Listen to the Retirement Plan Experts or Why I Hold Grudges

Last weekend was the final game for my daughter’s second grade soccer team in Oceanside, New York, which is nice because so much of the community is involved.  It’s been a trying season since so many of us including our family were decimated by Hurricane Sandy.

While I was at the game, I noticed the Human Resources Director at my old law firm and I never forget a face. I didn’t say hello because one of my shortcomings in life is that I can hold a grudge.  My grudge stems from the law firm’s 401(k) plan. When I got there, I was asked by the firm’s managing attorney to take a look at the plan with the plan’s trustees, which are the aforementioned HR Director and a property tax partner.

The plan was in absolute shambles, again under the direction of the HR director and this property tax partner (who I had a strike against already since he’s a New York Islanders fan). The 401(k) plan had $25 million in assets and a law firm partner who claimed to be an ERISA attorney (but had nothing to do with this plan). Yet the plan had no financial advisor, no investment policy statement, no investment education given to plan participants, and no change in the fund lineup. This was a disaster of a plan and probably one of worst run plans I have ever come across, especially for that size.

I scared the two trustees into action and told them they needed to hire a financial advisor because that could help with the bulk of the plan’s problems. I gave them quite a few names that would be excellent to talk to. I was never consulted about the advisor selection and they picked an advisor that I did not recommend.

While I suggested a third party administrator change (there was an excellent TPA two floors up from our Garden City offices), they made no change. They later made a change without letting me know until it was done. I felt embarrassed and betrayed because of my 9 years of working for TPAs and I could have given insight as to which providers might be a good fit. The fact is that I like the provider and the salesperson for that provider is a friend of mine is immaterial to me, I just felt it was a slap in the face.

Part of the grudge was that I was the 401(k) expert, yet the same people (the plan trustees) who ran the plan into the ground with no background in the retirement plan business thought that they knew better than me and it was best to keep me out of the loop especially when I had my money in this plan.

I left the firm maybe 4 months later and one of my best friends in the business, the salesman for that upstairs TPA knew I wasn’t long for that place especially after than “insult”.

Retirement plan experts are there for a reason. If you are a retirement plan sponsor or another plan provider, it’s important to listen to the retirement plan experts for their input. You don’t have to take their advice, but it’s important to listen and then make the decisions based on or not based on the advice.

I should be a better person and let it go, but quite honestly, I don’t think that I was insulted in my almost 15 years as an ERISA attorney as I was when that HR director purposefully kept me out of the process that I initiated to save our 401(k) plan.

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