The Rosenbaum Law Firm P.C. Blog

My latest JDSupra.com article can be found here

My latest JDSupra.com article can be found here.

Maybe it’s a simplistic approach when it comes to things, but I kind of see things the way they are in very simplistic approaches.

When it comes to employees working for a client, I always say that happy employees never leave. When it comes to clients of a retirement plan provider, I also say that happy clients never leave.

There was so much concern with fee disclosure regulations that retirement plan clients would drop their current providers to save a quarter or a small amount of money across the street and I don’t believe that has really materialized because fees have fallen industry wide and again, happy clients never leave. Clients that changed providers and saved a lot of money in doing, in my opinion, were never happy to begin with and just used that fee savings as cover.

Maybe I’m oversimplifying things, but keeping clients happy goes a long way in keeping them as clients.

My latest JDSupra.com article can be found here.

Maybe it’s an insecurity of mine, but I always felt and still do that there are many times that I haven’t been taken seriously. There were family situations and professional situations where that came to be and it wasn’t a good outcome for those that didn’t take me seriously.

I have been an ERISA attorney since 1998 when the stock market was booming and that meant that daily valued 401(k) plans were part of that boom. Even when I started out, I was alarmed about revenue sharing because it just didn’t seem right to me that some funds paid them and some didn’t and those that paid revenue sharing to the plan administrator had a better shot to be picked. Plans that just offered index funds were few and far between because they were considered as being more expensive to run because of the lack of revenue sharing payments. I was also amazed that while a plan sponsor had the fiduciary duty to pay only reasonable plan expenses, they had no way of knowing how much their plan providers were charging them unless the plan provider was transparent and prior to 2008, that was few and far between.

When I first heard about litigation concerning revenue sharing, it was a lawsuit against Nationwide Insurance in 2000 and in those days, plan sponsors were the usual victors. Then times changed and court started recognizing participant rights and made it easier for them to sue. With a falling stock market in the early 2000s and the late 2000s, there was an increased call for free disclosure because litigation against plan sponsors were increasing.

About 8 years ago, I was starting to be openly critical about revenue sharing and TPAs being less than transparent. Well, there were a lot of people I knew who laughed at me and that included co-workers at the time. Well, they aren’t laughing anymore. Fee disclosure regulations, more litigation, and more competitive fee pricing have changed the 401(k) plan business for the better.

The point is that change is inevitable and that was fee disclosure was inevitable because of a spotlight shown on 401(k) plans because of the poor savings and investment returns went the stock market went through two major corrections in the past 14 years. There is no business that is stagnant except maybe those in the funeral business and any ideas of change shouldn’t be scoffed at or dismissed.

If you don’t feel right and you go to the doctor and you get some grim or fantastic news about your health, isn’t it a good call to get a second opinion? Especially with certain types of cancer, speaking to a different doctor may lead to a confirmation of your diagnosis or an alternative that can be a better course of treatment.

Yet when it comes to retirement plans and advice from potential plan provides, plan sponsors never ask for a second opinion. That can be harmful when the potential plan provider is advising something that is against the rules set forth by the Internal Revenue Code and puts the plan sponsor in great harm.

One of my top clients (who is a leading plan fiduciary) advised me that a plan sponsor was being advised by a third parry administrator who also double as insurance salesmen (not a good fit) that it was OK for a plan design that only offered a life insurance benefit to highly compensated employees.  The problem is that there is rule called benefits, rights, and features that bar any benefit, right, or feature that is discriminatory in favor of highly compensated employees. If this plan sponsor doesn’t get a second opinion and buys this magical bean of insurance only for the highly compensated employees, then they maybe in a rude surprise if the plan ever was audited by the Internal Revenue Service.

Whenever a plan sponsor gets an out of the box plan design solution, a second opinion is just always a good idea.

My latest JDSupra.com article can be found here.