The Rosenbaum Law Firm P.C. Blog

At my old law firm, there was a brilliant law firm partner. His only problem was that he had no people skills. He’d be great for research or writing, but you’d want him as far away from the client as possible.

When the main partner whose client was a large New York State union was unavailable for their national conference, the partner with no people skills was recruited to give a discussion on retirement plans. I was asked to travel to Albany on my birthday to assist. While I had a good track record as a speaker, the brilliant partner did not. Let’s just say out of a few dozen presentations at the conference, his was the worst rated.

I think the one thing that most people in business forget is that they are in the people connection business. I don’t care how brilliant you are as a third party administrator, financial advisor, or ERISA attorney; you will fail in drawing business if you fail to connect with your audience.

You need to have people skills to compete in generating business for you and your firm. You need to connect your audience of potential and current clients to pay your bills. It’s as simple that.

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Plan sponsors aren’t the greatest keeper of plan records because as a plan fiduciary, they think they get too many reports, prospectuses, and plan documents.  It’s a lot paper to keep, but in a world of mobile storage thanks to scanning, plan sponsors get even less sympathy for all that paper.

Plan sponsors after a certain time can toss out certain reports. A 2001 investment policy statement is of little use now, but all plan documents and amendments should be kept. In most plan audits, the one thing that plan sponsors don’t have are fully executed plan documents and that’s a problem because an unsigned or undrafted amendments from 1993 can be a problem for the plan sponsor today. If plan documents and amendments are unsigned or missing, the government auditor usually takes the position that they were never done.

So when you get copies of plan documents and amendments to sign by your third party administrator or ERISA attorney, sign and date it the day you get it. Then scan it to make sure you have a copy of it if you misplaced the original. It’s just common sense, but most of the time, I rarely see all plan documents fully dated and executed. So get those plan documents signed and dated and put them in a safe place.

It’s now Fall and it’s one of my least favorite time of the year because I love Spring and Summer and Fall means Winter is around the corner.

For a retirement plan professional, it’s one of the best times of the year because this is often the time for opportunity. Plan sponsors usually make plan provider changes during the 4^th quarter in order to effectuate a January 1^st conversion date.

So now is the time to sell your services to potential new clients. Each potential client is different with its own situation and its own gripes with their current plan providers. Most of the time, plan providers get fired for something other than the fact that fees were less somewhere else. It’s usually because the plan provider made a big error that cost the plan sponsor, or they referred the plan sponsors to another plan provider that was incompetent, or they are not offering enough services for the fees they charged. So this is the exact time to be having the conversation with the potential clients on why your services for the price you charge is better than what the current provider is charging.

Have those conversations and good luck. If you need help with the conversation, give me a call.

So as a retirement plan provider or referring one to your plan sponsor clients, concentrate on those that are competent, rather than those who have flashy websites, or vague promises that their TPA services integrate with payroll. Maybe a daily valued TPA doesn’t have a participant website that is eye candy, but maybe their fees are reasonable and their service is incomparable. There is nothing wrong with nice websites and fancy brochures, it’s just that you have to have the background to fit the claims and services touted in your marketing materials as well as making sure that the providers you have aligned with can actually do the job that they have promised to do. Too often, plan sponsors and retirement plan providers get burned by buying the “fluff”, hiring a provider just based on the materials and claims without digging to find out if the provider is any good. We all know too well (for some of us, too well) of the fiduciary who was a great advocate for plan sponsors and participants because he said he was, but this fiduciary had no clothes or is accused of stealing some clothes. That being said, you have to have the background to support your claims, you have to make sure that the providers your work with are competent and aren’t known for being a lousy plan provider.

Sizzle is nice; just make sure you have the steak to go with it.

As a retirement plan provider, tools like Brightscope, fi360, Fiduciary Benchmarks, and FRA Plan Tools among others, are great resources to prospect prospective clients.

Thanks to the information provided on the Form 5500, these tools can let you know about the costs of the Plan as well as many of the potential issues with the plan such as a low participation rate and whether the Plan has a proper bond.

These reports are not the Holy Grail; they are imperfect tools because all they report is what appears on a Form 5500. If there are issues with the Plan that don’t show up on the Form 5500, you won’t know about it.

I remember my old law firm scored an 85 with their 401(k) plan on Brightscope; it’s actually still the same score. The plan had low fees and it had a generous safe harbor/new comparability contribution of 5% to non-partners.  The eligibility was only 3 months. The problems with the Plan when I was there was that the plan had no financial advisor on the Plan. The plan’s investments weren’t reviewed for 10 years, there was no investment policy statement, and plan participants weren’t getting any investment education. So the major issues that the plan suffered from would never show up on any of these plan-prospecting tools.

These tools are like problems with a car, it only shows you what’s visible and if you really want to know what’s wrong with the plan, you will have to lift up the hood. So just stating to prospective clients that you’ll be cheaper than the incumbent provider, get the big picture from the plan sponsors and what maybe wrong. The only way you’ll find out the full story of what’s wrong with the Plan is when you have the plan documents, valuations, and fiduciary materials reviewed. Then you get the full picture and then you can hammer home the point why you are the right fit for a client.

Prospecting tools like Brightscope are like golf clubs. Consider them the driver, but you need woods, irons, and a putter to win the hole.

I was a fit at my old law firm sort of like how my son’s toddler clothes fit him at age 7.  I wasn’t a good fit because I didn’t take myself too seriously, I tried to push for flat fee billing, and I tried to break down difficult retirement plan concepts into Basic English for my clients and for the financial advisors that I was working with. The way I empathized fiduciary responsibility for plan sponsors then and now is that it isn’t brain surgery and clearly that’s a threat when you have to charge $300 an hour for that legal advice because when you charge a premium, you can’t make the advice that much basic.

The fact is that like keeping a healthy mouth, keeping a healthy retirement plan doesn’t take that much work. It takes dedication and time, but ultimately, a successful retirement plan always requires one constant: a plan sponsor that takes their fiduciary role seriously. So a plan can have the best providers out there and the best fund lineup out there, it’s still probe to problems if the plan sponsor is negligent in their duties. A plan sponsor committed to fiduciary responsibility is the one constant for having a great retirement plan.