There is a price to pay for being outspoken

I always say that plan providers need to stand out in the crowd. I follow my own advice and that’s how I tried to act when I started my law practice 5 years ago.

I was pretty brazen in my comments and I know I certainly ruffled a few feathers with my unbridled discussions in a world that pre-dated fee disclosure regulations. It was rather unique as many ERISA attorneys are neutral in their comments because of their desire to keep a low profile in getting to represent all plan providers, including both good and bad. I called out bad retirement plan providers including two of the top payroll providers and that certainly closed one pipeline of referrals.

The point is that being outspoken will certainly let you stand out in the crowd, but it can cause you business and it certainly has cost me. The point is that you can be outspoken, but always make sure that you don’t offend every potential client or sources of referrals.

I think my act has toned down over the years, I’m more mature and the previous object of my ire no longer exists. I don’t regret the way I started, but it was interesting to hear a recent third party administrator (TPA) criticize me as someone who hates TPAs. That’s something I have not heard in over 4 years and my TPA clients will agree that I like good TPAs and I don’t like bad TPAs. There is a difference.


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“Plain” Advice to Retirement Plan Sponsors

My latest article for can be found here.

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Marketing is about drawing a dime of business

At my old law firm (yes, that semi-prestigious law firm in Long Island), we had a law firm administrator.  What he administered, I really had no idea.  I’m still waiting for him to help me with growing my practice after he promised 6 ½ years ago. This fellow was very good at talking about ways to improve the way we did business at the firm, but did very little to actually get it done. While acting as the gateway to the Managing Attorney, he really was just a snitch. Since he had the Managing Attorney’s ear, he was given way too much leeway in monopolizing the time of our marketing department in producing his own articles for distribution.

My dispute with that (of course after I left the firm) was that these articles weren’t going to draw a dime for the firm because we were in the practice of law and not law firm management. Of course, I mentioned this waste of resources in a few of my articles and this law firm administrator never wrote another article that the firm published before jumping to a larger firm.

When it comes to marketing services as a retirement plan provider, your marketing has to have the intent that it will draw a dime. You’re in business and some articles unrelated to your business are of little use and a waste of resources and time.  It shouldn’t be about over commercializing what you do, but an explanation of what you know. Materials that make your audience think and giving them some good sound advice is going to get interest about your firm and the services you offer.  The days of getting your name in the newspaper isn’t going to cut it anymore. Social media is the online dissemination of business ideas that is hugely cost effective and can have wide ranging, positive results.  A recent article I wrote about not using cheap plan providers just got me an invitation to a very nice speaking engagement in the spring.

As long as you know your audience, half the battle is already won. Writing the content that will help spread the word about your firm around is the other half. Just remember that your efforts need to help draw you a dime.

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Pick Plan Providers Just Because They Are Cheap Is A Bad Idea

My latest article can be found here.

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Most Attorneys are not ERISA Attorneys

Unfortunately, I have gotten involved in the politics of my local village which contains so much conflicts of interest and cronyism, it reminds me of the retirement plan business when I started in 1998. A lot of the fighting goes on Facebook and as an attorney, there is nothing funnier that non-attorneys who profess their knowledge of the law and get it completely wrong. I had someone threaten to sue me for age discrimination because I mentioned they were retired. This is what you have to deal with. As an ERISA attorney, I also have to deal with attorneys who think they know retirement plans and they don’t.

I have been practicing in the ERISA field for over 16 years and that is all I have done since I first started working after getting my tax LLM degree at Boston University.

When people find out that I’m an attorney, they often ask question that have nothing to do with ERISA. While I can probably pass the state bar again if I have to, I have forgotten more about the law outside of tax than I actually remember. So when people ask me for legal advice outside of tax, I refer the matter out.

On the flip side, just because someone is an attorney doesn’t mean they know ERISA or the Internal Revenue Code as it pertains to retirement plans. Yet when my services come up for a business that has general counsel, I often find the reaction that the general counsel feels that my services aren’t required because they claim that most companies their size don’t get sued over their retirement plan.

I get that reaction a lot. Heck I worked at a semi-prestigious law firm with some snooty lawyers who could never turn down a free meal, but turned down opportunities to refer my services to their clients. Let’s not forget how badly their 401(k) plan was run before I reviewed it (no advisor, no education to participants, no review of investment options for 10 years, and no investment policy statement). From what I heard, they are still having problems because the human resources director is still doing a “fantastic” job running it.

An ERISA attorney isn’t the right person to ask about a criminal matter or adoption and a non-ERISA attorney isn’t the best person to ask if the retirement plan that your company has is being run efficiently and what the liability threats.

Heck, there have been attorneys sued by the Department of Labor (DOL) for embezzling and transferring retirement plan assets. They didn’t know much about ERISA.

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Focusing too much on Plan fees isn’t healthy either

I remember as a kid that there was move to use margarine because of the cholesterol that was in butter. Who can forget those talking Parkay carton commercials? Of course, we later learn that many margarines had high amounts of trans fats, which is just as bad as cholesterol. For the past 45 years, we’re still having a similar debate with sugar vs. artificial sweeteners.

In the retirement plan business, we don’t deal with margarine and NutraSweet, but we have been talking a lot about fees. Plan administration fees have been the talk of the retirement plan business for the past 7-8 years and continued focus thank to the fee disclosure regulations put forth by the Department of Labor. The obsession about fees can be a problem when the discussion about selecting and or replacing plan providers is based solely on fees. Fees are really about reasonableness and paying reasonable plan expenses for the services provided. It’s not about picking the cheapest provider.

Focusing too much on fees means there is less focus on finding the right providers and a good chunk of the time, the best provider candidate for the plan isn’t the cheapest. I see to often, plan sponsors picking a cheap third party administrator that is short on competence, which leads to higher compliances costs later when penalties are tacked on for incompetent administration.

Fees should always be a concern but focusing too much on fees is like eating margarine with high trans fat because it’s as unhealthy as butter without the taste.

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Advisors Advantage

My latest newsletter geared towards advisors can be found here.

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2015 New Year Tips for Retirement Plan Providers

My latest article can be found here.

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Give your clients their own “football”

When I was in college and law school, I had this fancy leather bound DayRunner that had all my contacts, business cards, and notes. For 1992-1998, it was state of the art because I didn’t have the shekels for a Palm Pilot. I called the DayRunner, the “football” in recognition of the “nuclear football” attaché case that stores all of our nuclear launch codes. I’m sure somewhere in my head, I though the name and number of the recruiting coordinator at the Irvine, CA office of Ernst & Young was as important as a launch code, it wasn’t.

To differentiate yourself as a plan provider, it maybe wise to give clients their own “football”. Their football wouldn’t have codes, but the important stuff that all plan sponsors need. That would be copies of the plan documents, the investment policy statement, fund menu, minutes from fiduciary meetings, materials that were handed out at enrollment meetings, or some other things that you may deem worthy. These days, it doesn’t even have to be in a fancy binder because a USB flash memory key can do the trick.

It maybe a gimmick, but it’s a good gimmick. It allows yourself to differentiate yourself from the competition, and a little gift to a client goes a long way. I knew of an advisor who did this many years ago, probably to justify the 75 basis points he was charging at the time. Regardless of what you charge, I think it’s an effective tool.

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401kwire’s Top 100 Most Influential in 401(k): #100

I am proud to have been named of the Top 100 Most Influential in Defined Contribution/ 401(k)  by 401(k) for the second year in a row. While I dropped from #73 to #100, you get no extra money for finishing higher. Actually you don’t get an award either.

Like I stated last year, it’s a win for the underdog because I was the associate who had a managing attorney who didn’t believe in me and I was the ERISA attorney that the head of a third party administrator (TPA) laughed at when I suggested I could help sell (actually there was more than one head of a TPA to do that, boss and prospective bosses).

The only reason I’m on the list because of you, the reader. No matter how good a read my articles and blog posts maybe or how many references to Caddyshack and Airplane! I could provide, I am only successful because I made a connection to you, the audience and for that, I am forever grateful.

I only wish my friend Richard Laurita was here to see this. Many of you know of Rich or know my stories of Rich, but he was the TPA salesman that I worked with at two TPA firms and he was the only person who saw something in me when no one else did and I would not have had the confidence to start my own law practice if he didn’t make under his wing so long ago. He’s gone almost 8 years and as long as I’m in the retirement plan business, he will not be forgotten. Wherever you are Rich, I hope you are enjoying the golf.

Again, thank you for the recognition and continued readership.

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