Retirement Plan Advisors Advantage

My newsletter geared towards retirement plan providers can be found here.

Posted in Retirement Plans | Leave a comment

Thinking Outside The Box For Plan Providers

My latest article for can be found here.

Posted in Retirement Plans | Leave a comment

The DOL Fiduciary Rule Is No Time To Celebrate

The Department of Labor (DOL) sent the final rule to the Office of Management and Budget that will delay the implementation of the fiduciary rule. While some brokers may think it’s a time to celebrate, there is no room to celebrate.

Brokers maybe able to continue to operate in the retirement plan space without being a fiduciary for the time being, but what about the cost they had to make in order to comply with the new rule, that’s now being delayed. All those letters sent to certain retirement plan and IRA clients that they can no longer service those accounts can’t be recalled and all the legal cost they paid to comply with the rule can’t be refunded.

It’s hard to close the barn doors after the horses have left and it’s going to be hard for brokers to return to the same business after the fiduciary rule has been delayed. More and more plan sponsors understand what a fiduciary is and that most brokers aren’t fiduciaries.

Just because the rule has been delayed for now, doesn’t mean that there wont be a fiduciary rule down the road that will end up being more restrictive than the best interest contract exemption of the new rule. Donald Trump won’t be President forever and Congress wont be in Republican hands forever either. Midterm elections are 19 months away. Who knows what tomorrow will be?

So in my mind, no time to celebrate.

Posted in Retirement Plans | Leave a comment

Oracle’s 401(k) and what doesn’t look right

A district court judge has ruled that Oracle will in have to defend itself regarding its 401(k) Plan.

Plaintiffs allege the Oracle Corporation 401(k) Savings and Investment Plan “caused participants to pay recordkeeping and administrative fees to Fidelity that were multiples of the market rate available for the same services.”

In addition, the complaint says, Fidelity “is the sixth largest institutional holder of Oracle stock, owning over $2 billion shares.”

So the plaintiffs suggest, Fidelity “has the influence of a large stockholder in light of its stock ownership.” The result is that “Oracle has chosen and maintained funds from one of its largest shareholders, Fidelity, to be investment options in the plan.” Plaintiffs suggest this relationship has led to conflicts of interest that have harmed participants and retirement plan performance.

I can’t opine on Oracle’s chances in the lawsuit, but it confirms everything I’ve ever said regarding the choice of plan providers. Choosing plan providers where there is some underlying relationship that implies that the choice of plan provider was done to benefit the plan sponsor is something to avoid. Any suggestion of impropriety will lead to an ERISA litigator alleging that something improper was done even if it wasn’t improper. I think Oracle shouldn’t have selected a bundled provider like a Fidelity or any other large mutual fund company because of the likelihood that provider is an institutional shareholder of the employer. If it looks improper, avoid it.

Posted in Retirement Plans | Leave a comment

You Can Lead A Plan Sponsor To Huge Retirement Savings, But……

One thing I will always remember working as an ERISA attorney for third party administrators (TPAs) is when a plan sponsor would tell us that they wanted the maximum savings for retirement and when we came back up with a design for huge retirement savings for them, they’d back away.

That happened to me again a few weeks back when I meet a company about their lack of a retirement plan and I was able to develop with the help of a TPA a combo 401(k)/cash balance plan where the owner of the company would have saved $160,000 per year with both plans and would’ve only had to make an employer contribution of $21,000 for both plans. It was a no brained to go with this plan design and they balked.

The point is that while you can help with plan design and lead a plan sponsor to hue retirement savings, sometime you just can’t get them to sign on as a client and help them save huge amounts. That’s just part of the game.

Posted in Retirement Plans | Leave a comment

The problem with Morgan Stanley’s payment decision

As you probably heard, Morgan Stanley will be moving to a level compensation approach for its 401(k) advisors.

So this means it will do away with commission payments and finder’s fees (for recommending record-keeping vendors) for advisors, in favor of a level fee based on a plan’s assets.

Morgan Stanley’s policy is expected to go into effect “over the next few weeks,” Merrill Lynch had previously announced that it would go with a level-fee arrangement for 401(k) advisors.

Even with the fiduciary rule being delayed, this makes sense for the time being. Since they did all the legwork to comply with the new rule, Morgan Stanley doesn’t want to stop the reform dead in its tracks and wants a compensation system that wont conflict with that delayed rule or any other rule that comes down the pike. The only problem is that this hasn’t been the first attempt over the years for a broker-dealer to overhaul their compensation system for retirement plans and/or IRAs.

Unless other broker-dealers join this payment system route, don’t be surprised that brokers like Morgan Stanley get enough complaints from their brokers to go back into the  varying payment system that previously existed.

Posted in Retirement Plans | Leave a comment

The one thing you should never throw out as Plan Sponsors

I’m always asked about how long plan sponsors keep records and there is one thing plan sponsors should never throw out, their plan documents.

While most records can be thrown out after 7-8 years, plan sponsors should never get rid of their plan documents including documents from the initial implementation even if it was 30 years ago. When it comes to audit, plan termination, or some other issue, you never know when the Internal Revenue Service may ask for a plan document from yesteryear. If you don’t have the plan documents that you’re supposed to have, the assumption is that it was never drafted and you have a huge compliance problem that could lead to some severe financial penalties.

I just came across a plan that might not have had their plan documents restated since 1999. Maybe the documents were restated, maybe they weren’t. I’m not a betting man, but I always assume they weren’t done. It’s going to cost this plan sponsors thousands and thousands of dollars to correct this.

So while you may want to spring clean your plan files, never get rid of any types of plan documents. As far as valuation reports, participant records, and beneficiary forms, invest in a  good scanner and network drives.

Posted in Retirement Plans | Leave a comment

Don’t Let Vendettas Cost You

I’m sure people who have heard of me in my local village might say I’m difficult in the sense that I’m not afraid to speak up in defense of myself and family. I seem to get in fights with people in my area who seem to have the same type of personality.

No matter how I may act in my personal life, I don’t let fights or vendettas get in the way of making money in this retirement plan business. Grudges are silly if you let it hit you right in the wallet or pocketbook.

Years ago, I had a major falling out with someone in the retirement plan business. After all was said and the done and the hostilities concluded, that person became one of my best clients.  What happened? I think we both acted like adults, showed contrition and general like for each other. I also saw it as an opportunity for me to grow as a person and not let a silly grudge get in the way of growing my business.

All of my business disputes typically occur when I’m the consumer and I let the producer know how disappointed I am in the service. The problem is that these producers can’t take criticism too well and they decided that my criticism is no longer worth my business. For some reason, this flakiness usually deals with construction at my home.

That’s another thing: if you’re criticized it, accept it. Even if the client is wrong, they are always right in the sense that you need to listen to their grievances. Don’t let their criticism get in the way of you firing them as clients. There are some clients you may never please, but a good way of client retention is actually listening to their criticism and trying to meet the expectations of your client when they think you’re failing.

In the end, never let fighting get in the way of making a buck.

Posted in Retirement Plans | Leave a comment

The Rosenbaum Law Firm Review

My newsletter can be found here.

Posted in Retirement Plans | Leave a comment

401(k) Plan Sponsors Need To Get Up And Focus On This

My latest article for can be found here.

Posted in Retirement Plans | Leave a comment