They aren’t laughing anymore

Maybe it’s an insecurity of mine, but I always felt and still do that there are many times that I haven’t been taken seriously. There were family situations and professional situations where that came to be and it wasn’t a good outcome for those that didn’t take me seriously.

I have been an ERISA attorney since 1998 when the stock market was booming and that meant that daily valued 401(k) plans were part of that boom. Even when I started out, I was alarmed about revenue sharing because it just didn’t seem right to me that some funds paid them and some didn’t and those that paid revenue sharing to the plan administrator had a better shot to be picked. Plans that just offered index funds were few and far between because they were considered as being more expensive to run because of the lack of revenue sharing payments. I was also amazed that while a plan sponsor had the fiduciary duty to pay only reasonable plan expenses, they had no way of knowing how much their plan providers were charging them unless the plan provider was transparent and prior to 2008, that was few and far between.

When I first heard about litigation concerning revenue sharing, it was a lawsuit against Nationwide Insurance in 2000 and in those days, plan sponsors were the usual victors. Then times changed and court started recognizing participant rights and made it easier for them to sue. With a falling stock market in the early 2000s and the late 2000s, there was an increased call for free disclosure because litigation against plan sponsors were increasing.

About 8 years ago, I was starting to be openly critical about revenue sharing and TPAs being less than transparent. Well, there were a lot of people I knew who laughed at me and that included co-workers at the time. Well, they aren’t laughing anymore. Fee disclosure regulations, more litigation, and more competitive fee pricing have changed the 401(k) plan business for the better.

The point is that change is inevitable and that was fee disclosure was inevitable because of a spotlight shown on 401(k) plans because of the poor savings and investment returns went the stock market went through two major corrections in the past 14 years. There is no business that is stagnant except maybe those in the funeral business and any ideas of change shouldn’t be scoffed at or dismissed.

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Plan Sponsor maybe wise to get a second opinion

If you don’t feel right and you go to the doctor and you get some grim or fantastic news about your health, isn’t it a good call to get a second opinion? Especially with certain types of cancer, speaking to a different doctor may lead to a confirmation of your diagnosis or an alternative that can be a better course of treatment.

Yet when it comes to retirement plans and advice from potential plan provides, plan sponsors never ask for a second opinion. That can be harmful when the potential plan provider is advising something that is against the rules set forth by the Internal Revenue Code and puts the plan sponsor in great harm.

One of my top clients (who is a leading plan fiduciary) advised me that a plan sponsor was being advised by a third parry administrator who also double as insurance salesmen (not a good fit) that it was OK for a plan design that only offered a life insurance benefit to highly compensated employees.  The problem is that there is rule called benefits, rights, and features that bar any benefit, right, or feature that is discriminatory in favor of highly compensated employees. If this plan sponsor doesn’t get a second opinion and buys this magical bean of insurance only for the highly compensated employees, then they maybe in a rude surprise if the plan ever was audited by the Internal Revenue Service.

Whenever a plan sponsor gets an out of the box plan design solution, a second opinion is just always a good idea.

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End of Year Tips for The 401(k) Plan Sponsor

My latest article can be found here.

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USA Today

Proud to have been quoted in USA Today for an article on plan participant concerns with their mutual fund lineup. Please click here for the article.

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The Road to Hell is Paved with Good Intentions

One of my favorite sayings is that “the road to hell is paved with good intentions.” To me, it means that good intentions could have some bad results.

A big part of my practice has been helping advisors and brokers get business, either through serving as counsel or trying to partner up and get clients together.

A few years back, I met a broker who really wanted to put a name out for himself and he really liked my discussions regarding plan expenses, good third party administrators (TPAs), and overall fiduciary responsibility issues.

This broker was prospecting a former client of mine when I was the head attorney at a New York third party administration firm.  I was giving him some insight on issues that probably would help him get that client.

Well apparently, some of that insight helped as he got the client. The broker told me that the client was changing plan administrators, changing to a payroll provider TPA that I’m not too fond of because this payroll provider works well with this broker’s platform.

Clearly, some of my discussions didn’t rub off too well as one of my issues is any broker or financial advisor having the plan sponsor change providers, just so they could get paid easier. Whether this former client of mine ends up in a worse situation that where they were before is up for debate, but somehow some of my work led to what I think is an unfavorable result.

Sometimes, the best of intentions lead to great results and sometimes it doesn’t.

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Advisors Advantage

My newsletter geared towards retirement plan professionals can be found here.

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Pearls of “Wisdom” for 401(k) Plan Providers

My latest article can be found here.

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The Need to Vett Plan Providers

The times that I have had trouble with a contractor or other type of business provider is when I didn’t bother to check their reviews.


Of course had I known the waterproofing company that I used for my downstairs a few years before Hurricane Sandy had 28 complaints with the County Department of Consumer Affairs, I wouldn’t have been so surprised how bad their services was.  I probably could have avoided having hired them, dealing with the issues when their French drain wasn’t working probably, and going through the whole trouble of filing a claim through the County.


If I hire a bad contractor for my home or a bad accountant or bad attorney, it’s my cross to bear. Plan sponsors don’t have it that easy. If they choose a plan provider, they will be on the hook for liability because they are a plan fiduciary, which means they have a higher duty of care, than if they were just hiring a provider for themselves.

Plan sponsor need to properly vett their potential plan providers and that means a little more than taking the plan providers’ word for it that they are good.

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Stuff That Prospective 401(k) Plan Providers Tell You That’s True

My latest article can be found here.

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The Rosenbaum Law Firm Review

My latest newsletter can be found here.

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