The United States Government Accountability Office (GAO) released a report on the impact of Department of Labor Regulations (DOL).
The report involved talking to plan sponsors and plan providers. It stated the obvious impact of fee disclosure regulations that were implemented in 2012: fee disclosure is one factor that has led to a decrease in 401(k) fees. That’s really the obvious and unliked many critics, I knew that fee disclosure regulations wouldn’t cause the sky to fall.
Even back then in college, I knew when things weren’t right. I was the Managing Editor of the Stony Brook Statesman and the top editor made copies of our Newsday Awards and was mailing someone a response to a letter, criticizing our typos. When you draft a 16-page paper at 4 am, there are going to be errors. Rather than accept the criticism, the editor claimed we were an award-winning newspaper, which still didn’t mean anything when confronted with our typos.
I write and use an AI proofreading tool. People criticize my typos and I accept it, as a one-man shop. When you are out there as a person or a plan provider, criticism is part of the job. We have school board members and other political leaders in our village and I’m amazed how thin-skinned they are. When you’re a public official, being criticized is part of the job. The same with being a plan provider, things go wrong, and take criticism.
There are good third-party administrators (TPAs) and bad ones. No matter how good your TPA is, they’re not a mind reader. So when it comes to providing information to your TPA, you need to level with them. If you don’t provide the necessary information about the census, ownership, ownership in other entities, and other qualified plans you maintain, your TPA can’t do its job credibly.
I’ve seen clients not tell the TPA that they have additional retirement plans or additional companies, which can be catastrophic.
I’ve seen too many TPAs discover errors, just because the plan sponsor didn’t provide the necessary information. Corrective contributions might be owed if you did the employee census incorrectly or if you didn’t provide all the companies you own.
The easiest errors to avoid are the ones you can avoid by providing the information your TPA asks and by volunteering information that you think they should know.
When I was in college and law school, I loved TGI Fridays. Whenever I was in New York, D.C., Boston, or traveling to California, the beauty of this chain restaurant was that you’d get the same quality meal. I always went for the Chicken Caesar Salad and the Rockslide Pie was a great dessert.
Like Bennigan’s before it, it looks like the near end of Fridays. From 600 plus restaurants, down to a little more than 100, TGI Friday’s just filed for bankruptcy and it looks like it will be the end. The Fridays by me just closed suddenly, and while I loved the chain, I’ve only been there a couple of times over the past 5 years. While they cite the pandemic, Friday’s has been eclipsed by other restaurants like The Cheesecake Factory and Chili’s. Even Ford’s Garage opened up shop in Suffolk County, and they will be the next booming chain. What happened to Fridays is that they stayed stagnant, didn’t offer much enticing food on their menu, and always seemed to change their loyalty program.
You have to continuously fine-tune things and deal with the competition. Chili’s is doing gangbusters with their business because of their $6 Margaritas and Triple Dippers. If you don’t evolve, you run into trouble and end up out of business.
When looking at organizations, both businesses and charitable places, I’m always amazed why people stay on, even when it’s time to go. I was a part of a Hebrew school where the PTA President no longer had kids in schools. Same with the current school board where I live. I don’t think I’d mind these things if they were doing their job, but it hurts when they aren’t.
I have been very lucky in life, I know from jobs and other organizations, when it was time to go. Whether you have accomplished what you have done or things aren’t going the way you want, it’s important to recognize when you should be leaving. Give someone else a shot.
The greatest business failures are business giants that fail to adapt to a changing environment. If Blockbuster only saw the future was digital, perhaps it could have saved itself, even with its stubborn decision not to buy Netflix.
You either adapt to a changing environment or you die.
After a 2 ½ year reconstruction, the local Library reopened after a $35 million renovation. The renovation was made possible after a bond referendum during COVID. I haven’t read an actual paper book since Kindle, and I’m sure many have. However, the library repurposed itself long ago as a community center that the community didn’t have since we are an unincorporated village. It’s for programming and a lot of other things, and they have books too.
Unfortunately, the library is majestic and the school district is in shambles, but that’s another tax district.
Whatever struggle you’re in, you can’t stand pat in a business that is always changing. You have to change when the times change or you become obsolete as a library that just has books.
I read that a recent study showed the 80% of 401(k) plans are overpaying in fees. Tell me something I don’t know. For most small and medium-sized plans, there is absolutely no check by the plan sponsors on whether the fees that they’re paying are reasonable or not. That’s just a fact of life as most plan sponsors put the fee disclosures in the back of a drawer.
Again, tell me something that I don’t know, like next week’s Mega Millions numbers.
Consolidation among plans provides continues in the retirement plan business.
U.S. Retirement & Benefits Partners Inc. announced the purchase of Pension Planning Consultants Inc.
Pension Planning Consultants is a New Mexico-based firm that provides retirement plan design consulting and third-party-administration services to more than 2,300 clients.
The U.S. District Court for the Western District of Michigan granted Pfizer Inc.’s motion to dismiss a case that claimed that Pfizer paid “unreasonable” recordkeeping and administrative fees. U.S. District Judge Paul Maloney ruled that the plaintiff presented his case with a flawed methodology.
The complaint argued that plan participants should have received better rates for recordkeeping because of the plan’s large size. The Pfizer Savings Plan has more than $19 billion in assets and serves 56,648 participants, according to its latest Form 5500 filing.
It was alleged that plan participants paid, on average, $24 more in recordkeeping fees than they should have each year between 2017 and 2021.
Pfizer claimed that the Plaintiff didn’t use a proper methodology to establish his claims. The complaint had compared average fees paid over several years to just one year of a plan’s costs.
Pfizer’s motion to dismiss also argued that the plaintiff failed to allege that the plan fees were excessive relative to the service provided.
Also, Pfizer argued that Plaintiff failed to identify a comparable 401(k) plan that paid lower recordkeeping fees.
Again, federal courts are tired of these cases. Alleging a plan that should be cheaper isn’t proof enough of a fiduciary breach.
