Advising Advisors on ESG Processes with Bonnie Triechel

[00:00:00] Qayyum ("Q"): Welcome. Bonnie. I'm really excited to have you here today. You have a really awesome background, and I might push you this in the way I say it, but I believe you started off in law and ended up in the financial services space. And I feel like your tagline is you're the adviser to the advisers, and I know you do a lot of different things, some stuff in plan management, ERISA, and all of those sort of governance issues. And then you also focus on ESG. I'm really excited to have you here today. Last time we talked, we had an awesome conversation. And obviously this space is changing. It's increasing. And I just wanted to welcome you here today, and we're looking forward to having a conversation with you.

[00:00:37] Bonnie: Thank you so much for having me. I'm excited to be here and talk a little bit about my background and how I work with advisors. As you mentioned, I like that term, the advisor to the advisors. So excited to share a little bit more about that and how that translates not only to retirement plan issues, but also specifically to ESG investing.

[00:00:56] Qayyum ("Q"): Awesome. Why don't we start there? So who the heck are you, Bonnie?

[00:01:00] Bonnie: Well, again, my name is Bonnie TRICOL. I own a consulting firm called Endeavor Retirement. And as you pointed out, my background, I started out as an ERISA attorney. And so I know a really specific issue of the law, which is the intersection of ERISA and the tax code. So if you ask me to go into a courtroom today, I would be lost. So I was an ERISA attorney for a while and then transitioned somewhat nontraditionally to being an advisor. So I was an investment advisor for a while and had a great opportunity to take what I learned in the practice of law and really put it into practical application. And that was a really great experience, working directly with plan sponsors or rather with employers as they offered 401K plans, four or three B plans to their participants or rather employees. And so after that, I started my own consulting firm and put the two experiences together. So blended the legal work with the work of an advisor. And now, as you mentioned, have a practice consulting firm that is being the adviser to advisers. I also work with some institutional groups as well. But primarily my work is being an advisor to advisers as they help really employers to create better retirement plans that can help individuals save more for a dignified retirement.

[00:02:27] Qayyum ("Q"): That's awesome. And Endeavor Retirement that I think is growing fast, and it's in a space that's needed. And I think a lot of the work there is complicated and opaque. So I think it's a valuable service written in. So what kind of prompted the shift from law into finance? Obviously, it must be kind of a smooth transition because they were dealing with similar things. You can see that trajectory, but how did that shift sort of happen?

[00:02:55] Bonnie: Great question. So one of the opportunities well, one thing I'll say is that I haven't met anyone yet who woke up and said, hey, I'm going to grow up and work with retirement plans. So it's a really small yet large space, and I think most people fall into it. But what I would say is most people in the space find it to be very rewarding. So when I was practicing law, I started in the general financial services space defending broker dealers and investment advisers, started to get more specific in the ERISA space with many of the same clients, and then transition to being an adviser. I ran into someone that I was actually trying to sell services to, and he brought up the idea of, hey, you would be good at being an advisor. And I thought about it for a while and realized that it would really give me a lot more breadth and depth to be an advisor for some period of time, to take what I learned as an attorney and get more practical with it, really actually get to work with the people that my end advice was impacting. And so it was a great opportunity to actually put my legal advice to work with that same knowledge and actually get to work directly with those plan sponsors or employers and really see the participants that I was impacting as an attorney, I didn't feel like I was getting in the weeds enough to actually see the day to day of that work. And so that was a really great transition for me.

[00:04:30] Qayyum ("Q"): That's awesome, man. You're the first person I've heard of that sort of story of you might be doing something, but like, at arm's length, and then you can actually get in, talk to the clients day to day, be involved with them. And that's a bit of a different feeling. It's quite rewarding because you're in there every single day. That's awesome. So what is the work that you do at Endeavor Retirement look like on a day to day basis? Like, who is your typical client? Is it all advisors or advisors trying to do something specific and what's kind of the scope of work that you do?

[00:05:06] Bonnie: Yeah, great question. So one of the reasons I started Endeavor is that I feel like the retirement plan industry is changing, and we have an opportunity to embrace that change and change with it. And what I mean by that is a couple of things. We have an opportunity to continue to bring the next generation of advisors into the retirement plan field. So part of my practice is making sure that we're making the work of a retirement plan advisor accessible to everyone. So if you look at the demographics of retirement plan advisors today, it's a pretty singular demographic. So part of my work is making sure that anyone who wants to be a retirement plan advisor has access and ability to do so. The second part of that is making sure that we really look at the retirement plan industry through a new lens. So we don't just do it this way because it's always been done that way for the last X amount of years. But we really rethink and rework how is retirement plan business done today? And so my work is making it easier for retirement plan advisors. When I keep saying retirement plan advisor, these are individuals who not on the retail or high net worth side. But if you are working with a 401K plan or a 403 B plan for 457 401 A, those types of plans employer sponsored, if you're working with those types of plans to offer a retirement plan, I can help with all of the I'm going to call it governance framework for everything from how to prudently, select and monitor a service provider, how to prudently, select and monitor investments, all of that structure. You need to make sure that the client, or rather the plan sponsor is complying with the rules and regulations. I can help with all of that framework, and I can help you rethink that in a way that it doesn't have to be done the same way it was done before. We can rethink it and reengineer it in a way that helps you create retirement plans of the future that really help Americans retire with dignity. And that's the work that I'm doing with advisors on a day to day basis. So I have the simplest kind of plug and play solutions all the way up to custom consulting with different advisory firms across the country.

[00:07:29] Qayyum ("Q"): That's awesome. And I love the phrase retire with dignity. Right. That's a core sort of North Star to align both sides. And I imagine all the governance frameworks, it's not exactly the work that the retirement spend their time on a day to day basis. Right. So that's great. And I'm sure we could do like 5 hours just under and all the different plans, which I kind of claim to know too much about. One line in the CFA program when I did it a little while ago. But that's awesome. So let's just gears a bit. So I know within retirement, you're also trying to or have started to have a bit more of an eg often as well. Right. And I think this kind of fits into that next generation of advisors and this generation of transfer of wealth and this values alignment piece. So maybe talk a little bit more about that. And what prompted you to start that sort of side of the consulting business, and what does that look like there?

[00:08:24] Bonnie: Yes, great question. So I think thinking about ESG again, if we look at how many advisers have traditionally viewed what is ESG historically and helping them to rethink that and what that looks like on a go forward as part of their practice, that's all part of my work to one, bring new advisers into the fold, embrace diversity, equity and inclusion, and also really think in a forward thinking way about what does it look like to get people to start savings, start saving more, and to be able to again, back to that phrase like retire with dignity, what does that look like? And I think ESG is a big part of that. So when I look at my practice, how can we teach the teachers about ESG and what that means today? And so that starts with, hey, this isn't divesting like it was ten years ago. This isn't just for hippies on the West Coast or in Portland, Oregon, where I live. This is a new concept, concepts like ESG integration, the concepts that just because it isn't branded on a mutual fund XYZ sustainable bond or something of that nature doesn't mean it's not ESG or looking at ESG factors. So part of bringing it into my practice, I had an opportunity to write a training program for the National Association of Plan Advisors. And that gave me kind of my first opportunity to really start training advisors about what is ESG today and how can you just start to have a kind of plug and play a way to train your staff internally at an RIA and get comfortable with what is this new language? How can you talk to plan sponsors about it? How can you talk to participants about it? And so that was my kind of entree into it and then being able to bring it back into my own practice. I continue to train advisers. A lot of my work is just starting the dialogue with advisors and then starting to get them comfortable with the language and training. The next piece of that is then giving them the tools and resources to implement it in their practice. So I guess, one, I'm passionate about it. But two, it also is just a big part of training. What do investments look like on a go forward basis? And what is the future of mutual fund companies and fun companies going forward?

[00:10:58] Qayyum ("Q"): That's awesome. And there's so much to follow there. One quick point I want to make as well is I couldn't Echo more with the concept that just because it doesn't have EC on the label or it's not a green fund or SDG bond does not mean it's not ESG, right. Like, the scope is actually so wide and with materiality and all these different factors, every company can fit the bill right, or every industry can fit the bill. And it's really about looking into that. And I think that way you also don't constrain people's investment universe as much by just excluding fossil fuels or et cetera, et cetera. I think we're going to see that shift in the world. But what I would love to ask you is, so you mentioned how advisors are looking at EUC today or how you need to look at EUC today versus what they used to look like. So how do you feel that's changed? How do they use to look at usage before and how do they look at it today? How should they look at it today and what's in it for them?

[00:11:59] Bonnie: Yeah. And again, there's a lot to unpack there as well. Right. So I think one of the big, I'm going to say hurdles that's been coming up over the past several years is the regulatory landscape. Right. So when we ask the question, how do advisors look at this, what's in it for them? I think a couple of things we want to think about. One, I'll start with the what's in it for them, because I think that's the most important part from an advisor's perspective. And then I think that's also going to get us to the what's in it for them, for employers or plan sponsors going forward. The what's in it for them is for an advisor. I think there's still a long ways to go as it relates to helping people understand what is the ESG of today. I think investment management firms are there. They're far ahead in the space of ESG. Advisors are starting to catch up, and so are employers. But I think for advisors, if you don't understand and you're not talking about it or you're not prepared to talk about it, you don't necessarily have to love it or embrace it or be fully there yet, but you've got to at least be able to have that conversation because it will help you, I think, to win business in some instances, if you can at least have the dialogue and your competitors can't, particularly if you're working with participants in the plan, there's a lot of data that suggests that participants are demanding ESG. And again, participants might not understand ESG in quite the sense that we want them to yet. They might not understand the concept of ESG integration yet, but they're seeing the headlines. Participants want to put their values first. We've seen that a lot over the last couple of years. And so what Senate for the advisor is, one, it's the opportunity to strengthen relationships with the employer or the C suite at the employer, sometimes those decision makers. And two, it's the opportunity to strengthen those relationships with participants in the plan that they might be working with. And so I think you don't have to have it fully baked into your practice yet. But for an advisor sitting here at the end of 2021, I think you've got to at least be able to have that dialogue. And I would argue the same. Even for an employer we're seeing it's such a competitive job market. And so I think some employers are going to see that by being a little bit forward thinking on some of these things. If they can at least have the dialogue that our 401K plan is looking at this, we do align our mission with our investments. And of course, again, I want to come back to the regulatory landscape. Fiduciary responsibility comes first. I'm not suggesting it doesn't, but if there is some alignment there and some recognition of that, I think those dialogues are going to be useful in these competitive markets.

[00:14:57] Qayyum ("Q"): Totally. That's incredible. And I think it's so interesting because I feel like ESC is quite multidimensional. Right. Because you're talking about the plans that employers are having and you're talking about the conversation the buyers are having with their clients. And it also extends to employees. Sorry, my dog is in the corner. There.

[00:15:15] Bonnie: No, I love dogs. So that's perfect. [00:15:19] Qayyum ("Q"): And also the conversations that employers have with their employees, even just for recruitment. Right. Like the values alignment. And I think you mentioned some are not caught up to maybe where we'd like them to be from EUC perspective. But I love all the new tools that are coming out are giving people the art of the possible. Like, oh, I never knew I could have something that lines exactly with my values. Right. So that's really interesting. So what do those conversations need to look like from an advisor going forward? And how can they not give away all the secrets, but how can they begin to have better conversations? Because I imagine this is going to lead to better relationships, a bigger book of business. And like you said, even some of our clients to the issue analytics are advisors. So we see them. There's a few that are very Proactive in this, and it's a whole new market to see. So how can they go about that?

[00:16:16] Bonnie: Yeah, that's a great question. I think one big remark that I would make is that coming back to something I said earlier, I mentioned that historically the regulatory landscape has been an impediment to folks. I was on a call not too long ago with an advisor that I feel is a very intelligent advisor, and he used the term ESG is still illegal at this point. That is a very common misconception is that ESG is illegal. And I think a lot of our employers think that, too, because they've seen these headlines from prior administrations that ESG, you can't have ESG or you're not allowed to or you're going to get sued if you have ESG. And so I think what is really beneficial for plans is that we saw the Biden administration issued their proposed regulations that we believe will become final regulations early next year and early 2022. And of course, I'm sure there'll be some tweaks to these regulations, but it was very I'm going to call it pro ESG.

[00:17:34] Qayyum ("Q"): Right.

[00:17:34] Bonnie: So what I mean by that is it had language that said it got away from that chilling effect of the prior administration. And that was really one of the things that they said in the preamble or like the opening text prior to the actual proposed regulation itself was that was part of the purpose of the regulation was to get away from that notion that you couldn't have ESG, because this regulation actually says that a Fiduciary may be required to consider ESG factors. And so I think that really sets a very different tone that can help both advisors and employers. So when we ask what should an advisor be saying? How should they start the conversation? I think there's a couple of elements of that. One is let's start by helping people understand what is Es and G. So you've got to just start with what is it baseline, right. Give some basic examples. And then second, we've got to give some examples of whose role is it to do what. So we don't want an employer to think that it's their role to look at an environmental factor and to determine the materiality themselves. In a 401K plan, for example, that's what the investment management firm is doing. It's really just up to generally a Fiduciary adviser or consultant to then evaluate that for the investment manager and the plan sponsor or employer. They're pretty far removed from that actual evaluation of the factor itself or the cumulative group of factors. And the materiality they're really looking at was the process followed. And so I think that can take away some of that real angst about how to implement it. So I think, again, let's explain what Esch and G are. Let's then explain whose role and responsibility is what, and then let's really emphasize what do the regulations say and how does that fit into your Fiduciary responsibility under ERISA? And so I think those are three components. If I were kind of putting together communication campaign, I'd want to make sure I was talking to plan sponsors about that. I think the fourth part that you'd really want to consider would be how does this impact your employees and how will it impact their savings? Because again, that's what we're really trying to get out is how does it impact their savings? And then how does it increase return or reduce risk in that portfolio over the long term? And so I think that's really helpful as well for the employer to understand what that actually does overall.

[00:20:20] Qayyum ("Q"): That's awesome. And I think that's a bit of a different shift in thinking that can really help because one of my old roles was managing advisors in Edmonton, actually. And so when we're describing complicated investment strategies and every firm has this crazy strategies, forget, right. And their job is not to go in and do that strategy, but to understand, like you said, with the process and whose responsibility is who's. I think employers and plans is also analogous to advisers dealing with retail clients. And I think people can definitely get confused with it's a very confusing industry. There's a million different frameworks, million different terminologies. There's things that are happening in a fluid base. But to take a step back and be like, okay, these people are falling a very stringent process to get this in. And here are the factors that are coming in, and being able to explain it at that higher level definitely takes the load off to them actually dealing with their clients or their employees and things like that. So I think that's really good shifts in thinking. Very well said on the phrase wrapping up here. So if I was just to ask you, let's go a couple of years in the future, what does this sort of industry look like and what are the most successful advisors doing in this space?

[00:21:46] Bonnie: Yeah, that's a great question. I think the most successful advisers are really focused on a couple of things. I would say. We didn't talk about this during this podcast, but one, the most successful advisors are focused on how we are getting participants to a better outcome, and they're actually measuring those results. So the most successful advisers are finding ways to really embrace data and technology to measure results. Right now, we're so focused on just getting people to save, but we're not looking at actual measurable results. So successful advisors will measure the results of participants and be reporting those back in really concrete ways to the plan sponsors or to the employers. Two, we will have we will have advisors who aren't so focused on I'm going to call it monetizing of participants. Right now, there's a lot of focus in this space on how can we monetize the participants and how can we use participant data and monetize that, be it through managed accounts or otherwise. And I think my perception, which might not be well received, is that there are other ways to really be a fiduciary first advisor and make a lot of money without monetizing participants. I think advisors, third, who are really successful will very successfully use technology and a lot of efficiencies. So again, part of my practice is creating a lot of efficiencies and scale through the service model. And so it's all about having the right tech stack, the right efficiencies. And fourth, I would say advisers who are very forward thinking things like they embrace ESG. I think we're going to see different things coming up, like with crypto and that sort of thing. You can love it or hate it, but you've got to at least be able to have those dialogues, embrace it, and keep moving forward because technology is happening very fast and the world is changing. So those advisors who can really become very, very efficient, focus on participant outcomes and measure it and embrace data and technology, they're going to do very well. And I think great example, your company the way you have a very low cost, efficient, technology forward way to look at ESG data. That's a great tool for advisers. And I think those advisors who can find those tools and resources and integrate them into their technology stack, they're going to be very successful.

[00:24:23] Qayyum ("Q"): That's awesome. And thank you for the plug. We really appreciate it. But yeah, focus on client outcomes, being forward thinking on the technical side and on the trend side and I think obviously you help them with the stack in all shapes and sizes and that can also help them scale their business as well.

[00:24:41] Bonnie: Right.

[00:24:42] Qayyum ("Q"): Which is awesome. That was super informative, Bonnie. That's awesome. I feel like any advisor listens to this has will want your number to get in contact and I think they'll get a lot of value from this conversation. I think we can leave it there for today but what I wanted you to maybe talk about is where can people find you and how can they get in contact with you?

[00:25:05] Bonnie: Great. Well, thank you again for having me. It was really nice to connect again. I enjoyed our prior conversation and really enjoyed learning about your company as well. You're doing great things again. I appreciate anyone who's listening in today to reach out. I can be reached at Bonnie Bonnie at Endeavor retirement.com or there's ways to go to the website, sign up for the newsletter and that's just at Endeavor retirement.com.

[00:25:35] Qayyum ("Q"): Awesome. And we'll put all those links in the transcript when we post this onto our blog. Awesome. Thanks so much, Bunny. That was really good. That was awesome. I'll stop the recording here.

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