetic, which is an online digital marketplace. But everything you do is going online and your clients did it too.
It's not just in the retirement world. This is happening systematically across the entire world and across every industry, because we've never had something like this happened before that literally forced everyone in lockstep for a whole year to go online to get their whole life done, work, socialization, everything. But now that it's done, when we look back 20 years from now, the single most significant event of accelerating technology adoption that's ever happened. So, the consequences of that, if you've had traditional business practices that didn't leverage technology, you're going to get left in the dust. So, if anything, you got to get on board with online if you haven't already figured it out.
Josh Itzoe: Great advice, great advice. Where can people go to learn more or connect with you, learn more about Benetic? How can people engage with you guys?
Ray Conley: Obviously, our website is www.benetic.com. So, it's B-E-N-E-T-I-C.com. I always says, it's genetic only with a B. We thought about a tagline of saying, "Benefits are in our DNA," but everyone said that was corny. So, we didn't do that. Benetic.com, you can hit me up on LinkedIn. Ray Conley is my LinkedIn ID. If you Google, "Benetic Ray Conley," I think I usually come up on that.
Josh Itzoe: I'll make sure to put in the show notes access to all of this. So, Ray, this has been a really interesting discussion. I applaud what you guys are trying to do. Anybody that's bringing a tech forward approach to the ERISA space and the 401(k) space, having lived it for nearly 20 years, anything that can be done to help advisors work smarter, work faster, serve their clients better, I'm all for. I think listeners hopefully will get a lot out. Congrats on getting launched. It sounds like the critical mass and the flywheel is starting to spin a little bit. I'm really interested to see where things go for you. So, thank you so much. Thanks for being on the show.
Ray Conley: Josh, thanks so much for having me on. I look forward to connecting again soon.
Josh Itzoe: Absolutely.
Josh Itzoe: Thanks for listening to today's episode with Ray Conley from Benetic. If you'd like more information or to learn more, go to fiduciaryu.com. I've got some great resources there for you, including each episode along with show notes, articles, and free tools. Make sure to sign up on the site, so we can stay connected. I'd love to help you stay in the know about what's happening in the world of corporate retirement plants. If you've got questions you'd like me to answer, topics you'd like me to discuss, guests you think would be a good fit for the show or any other feedback, I'd love to hear from you.
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