The Appleton Group

w w w . i n s i g h t o n b u s i n e s s . c o m A p r i l 2 0 1 6 • I NSIGH T | 27 "It's no skin off Vanguard's nose if their funds go down in value," Scheffler says, "but it makes a big difference if the managers of these participant dollars is in Wisconsin because they are our neighbors. ey eat at the same restaurants we do, cheer for the same sports teams, their kids go to the same schools. ere's accountability that just doesn't take place when you have managers that are thousands of miles away." It's all part of his philosophy on striving for a sustainable economy, a passion that Scheffler feels so strongly about he launched the Foundation for Sustainable Wisconsin in 2012 (see accompanying story). "One of the key tenants of a sustainable economy is what I call 'eating our own cooking,'" he says. "If we can buy services from other companies either locally or in-state, it benefits the state and local economy tremendously. Everybody says buy locally and a lot of people think small scale. Wisconsin Select is about the things we can do for ourselves, as a state, to feed our own economy." "Helping Wisconsin shouldn't be the top priority," he says. "e top priority should be offering an outstanding retirement plan experience to your employees. I know from experience we can accomplish that in spades by aligning all of these service providers that are right in state to do a much better job than Wall Street. "e only people who said it's a terrible idea are Wall Street firms, because they're the ones who will see the landscape shi," Scheffler adds. "But I don't think anybody will shed a tear about that!" Scheffler says there's a common belief that Wisconsin oen can't compete on cost alone, but that it can compete on value. His goal is to offer a quality, competitive plan, not "the lowest cost 401(k) on the planet," because that could lead to fiduciary lapses, inconsistencies in reporting or hidden forms of revenue. Peter Mutschler, director of trading and co-portfolio manager at e Appleton Group, manages the firm's portfolios and spends a lot of time trading. He points out that fees and added costs are oen embedded in investments, so on the surface a fund might appear cheaper but the net is a different story. Further, "If it's cheap and not a great performer, what are you getting?" Because the cost of living and the salaries for fund managers are lower in Wisconsin, e Appleton Group can pass those savings on to clients. A fund manager in New York City may make $150,000 while in Wisconsin a comparable position may pay $50,000, for example. Not to mention, he adds, a large company such as Vanguard spends enormous amounts on advertising and marketing. (Scheffler points out that during the Great Recession, Vanguard funds dropped by about 40 percent, while individual clients of Appleton Group saw their portfolios dip by only single digits. e average Wall Street bonus recently was $146,000; that money comes out of plan fees.) "It turns out the cost for Wisconsin Select isn't too high — the cost is actually just a little bit less, so it's very competitive. If you look at doing more things locally, in a lot of cases you save a lot of money." Scheffler estimates he will have spent about $100,000 to launch Wisconsin Select. He's proud that it has "not cost one dime" of taxpayer money. e Appleton Group will receive one-tenth of 1 percent (0.001 or $1,000 on $1 million) on the assets it oversees for Wisconsin Select. Scheffler has not projected expectations for the program. He calculates that based on some $300 billion in retirement fund assets statewide, "If we are one-three- hundredths successful," overseeing $1 billion through Wisconsin Select, "that would be phenomenal." He does hope that plenty of people will find the idea a no-brainer. C O U R T E S Y T H E A P P L E T O N G R O U P iSectors Convergence Investment Partners AMP Wealth Management Heartland Funds Timpani Nicholas Funds Artisan Partners Baird Funds Ginkgo Multi-Strategy Fund Capital Innovations Milwaukee Institutional Asset Management Cortina Funds Reinhart Partners Inc. Thompson Investment Management Inc. ETF Model Solutions Dana Investment Advisors Broadview Advisors Plumb Funds Wells Fargo Asset Management Madison Investments Retirement fund managers involved in Wisconsin Select: Peter Mutschler

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