The Small Stuff That Plan Sponsors Should Sweat Out

My latest article for can be found here.

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The RFP Process has to be real

Years ago, as a naïve associate at a semi-prestigious law firm, I got the short end of the stick to attend a quarterly Taft-Hartley meeting in Staten Island. If you ever have to drive from Long Island to Staten Island, you know what a short stick it is.

The head of the union wanted recommendations for an actuary for part of their request for proposal (RFP) process. I thought of a few actuaries I could recommend, based on my 9 ½ years working for third party administrators. I mentioned it to the co-counsel and he pulled me aside. He told me the whole RFP process was a sham because the Taft-Hartley plan had absolutely no interest in hiring another actuary. They were happy with what they had.

The RFP process or the less structured process for reviewing plan providers includes getting competing proposals from other providers. It’s about a process and a process that is a sham is not a real process.

The current provider should partake in the RFP process or at the very least, the plan sponsor should treat all providers as potential providers instead of just deciding that they will keep the status quo because the status quo may not be sufficient.

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Warning Signs that Your Retirement Plan Might Be In Trouble

My latest article for can be found here.

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The thing about that Oakley thing

I’m an LA Clippers fan from Brooklyn and my wife was kind enough to score me some great seats for their game a few weeks back at Madison Square Garden through her employer.

The seats were fifth row behind the basket near the Knicks bench. During an early part of the game, I notice 6-8 guards surrounding Knick great Charles Oakley. Charles got angry and shoved a couple of them. The Charles was quickly escorted out, more like pushed out of the arena where he was then arrested. While I didn’t notice, it’s claimed that Oakley was heckling Knick owner James Dolan. Unlike many Knick greats, Oakley paid for his seat and he was a few rows behind Dolan.

From where I was standing, having a half-dozen guards surrounded was a bit much for a Knick great who didn’t appear to be bothering anyone. Oakley and Dolan have had a frosty relationship because Oakley isn’t afraid to say how Dolan has ruined the Knicks. Dolan later fired one of the heads of Garden security because it sounded like Oakley wasn’t supposed to be allowed to be there.

Whether Oakley was belligerent or not, it made the Knicks and Dolan look petty especially when they claimed Oakley was drunk and had a problem. When you’re trying to get fan support and entice prospective free agent players, treating a former great as if he was some obnoxious drunk fan is bad for business.

It’s the same if you’re a retirement plan provider. If you’re seen as being disparaging of current and former employees, what message are you sending to clients, potential clients, and other plan providers? I’ve seen plan providers lose clients and potential business just because of the was they’ve treated former employees and other plan providers.

The retirement plan business is so competitive, so it’s a big mistake to put yourself in a position where you look bad. Just ask James Dolan, he’s been looking bad for years.

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If you’re a jerk to employees, they’ll remember

I always have the belief that I try to treat people the way that I wanted to be treated. However, when someone stabs me in the back, all bets are off. So anyone who maybe had a problem with me when I worked with him probably wasn’t nice to me when they should have (sorry, Norma).

A few weeks back, I talked with someone I worked with at a law firm many years ago and he brought up a partner who broke away and started his own practice. 19 years later, I still remember how that partner wasn’t nice and he was really a bully when there really was no need to be that way. The person I talked to agreed with me and I think the point is that when you’re nasty to people and fellow employees, people will remember you.

Just this past week, I was talking to another attorney about an attorney who taught me in law school. I said that I’m really still peeved at this well respected attorney because 15 years ago, I sent him an email asking for employment suggestions and to this day, I’ve never heard back. This attorney told me how this well respected attorney messed up a great referral opportunity by accusing one of the plan providers of malfeasance when there was none.


Your reputation means everything and when you carry yourself off as someone who has no care for people and are just rude for no reason, people are going to remember you. You develop a reputation that isn’t very good and in this business, your bad reputation will follow you and lose some of the luster you thought you have as a plan provider.

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The Radio Shack lesson for plan providers

Radio Shack filed for bankruptcy again and is closing another 187 stores. I know the jokes and how people are puzzled that they’re still in business. However, there is a lesson here for plan providers.

When I was a kid, Radio Shack was a behemoth and they were actually one of the biggest computer manufacturers with their Tandy PC clone.  They were the place to get batteries, cables, tape recorders, and kids scientific/electronic toys. They did try to change with the times when they opened up Incredible Universe to compete with Best Buy where the stores were so tremendous that they had entertainment in the center that distracted people from buying electronics. The end for Radio Shack was I no longer had to go to Radio Shack for that odd sized battery when Amazon sold it for half the cost. They tried selling cell phones, but most people like to deal with the carrier directly.


The point here is that you have to change with the times and adapt. Plan providers who couldn’t change in a fee disclosure environment left the business (ask how many insurance companies left the retirement plan business) and if a fiduciary rule is eventually implemented, there will be providers who will exit too or fail if they can’t change.

Don’t be like Radio Shack and change with the times.

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401(k) Plan Sponsors: Don’t Make These Mistakes

My latest article from can be found here.

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Don’t hire relatives as your plan providers

I have some simple rules to live by. I never bet on the Mets, eat at a place called Mom’s, play cards with a guy named Doc, or do business with family.

Yet I have come across so many financial advisors who bemoan to me that they couldn’t get a new retirement plan client because the current advisor is someone’s relative. Since when did running a 401(k) plan all of a sudden become someone’s patronage mill for family members?

Seriously, being a plan sponsor or a plan trustee is a tremendous responsibility and you must act in a prudent manner. All plan providers must be screened carefully through a process involving the interview of other competing plan providers. Simply handing the role of financial advisor to someone who is related to one of the plan’s decision makers or participant may be a breach of the fiduciary’s duty of prudence in selecting a plan advisor.

Being a plan fiduciary bears a tremendous amount of responsibility. It requires the retention of responsible plan advisors, monitoring those advisors, monitoring plan fees, shopping the Plan to determine whether plan fees are reasonable, working on an investment policy statement, review of plan investments, and ensuring participant education. So why would a plan sponsor and/or plan fiduciary by hiring a financial advisor or any type of service provider because that person is someone’s cousin? There are quite a few hundred of thousands of financial advisors not related to anyone who will works for the plan sponsor, so I would recommend hiring someone who is not related to anyone connected with the plan sponsor.

For fair disclosure purposes, I am not the ERISA attorney for any plan where the plan fiduciaries or participants are related to me.

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Pick up the damn’ phone

As a consumer, I have to say the thing that annoys me the most is when you call a company or a person and they don’t return the call or reply to the messages I left. It’s annoying because to me, it shows a lack of care or the part of a business to answer my needs and I always have the saying “I needed your help, you weren’t’ there, I don’t need you anymore.”

As someone who has worked as an ERISA attorney for the last 18 years, I have to say one of the major reasons that a plan sponsor fires a plan provider is lack of communication on the part of the plan provider. It may not be the biggest reason that plan providers get fired, but it’s one of the most avoidable ways to lose a client.

There are so many reasons why you can’t return a call, so quickly. I understand that, but having a client who has to leave multiple messages needs to be avoided because clients want to be valued. Customers who aren’t valued or appreciated will find providers that will.

Neglecting calls happens to the best of us and when I don’t return the call before the second voice mail message, I always make it a point to apologize for not being so quick in returning the call. Being humble and apologetic can sooth any issues for neglecting the call in the first place.

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You’re Paying for That

The best third party administration (TPA) salesman I ever knew wasn’t happy with the typical GMC SUVs that he had leased in the past, so he wanted something more. After talking with the head of the company who he was very friendly with, this salesman got talked into purchasing a Porsche and the TPA was obviously going to pay for it as a business expense because of the business miles he put on it.

I thought he was being silly to purchase such a vehicle and it looked too extravagant for a TPA salesman who wasn’t an owner of the TPA. The reason I thought it was too extravagant in the belief that many potential 401(k) plan sponsor clients may think the TPA is charging too much in fees.

If a plan provider takes you a tour of their grandiose offices or somehow takes you to dinner or takes you to a baseball game (beware of accepting gifts that are more than de minimis), just realize that you’re paying that if you’re their client.

That’s not to suggest that plan providers should be working out a closet especially if they’re a large provider of many retirement plans, but it’s always something to consider when you’re paying fees.

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