The Rosenbaum Law Firm P.C. Blog

My latest newsletter for retirement plan professionals can be found here.

My latest article for JDSupra.com can be found here.

Now that hardship rules are changing in 2019 with the elimination of the six-month deferral suspension and the need to exhaust loans first, expect more hardship distributions in the near future. Once these barriers for hardship distributions are eliminated, it would be no shock to me that the number of distribution requests is increased.

The problem with hardships, other than the fact that there are assets leakage is that I don’t believe that many plan sponsors do a great job in vetting hardship distribution requests. Plan sponsors have a fiduciary duty to review any hardship requests and make sure the hardships are documented by the plan participant. The Internal revenue Service in the not too distant past has increased review of hardship requests during plan audits especially for those participants with multiple hardship requests.

So as more and more requests may be headed, plan sponsor needs to implement a process where hardship requests are actually reviewed and vetted.

Suppose someone you never met before comes up to you and asks whether they can stay at your house or someone you never heard of, all of a sudden wants to be your partner and best friend. Any business relationship and any personal relationship you have requires trust and trust is something that doesn’t develop overnight.

When I started my own law practice over 5 years ago, I knew that I needed time to develop my business. Financial advisors and third party administrators weren’t going to recommend their clients to me based on a couple of articles I wrote or a quick meeting. It was going to take time in developing relationships by building my reputation and by developing trust.

Yet I’m always baffled by the broker who calls me up out of the blue and starts inquiring about my clients and whether my clients are happy with their current financial advisor, which is disconcerting to me when a good chunk of the time, a financial advisor has referred me this client. Even if a financial advisor didn’t refer me this client, I barely know this broker. I can recall how many times in my law practice where I met an insurance agent to network and all of a sudden, they are trying to sell me life insurance that I couldn’t afford and didn’t need.

When I talk to other retirement plan providers, I don’t ask them which ERISA attorney they work with. These people know what I do and if they like what they hear from me or see what I do, then maybe they will hire me or refer me when there is a need for an ERISA attorney.

Networking and developing relationships in this business is like dating. It’s a process, it takes time, and most of the time, you’ll come up short if you cut to the hoop too quickly.

Whether it’s working with clients or other retirement plan providers, you need to know that any worthwhile relationship will take time and requires trust.

One of the greatest tools in building my practice and enlarging my social media footprint in the retirement plan space was the use of LinkedIn.

When I was working at that semi-prestigious law firm, my activities on LinkedIn were rather limited since I wasn’t allowed to post because of some mistaken advice from our advertising committee that social media was some sort of advertising. When I started my own practice and things didn’t go well at first, I was advised by the Alfred brothers from Brightscope that they were able to build their business by starting conversations on LinkedIn.  Here are some things I’ve learned:

1.    The right way to see LinkedIn is as a starter, sort of like a starter in baking bread. It’s about connecting with people, widening your audience, and helping increase the footprint of your reputation as a retirement plan expert.

2.    It takes time. Like planting in the backyard garden, building connections as referral sources will take time because any connection that pays off requires trust and trust isn’t built into your LinkedIn connections immediately.

3.    The worst behavior I see on LinkedIn that I think you should avoid is immediately selling when you connect with new people. I tune people out immediately when they start selling me on their services. I’m an ERISA attorney and I work with dozens and dozens of financial advisors around the country. If I have to make a referral out for a client who needs an advisor, I’m not going to refer to someone I just connected on LinkedIn.

4.    While LinkedIn has really cut back on the effectiveness of groups for the hashtag labeled interests, I still think sharing content is the way to go.

5.    Speaking of content, it has to be general advice. Anything that is substantially commercial is going to be tuned out.

6.    There used to be a mindset that you should only connect with people you actually know to keep that referral circle close. I disagree, connect with people that can act as sources of referrals.

7.    While you should connect with potential sources, I recommend not accepting every LinkedIn connection request. There are clear that there are certain people on LinkedIn in technology-related services where their simple goal is to sell you a technological service that you may or may not need.

8.    Avoid political posts, this is a place for business, this isn’t MSNBC or Fox News (dependent on your political view). Politics is like religion, debates about it only aggravates people that you may want as referral sources.

9.    You need to post and connect with people. Sitting on the sidelines won’t get you noticed.

10.    Post at least three times a week. It can be your content (preferred) or you can share an article with a comment or two. Posting gets you noticed.

My latest newsletter can be found here.

My latest JDSupra.com article ean be found here.

My latest article for JDSupra.com can be found here.

It’s an easy requirement that many plan sponsors think they’ve accomplished, but they haven’t received the right one. We’re talking about an ERISA bond and often plan sponsors on a Department of Labor audit are told by the auditor that the general crime policy they have isn’t what they need for that ERISA bond.

The bond should be an ERISA bond and noted as such. It’s to protect plan assets from theft by plan fiduciaries.  The bond must cover at least 10% of the assets handled by the specific fiduciaries, but can’t be less than $1,000. The maximum bond amount required is $500,000 (or $1 million if the plan holds employer securities). The amount of the bond must be based upon the highest amount of funds handled by the specific plan official for the previous year. If there is no previous-year data, the employer must estimate the amount of the bond using procedures contained the regulations. Employers can always choose to purchase bonds for more than those amounts.

The bond terms can be one year; however, bonds can be purchased for multiple years. If the bond covers multiple years, the fiduciary must check the amount of the bond each year to make sure whether coverage needs to be increased due to growing assets.

The bond must cover losses through larceny and theft, embezzlement, forgery, misappropriation, wrongful conversion, and willful misappropriation.

Note that plan fiduciaries are not permitted to have any financial interest in the entity from which the bond is purchased.

I’m a fan of Bill Belichick, probably because he was the defensive mastermind of my New York Giants in the 1980s and early 1990s that led to two Super Bowl championships. His defensive game plan against the Buffalo Bills for Super Bowl XXV sits in the Pro Football Hall of Fame. While Belichick has now won 6 Super Bowls as a head coach, he had to get past some obstacles.

While Belichick was a well-respected assistant for coaching legend Bill Parcells, for some reason or another, Giants General Manager George Young hated Bill Belichick. Young claimed that Belichick would never become Giants’ head coach on his watch because he thought Parcells had lousy people skills, dressed like a mess and because Belichick was a former lacrosse player in college. George Young thought Ray Handley was a better fit and history showed what a disaster Handley was after replacing Parcells who left the Giants after Belichick left to take over the Cleveland Browns head coaching job.

Speaking of the Browns, Art Modell who owned the Browns hired Belichick even after George Young took the extraordinary step of trying to talk Modell out of it. Imagine working for a boss who not only wouldn’t recommend you for a promotion but actually called a potential new employer to bury you. Belichick’s struggles as Browns’ coach proved Young right initially, but 6 Super Bowl wins later, now question Young’s status as a Hall of Fame member.

Whether you did anything wrong or not, there may be one or two people in your career that may try to plot against you. They might be co-workers or supervisors, whoever they are, they may not like you for one reason or another. As you know as a kid, not everyone is going to like you and how you handle these terrible relationships will say more about you than them. I had two people in my career that either didn’t like me or actually called other retirement plan professionals to speak badly about me. One person is still mocked in my articles because I think she couldn’t see the future if it was right in front of her (sorry Lois) and the other one, is now one of my best clients. There are those who may not like you, but you just have to deal with it. You can persevere as long as you have talent and the ability to learn from your mistakes, just ask Bill Belichick.