If you work at a regular job, perhaps in a corporate environment, your retirement savings is probably easy to manage. You set a % of your salary aside each paycheck to go into the company’s 401(k) plan, and it’s pretty much hands off from there (at least, for awhile).
As an entrepreneur, small business owner, or freelancer, this can get a bit more tricky. It may not be clear what your options are, and if you’re extremely busy, you might neglect to ever figure it out. And when that happens, you’re setting yourself up for failure in retirement. Even if you do put money aside for retirement, you may be “leaving money on the table” by not approaching it with the right strategy.
Today’s interview features Chad Parks, founder of The Online 401(k). He has a unique online business that helps small business owners save for retirement. In an industry where people can be greedy and unethical, Chad’s business aims to take the mystery out of saving for retirement. In this interview, we discuss how his business started back in 1999, to where it’s gotten to today – helping people save over $1.3 billion for retirement.
This is a pretty inspiring interview, with a lot of important information for every entrepreneur.
Chad, it looks like you’ve built a unique business with The Online 401(k). Retirement savings is something that I know small business owners (and “one man operations”) struggle with; Many, I’m sure, aren’t even putting any money away in retirement accounts because it’s not convenient (like it is when you’re an employee of a larger company with an easy-to-set-up 401(k) program).
Tell us a bit about your background and journey. What led to the creation of The Online 401(k)? How has the business changed over the years? We’d love to read about how you built the company and brought it to where it’s at today.
From the moment I popped out to say hello to the world – I was looking for a way to improve upon it, build a business model around it, and revolutionize how it’s done – no matter what “it” is. I’ve had multiple businesses in my time, and they all were innovative in their own right. But this venture, this one – this idea that has blossomed into my passion project, has blown even my idea of what it could be, out of the water.
I founded The Online 401(k), back in 1999 with the higher purpose to help people overcome the fear of saving for their retirement. Our industry is rife with jerks in pressed, stiff suits that like to rob people’s futures, because you don’t read the fine print in your plan, and couldn’t find the fine print even if you tried.
The company took off and really kicked ass with the small business audience, the ones that the big institutions wouldn’t and still won’t touch with a ten-foot cattle prod (because they are small change). We were solving a problem, which is the same problem we are still trying to solve today. American workers are $6.6 trillion dollars short of what they need to retire. Nearly half of American workers have less than $10,000 in savings. Social security is projected to be insolvent by 2033.
There is, in fact, a looming retirement crisis in America!
Our business is built on educating the masses, on demystifying the subject of retirement. We are seen as the black sheep of our industry and the small business savior. This speaks to my higher purpose of being profits with a conscience. That’s the foundation of our business, and one that is rock steady.
What do you consider to be your greatest success (or successes) so far with your business?
Well, for one, we’re still here! Think about the catastrophes that presented themselves from the moment we opened our doors: The dot-com bubble burst of 2000, September 11th, then Enron scandal which began the downfall of the pension system as we know it—the stock market crash of 2002, and then the sub-prime housing crisis of 2007 and then boom the recession again in 2008. Through all of that (and more) we continued to thrive as a business.
Year-over-year we have gone from $1.2MM in revenue in 2003 to what is forecast to be $12MM in 2014. That’s pretty impressive – more impressive is that we are looking at more than doubling that number at the end of 2016.
So far, we’ve helped people save $1.3 billion towards retirement. We have a long way to go in order to make a dent in that $6.6 trillion, but hey, we’re working on it and having a good time in the process!
What have been some of the greatest challenges you’ve encountered with The Online 401(k)? What were the lessons learned from overcoming these challenges?
One day back in 2010, I walked into my company and realized it was no longer my company. The people I had in “management” were MONSTERS. They treated our employees like robots, not humans, and happiness existed nowhere except at the top, and maybe not even there.
If you met me you would realize just how ridiculous that is. It’s one of those slow things that happen over time. It took a lot less time to undo that mess. People have a way of weeding themselves out when you suddenly walk in and reorganize everything on the basis of happiness and love.
People (not to be confused with robots) spend more time at work than they do with their own families – why the hell would you make that miserable for them? So the monsters that didn’t weed themselves out – I showed the door.
And from there, everything changed. We’re not just a 401(k) company. We are a group of bad asses with a ton of new blood – creative go-getters that are helping people save for their future, and the sky’s the limit to what we can do. And I mean that quite literally.
Getting the word out about a website like this must’ve been a massive undertaking. How did you go about promoting the site and acquiring new customers?
The easy answer is: I don’t remember. Ha! Actually, over time we relied on partnerships, good old fashion in your face relationship building, online advertising – pay-per-click, that sort of thing. We also used PR for about a year, and that was clearly a good investment.
I think it was Bill Gates who said, “If I had $2, I would spend $1 on PR.” It certainly helped us during that time, but we needed to be conscious of the economic climate and our budget. We cut that line item in 2007 and picked it up again when there was a clear strategy for doing so. There was a big wake up call that your home is not your retirement (thanks, 2008!), which caused the focus to shift back to good old-fashioned savings.
We needed to take the lead on this topic along with the hell storm of fee-disclosure. So we added it back in, while focusing on SEO, organic search, social media, etc.
Later this year, we’ll be hitting the advertising hard, as we continue to roll out new products to round out our lineup. We aren’t going to be just retirement – we’re going to be the whole benefits stack.
I’m sure many readers of this site (The Daily Interview) operate their own independent businesses, and may not understand why they should look into setting up a 401(k) for their business when they can easily contribute to an IRA on their own. Many may not even be thinking about retirement plans at all.
Can you provide us with a little bit of education on why this is something that small business owners and freelancers need to pay attention to? Why is The Online 401(k) a great solution?
Here’s something that small business people often don’t think about – actually, three things. One, attracting and retaining top talent. Two, the tax benefits of having a plan – they practically pay for themselves, so you can pay the IRS or you can pay yourself. And three – this is the big Kahuna – you are helping to solve for the looming retirement crisis. If you love your employees and want to give them a great gift, give them the gift of a happy future that is not reliant solely on a Social Security system that we don’t know is going to be there.
Plus, we are good to our people, our family – that includes our employees and yours. Philosophically and in practice, we are the good guys and gals. We are a flat-fee-for-service operation, that means that you can have one dollar or one million dollars and we get paid the exact same. That’s an unheard of rarity in our industry.
Also, we’re online! Forget paper pushing, we’ve got everything you need on a friendly dashboard. Plus, we have real humans to help support your business – in fact, you get your own team to help you navigate the process. Not only are they experts, they’re your personal future advocates. No jargon, just straight talk from happy people.
Finally, when I said we had a higher purpose, I wasn’t kidding. Back in 2012, we embarked on a journey to tell the great and real American story. Now a full-length feature documentary, Broken Eggs features a generational tale of people who did it right and lost it all, people who can’t do it at all, and the policy makers and shakers from DC who are trying to solve for the retirement crisis.
This is not an advertisement for our company. This is a project that was funded by The Online 401(k), and we certainly take credit for the endeavor, but it’s a real and fair picture on the state we’re in and how to fix it.
What other retirement company can claim all that? Just this one.
Looking generally at becoming a successful entrepreneur: If you had to take your best advice or inspirational thought and put it into one sentence or phrase, what would that be?
If there is one thing I can impart to you – it is this:
Don’t be afraid to leap – when your gut is screaming at you to alter your course, even if it means that you will face difficult waters – do it.
Trust in the science of gut reasoning!
Because I have worked so hard to keep my company alive and relevant, and to keep it evolving with evolving times, which includes imparting management by freedom with accountability into our organization, I was able to follow my gut: “Let’s create a documentary!”
That idea exploded in 15 minutes.
It launched into action in 4 months.
And it fully finished in 20 months.
There’s a wonderful quote by Richard Bach:
Argue for your limitations and sure enough they’re yours.
I don’t believe in limitations. Those are man made ideas. You tell me a problem – even if it involves gravity, and I will assemble a team that can solve for that problem. We can be whatever we want, and we can create beyond where we are now. Screw limitations.
We are not machines producing for the man, we are humans producing for the good of humankind. What’s your higher purpose? What’s your dream?
Trust your gut and go; don’t let fear of the unknown stop you. [Click here to tweet this]
What are your favorite online resources – ones you can’t live without?
A lot of my favorite resources come in the offline world – meeting people, who inspire, motivate and support me. In particular, two worth looking into are Entrepreneur’s Organization (EO), and Singularity University and anything Peter Diamandis is is involved with! Beyond that, with a search engine and a mobile phone, I can rule the world.
Finally, where can people find you online?
The Online 401(k): www.theonline401k.com
Broken Eggs: www.brokeneggsfilm.com
Thanks so much for taking the time to explain your business and share your story with us today, Chad.
What did you think about this interview with Chad? Have you given much thought to your retirement planning, especially if you’re an entrepreneur/small business owner? Leave a comment below!
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