HUB enters the retirement plan space and it makes sense

CVS just announced they are buying Aetna and a sign of further consolidation in the health care industry. We see consolidation in the retirement plan business so it’s not shocking to see a leading insurance broker decided to enter the retirement plan space.

Hub International, a leading insurance broker has acquired the assets of Summit Financial Corporation and Summit Financial Insurance Agency, Inc. (Summit).  Summit provides plan design, consulting, actuarial, administration and investment-related services for both qualified and non-qualified employer-sponsored retirement plans, as well as, similar services for employee benefit plans.

When you’re a leading insurance broker with so many relationships with businesses, getting into the retirement place space might be a good idea s long as you’re able to cross-sell. Cross-selling has always been a great idea in the retirement plan business, from personal experience, it’s harder to make it work than you think.

Posted in Retirement Plans | Leave a comment

Another TPA joins Alliance Benefits Group

One of the great supermarkets in my area is ShopRite and it’s one of the unique successes in the supermarket business. ShopRite is a co-operative consisting of individual supermarket owners who band together for purchasing power and marketing purposes.

So what’s good in the supermarket can be good for the third party administration (TPA). I was introduced to Alliance Benefits Group (ABG) by John Blossom of Alliance Benefits Group of Illinois who is a client of mine and Alliance Benefits Group sponsored me at their booth at the NAPA event in Las Vegas last March. Alliance Benefit Group has grown again as Jocelyn Pension Consulting, LLC, with offices in San Rafael, CA and Boulder, CO, became the latest retirement plan recordkeeping and consulting firm to become a licensee and join the ABG network.

Being in the TPA business is rough, so it makes sense that some good TPAs have decided to band together for the reasons that any cooperative business is created.

Posted in Retirement Plans | Leave a comment

Retirement Plan Sponsors Can’t Afford To Be Cheap

My latest article for JDSupra.com can be found here.

Posted in Retirement Plans | Leave a comment

Don’t give it away for free

Many years ago, I did income tax returns for a flat fee. It didn’t become the success that I thought it would be, but it was worth a try. I had the ProSeries tax software, which is the professional version of TurboTax. I had a family member who wanted me to do her boyfriend’s tax return for free and I balked. Of course, in my family, I was attacked for it even thought I offered them to use the software, but mark the return as self-prepared. It was one of my stubborn Larry David like Curb Your Enthusiasm moments, but I was adamant that I wouldn’t do it for free because I believe that if you do something for free, the other side assumes what you gave them has no value.

If you work, you deserve to be compensated. Sales pitches and meetings are part of the cost of doing business, but offering services to potential clients for free that you ordinarily charge is a mistake. I do a plan review for plan sponsors called the Retirement Plan Tune-Up for $750. About 5-6 years ago, I had a financial advisor from Pennsylvania who was interested in the review and asked for a sample done for a potential client as a test case for this potential partnership with his firm. Let’s just say that nothing came out of the partnership and this advisor got a free review of their plan. Not everyone will exploit your willingness to do something on the house, but you need to show people that there is a value to the work you do. If people see that you’re giving away something that you would charge for free, then they think the value of what they gave you is zero.

Get compensated at all times for the work you get compensated for because if you let yourself get exploited, you will.

Posted in Retirement Plans | Leave a comment

The Problem With Multiple Loans

When drafting new 401(k) plans, I always recommend allowing for a loan provision. I know there are quite a few plan providers who don’t want any provisions that allow “leakage” of retirement assets, but I believe that when times are tough, plan participants should have access through a loan that they can repay.

As far as loans go, I only want one loan outstanding at a time. If participants want a loan, fine, but let’s just let have one crack at it. A 401(k) plan shouldn’t turn into a payday loan type operation. However, the real reason that I’m against multiple loans is the difficulty in recordkeeping. Recordkeeping multiple plan loans can be an absolute headache especially when it comes to recordkeeping repayments. I’ve seen too many situations where errors in recordkeeping let one or more loans go into default and becoming a deemed distribution or a prohibited transaction when not deal with correctly.

If you ask for trouble, you’ll get it and I think that plan sponsors offering multiple plan loans are asking for it by allowing multiple loans that can only lead to a headache.

Posted in Retirement Plans | Leave a comment

Retirement Plan Advisors Advantage

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

Posted in Retirement Plans | Leave a comment

The Rosenbaum Law Firm Review

My latest newsletter can be found here.

Posted in Retirement Plans | Leave a comment

DOL kicks fiduciary rule enforcement until 2019

As expected, the Department of Labor (DOL) has delayed enforcement of the main provisions of the new fiduciary rule. Provisions covering exemptions for best-interest contracts and principal transactions will now go into effect July 1, 2019, along with some amendments to prohibited transaction exemptions. I won’t be surprised it gets delayed further as we get closer to 2019, but mid-term elections may have an effect especially if the Democrats regain control of one or both houses of Congress.

I feel the delay is futile as broker-dealers spent millions and millions of dollars in legal and administrative fees to comply with the new rule. A delay doesn’t help as they have spent the last couple of years in cutting back business to comply. The fiduciary standard is a standard that the broker-dealers had already accepted and the marketplace had accepted. You can’t just simply roll back the clock or run it out. I believe many plan sponsors have accepted the change as well and that there is a demand for it.

This fiduciary standard reminds me of Kosher meat and I will explain the analogy. When I grew up Kosher meat was Kosher meat and everyone would gladly eat a Hebrew National Hot Dog if they kept Kosher. Then about 30 years ago, there was a movement in the Orthodox community to eat meat that was Glatt Kosher. What’s Glatt Kosher? It supposedly means that Glatt Kosher is a higher standard because they won’t accept certain blemishes on animals that would suitably be Kosher such as adhesions to a cow’s lungs. It doesn’t mean that regular Kosher meat isn’t Kosher, it just means that Glatt Kosher is a higher standard of supervision. What eventually happened is that Orthodox Jews would only eat Glatt Kosher and would stay away from meat products that were just simply Kosher including Hebrew National Hot Dogs who adhere to a higher authority, but not to an authority that Orthodox Jews would be comfortable with.

The point here is now that brokers effectively adhere to a fiduciary standard, plan sponsors seem accepting of it. A rollback or delay in a fiduciary standard isn’t going to help broker-dealers when the marketplace knows the standard and wants it. A delay isn’t helping anyone here especially the DOL who look foolish for taking so long to formulate a new rule and are now dragging their feet at the behest of the White House.

A fiduciary standard that is in effect for all retirement plan financial advisors is inevitable and you can’t delay the inevitable. As I have stated in the past, the broker-dealers need to accept the new rule rather than wait for a rule that is more restrictive on business later (when there is a change in the White House and/or Congress).

Posted in Retirement Plans | Leave a comment

How A Plan Provider Should Handle Employees

My latest article for JDSupra.com can be found here.

Posted in Retirement Plans | Leave a comment

Plan Features And Services Aren’t A Fit For Every Plan Sponsor

My latest article for JDSupra.com can be found here.

Posted in Retirement Plans | Leave a comment