I always believe that the retirement plan business is a relationship driven business. It’s also a small world of industry where providers know providers nationwide. This belief has certainly helped my law firm practice grow as I’ve always had an open door policy in fielding questions from financial advisors and third party administrators without nickel and diming them with invoices for services provided.
The problem with any relationship is that it will conclude at one point and knowing when it’s over.
When I started my law firm practice 6 years ago, one of my marketing campaigns is when I advertised my legal services for financial advisors and third party administrators (TPAs) where I would charge a flat fee such as $500-$1,0000 per month in providing general ERISA legal advice. While I haven’t advertised this service as much as I should, I have three financial advisory fees and one TPA that pay that fee.
The first client I ever signed up for that fee was a TPA who eventually thought so much of my work and used my services, that they upped their payment to $2,000 a month. Through some of the projects I worked with them, they became my biggest client in 2012. The owner of the TPA said we’d be rich with his plans for plan design.
When it came time to restating their defined benefit clients for the EGTTRA restatements that were that April 30th, they needed my services and I performed around 40 restatements in less than two weeks time. The $40,000 I billed was around 2.5 times what I normally billed per month.
Billing $40,000 that month for that TPA client was amazing and it would have been more amazing if I actually collected that money. You see, the TPA was claiming that because of infighting with key employees that left the firm, they would have a hard time in paying that bill all at once.
I’m not a stubborn man when it comes to business relationships, so I’d let them float as long as they gave me work. Pretty soon after that, they couldn’t pay the $2,000 a month anymore. A reasonable businessperson would have referred the matter to collections, but I wasn’t reasonable because I thought that relationship was more important.
When Hurricane Sandy destroyed almost half my home, I was nearly broke. It happens when you have no flood insurance. So I reached out to this TPA and asked whether I’d get paid. I was told I would.
Thanks to the generosity of the Federal Government and whatever savings I had left, we were able to rebuild better than ever. I was chasing that TPA with phone calls and messages on whether there was going to be further work for me. I was promised there would be. But my biggest client in 2011 and 2012 was becoming a client where there were no fees coming in for 2013 and 2014 from them. I should have referred the matter out to collection, but I still felt like the relationship mattered and that there were fees that were going to eventually come my way.
In late 2015, they referred me a client that needed to restate their 401(k) plan. I did the work in July and finalized all the work in January. I still haven’t paid in full from their client. So my deadbeat client was referring me more deadbeat clients.
A few weeks back, I texted the owner of the TPA that maybe it was best to go our separate ways and that I refer the matter to collections. He promised to call Washington’s Birthday, He always promised to call, he rarely did, Weeks would go by where he would promise to call every other day and months would go by before we ever talked and he never seemed to want to talk about the money he owed me.
I knew he wasn’t going to call President’s Day and he didn’t. I finally referred the matter to collections last week. Once I referred the matter to collections, I felt 1,000 pounds off weight lifted off my shoulder. Of course, I’m beating myself for not seeking the money a few years back, but I thought I was doing the right thing with a business partner. You can bend over backwards for people and there were always be that one or two people who will take advantage of that. The problem is identifying those people and when to end it.
In the end, it’s all about teaching a lesson. You do good work, you deserve get paid. Excuses and promises are nice, but they don’t pay your expenses. Don’t be like me,; pull the plug before 4 years pass by.