An Army of One

A few years back, the Army unleashed a marketing campaign called “An Army of One.” The Sopranos has an episode called “An Army of One” when Jackie Jr. was whacked by Vito Spatafore.

Around that time, I was working as an attorney for a third party administration firm (TPA). When I started there, there was another attorney and paralegal. The attorney was terminated because he was making too much money and I was making so much less. Then the paralegal was let go. Then everything fell on me including making copies, mailing, almost everything but binding. When I was asking for a raise one December, I claimed I was an Army of One and the head of the company suggested that he was doing some of my work. He knew the truth, but he wanted to limit my raise.


When it comes to being a responsible plan sponsor, you don’t necessarily need an army of people on staff to review the retirement plan or have a committee that actually does nothing in their role. What you really need is an army of one, one person that is dedicated in their role in reviewing the retirement plan and that’s it. A retirement plan committee is a great thing as long as you have one person who is actually competent and responsible in reviewing the plan. That is all you need.

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The Worthlessness Of The 401(k) Fiduciary Warranty

My latests article for can be found here.

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DOL Proposes New Fiduciary Rule

Maybe it wasn’t Moses speaking from Mount Sinai, but the Department of Labor (DOL) proposed a new fiduciary rule that will change how retirement plan providers give advice. This is a re-proposal of a rule that was previously withdrawn a few years back.

The heart of the proposal is shattering, it will require all money managers, financial advisors and firms that are paid for dealing with retirement savings to do so in their clients’ best interests, and to disclose when there are potential conflicts.


The new rule will allow for current arrangements for compensation, fees and educational services (such as revenue sharing) to plan sponsors to continue under a new “best interest contract” exemption.

I won’t go into greater detail because the rule is merely proposed and there is enough opposition from Congress and Wall Street that could potentially kill the proposed rule or send it back to the DOL for revisions.

I will certainly keep you all in the loop.

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My Support for a Fiduciary Rule

The current way that retirement plans are handled by registered investment advisors who are fiduciaries and the bulk of brokers who are not can be explained in a similar, following situation.

Let’s say that there are two types of people that can treat a patient, one is a medical doctor and the other who is a medical practitioner (I made up this job). The duty of the medical doctor belongs to helping with the health of the patient.  The medical doctor collects a fee and that’s it. The medical practitioner has no duty to the health of the patient and gets paid differing amounts, depending on the prescriptions of medicine filled and some prescriptions give the medical practitioner different trails. Some prescriptions will pay higher than others.

Which medical professional would you pick to use and why?

While a retirement plan isn’t the same as someone’s health, you get the picture and that’s why I support a fiduciary rule.

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Plan Sponsors should invest in a scanner

Being a plan sponsor is a tough job and the amount of paperwork that goes with it can be overwhelming. The paperwork includes plan documents, summary plan descriptions, amendment, valuations, trusts statements, and payroll.

The fact is that as a plan fiduciary, plan sponsors need to keep good records. It’s important to have correct records when you need to pay former plan participants out, but they need to protect themselves. I have seen too many plan sponsors get into trouble with plan compliance or audits by the Internal Revenue Service or Labor Department because they no longer have copies of the documents they once had.

While spaces for document file cabinets are usually at a minimum, there is a friend out there than can help you avoid losing necessary plan documents and that’s a scanner.

Saving all the necessary plan documents and valuation reports through scanning them as a pdf can help plan sponsors avoid losing documents and save on the need for space of filing cabinets. While plan sponsors should maintain original copies of all plan documents, they can scan the rest. A good scanner won’t set you back and plan sponsors probably have that option with their copier.

Plan sponsors should scan all their plan files as they come in and label them in any easy to understood manner. Creating specific directories on the network for specific plan years is also a great way to keep these things organized.

Something as simple as a scanner can help a plan sponsor exercise their duty as plan fiduciaries.

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There’s a Cost For Those “Free” SEP and SIMPLE IRA Plans

My latest article can be found here.

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Using Plan Sponsor fear of liability into positive action

Many plan sponsors have a fear of liability and that’s a good thing is they put that fear into use by putting good practices in place for their retirement plan. It means nothing if plan sponsors process that fear into something that isn’t constructive for the plan.

Plan sponsor liability is real. Whether a plan sponsor can get sued is dependent on a lot of things such as plan assets, plan costs, and processes in place.

First off, big class action lawsuits on fees are going to be against larger plans. Smaller lawsuits by plan participants are a threat, but a low threat against most plans. If I was a small or medium size plan, I would be more fearful from the Department of Labor and/or the Internal Revenue Service taking a bite through an audit.

FDR said the only thing you have to fear is fear itself, but what plan sponsors need to do is turn that fear into a process to minimize risk and liability by putting good plan processes in plan and that just starts by hiring good plan providers. Hiring a good third party administrator and financial advisor are two huge keys to getting a good plan in place.

The threats to liability are always going to be there and litigation shows that anyone can sue anyone even if there is absolutely no liability and wrongdoing. A plan sponsor getting sued is like getting hit by a bus. No matter how care you use in handling it, crazy things can happen. Like looking both ways when you cross, good plan processes can go a long way in minimizing the plan sponsor’s liability.

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Complacency is a Plan Provider Killer

Complacency can kill a retirement plan provider and their business. Complacency is a two fold, being complacent in the retirement plan industry and being complacent with your clients.

Any business whether it’s retirement plan based or not, has to change with the time because fact is that no industry is immune to change. You need to be ahead of the game and understand any new changes that go on. Ask the folks at Blackberry about complacency. If you park your car on the raceway oval, don’t be surprised everyone else passes you by.

Working with your plan sponsor clients, complacency is all about taking your clients for granted and not reviewing their plan for new plan design studies, cost analysis, or plan provider searches. I’ve seen too many plan sponsors lose clients because these reviews come from a competing provider. Time and time again, I would hear the client ask why their current provider didn’t think of a new plan design first or review of plan fees.

Retirement plan and the retirement plan industry are fluid, which means what is good today maybe not good for tomorrow. You can never be too complacent because losing your client or your competitive edge is just around the corner.

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Retirement Plan Sponsors Need To Care About Plan Design

My latest article on can be found here.

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The Earth is not flat, but maybe the bill should be

I worked for a couple of law firms for a couple of years and it wasn’t my cup of tea. I’m not a big fan of any business that is predicated less on the quality of service and more on how much you bill.  Billing by the hour leads to abuse, I know because I was told by a managing attorney once that I did my work too quickly and I should drag it out for billing purposes. My lack of billing is probably the reason I had no future there.

For my national ERISA law/ retirement plan practice (cheap plug here), I bill 95% of my work through a flat fee.  I like it because the client doesn’t have sticker shock; the bill has an ending, which is open ended when billed by the hour, often predicated on how much the law firm can get you for.

Luckily, financial advisors don’t bill by the hour. Typically they charge a fee based on a plan assets. Some financial advisors have resorted to billing on a flat fee basis and other advisors considering the move. I applaud any flexible billing options and the advisors who do that.

I’m not saying that all advisors should utilize a flat fee. Unlike a lawyer’s billable hour, an asset-based fee knows an end, which is the limit on plan assets. For the advisor considering a switch to a flat fee basis, it’s all a numbers game. Developing a flat fee that will compensate you and not undercut yourself. This is advice from a former employee who undercut his own salary time and time again. In addition, do you have the clientele that will understand the value of a flat fee or have absolutely no interest in how you bill. Flat fee billing is also a nice marketing gimmick, can you market that effectively?

Again, it’s not for everyone. Probably a better fit for those getting into the 401(k) space for the first time rather than someone entrenched because a change to a flat fee can unwittingly give an advisor a huge pay cut.

As with any business decision, an advisor considering a flat fee needs to determine where it makes sense and where it doesn’t because you don’t have to pick an asset based fee vs. flat fee, you can offer a mix of both.

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