Attorney TPAs and Why Retirement Plan Providers Should Stick To Their Expertise

Years ago, I had this silly notion that I would not only start my own law firm, but that I would also go for a certified financial planner designation. It was silly because I don’t see why someone would seek out their attorney for financial advice.

Having worked for a third party administration firm (TPA) that had its own registered investment advisory (RIA) firm that led to conflicts of interests and hidden fees, I have the belief that plan providers should stick to their own element of expertise.

I have also seen accounting firms with its own RIA practice including one firm that audited the retirement plan of a client that they were providing investment services through that RIA affiliate.

One vehicle that I have taken notice of late are law firms with their own TPA practices. I am rather perplexed because I think there is certainly an inherent conflict of interest and a client of mine showed that to me recently.

I did a Retirement Plan Tine-Up (the legal review of plans I do for $750, cheap plug) for a client that was a client of another law firm and their TPA affiliate. The Plan has over $14 million in assets, yet was still with an insurance company based platform that was laden in frees. The conflict of interest is that an ERISA attorney is supposed to put the clients’ needs first and a concern for a client are plan fees and that fees should be reasonable. Plan sponsor paying unreasonable fees for plan services Using an insurance company platform when an unbundled platform could be had for probably a lot less creates a conflict since the law firm owns the TPA that is involved in having the client use a far more expensive 401(k) product.

People have asked me in the past whether I do financial advisory or TPA work and I always tell that I won’t because the clients’ needs come first and providing any other plan services than providing legal representation can create a conflict, which can certainly cause disciplinary problems down the road.

Plan providers should concentrate providing the best services to plan sponsors using their expertise and should be less concentrated in being the Wal-Mart of retirement plan services.