The Rosenbaum Law Firm P.C. Blog

My latest JDSupra.com article can be found here.

What makes a good retirement plan financial advisor? Well it takes an attention to detail, an understanding of what the role to entails, and a dedication to the client. In addition, what I find is the way a good financial advisor handles other retirement plan providers.

A good financial advisor will use other retirement plan providers to act as part of their team to offer the best overall retirement solution to their client. They will lean on the third arty administrator (TPA), ERISA attorney, or auditor to assist with their clients and use them as a resource for any questions they may have, as well as a sales resource for potential clients. When I was working for a New York TPA as well as in my practice today, I have helped advisors with potential clients. It’s a feather in an advisor’s cap as it shows a potential client that they offer white glove treatment if they can get a TPA and/or ERISA attorney to offer assistance without being retained first.

The not so good financial advisor sees themselves as an island, they are very possessive of their clients and are very wary of any provider encroaching on that client. They also have no use for any other retirement provider because they don’t value what they bring to the table. They only see other retirement plan providers as referral sources which they are not because most of the referrals that these providers receive are from other financial advisors and in the rare case that they get a direct referral from a plan sponsor, they are only going to refer that client to financial advisors that they have a longstanding relationship with.

Financial advisors should target a few TPAs that they can work with and rely on with any proposals or any questions for potential clients and to assist current clients. They should also seek out an ERISA attorney who has an eye in developing relationships with the hope of getting business later, rather trying to charge for every phone call and every consultation. See them as part of your team to help augment your sales team, but they likely won’t be your sales team.

Any type of item that keeps you in health is a good thing as long as you use it. So the floss I bought after my last checkup and the exercise equipment that I bought my wife a few years ago that is collecting dust are meaningless if they are not being used.

The same can be said about an educational policy statement that many retirement plan financial advisors are trying to draft for their clients or use as a way to solicit business.

In a nutshell, it’s a gimmick. Not a rip-off like the fiduciary warranty, but it’s not magic because any advisor could help plan sponsors draft one.

An educational policy statement (EPS) mimicked of course after the investment policy statement is really cute marketing, but absolutely of no use if the plan sponsor isn’t going to abide by it.  I like the idea behind the EPS, it’s always a great idea to memorialize fiduciary decisions with paperwork. I just worry that plan sponsors won’t actually provide the investment education that plan participants need in a participant directed 401(k) plan. An EPS is a nice idea on paper, but only effective if it’s not just on paper and being used to offer education.

My latest JDSupra.com article can be found here.

I would say that if that if you ask a retirement plan expert for their opinion, 3,000 experts will yield 5,000 opinions. It’s great to be opinionated, but for the plan sponsor, it can be a bit confusing.

The problem in the industry is when opinion is masqueraded as fact in a study that a retirement plan provider has commissioned. For example, one of the largest payroll providers has just offered plan sponsors a study why it’s a great way to integrate payroll with 401(k) administration, namely hiring this payroll provider to handle 401(k) plan administration. Does one honestly believe that this payroll provider commissioned a study that’s going to say having your payroll provider handle 401(k) administration is a bad idea? Of course not, especially when my articles on the matter are available for free J

Another study was commissioned by a Chamber of Commerce that will not reveal its members that said that changing the fiduciary rule change is going to have 30% of retirement plan sponsors terminate their plan because the rule change will increase regulatory costs and liability. Nonsense. Of course, a brokers association supported the results of the study.

Opinions are important, but understand the role of the person giving it. Is it really impartial or are they really trying to steer you to a certain service or fee arrangement?

Ever since I graduated school, I have gone to the same car mechanic for the past 16 years. Maybe Ralph is a couple of dollars more than someone else, but he’s always honest. He’s the type of businessman who shows that trust and good work is its own reward when you have such loyal customers such as myself. I’m not going to use a car mechanic who is 5 dollars less because my loyalty and faith that I’m not going to get ripped off is worse more than 5 dollars.

Yet I’m surprised when plan sponsors replace a good plan provider for something as little as 5 basis points. The work of a good retirement plan provider is certainly worth 5 basis points more or whatever is that negligible amount that the plan sponsor is going to save by using the plan provider across the street.

Again, plan sponsors must pay reasonable plan expenses. That means they don’t have to pay the lowest plan expenses. Plan sponsors who make a change of plan providers for something as little as 5 basis points end up costing themselves more than 5 basis points when the new plan provider isn’t as competent as the old plan provider.

My latest newsletter geared towards financial advisors can be found here.

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

Based on my articles regarding payroll provider third party administrators, I was quoted in this great PlanSponsor.com article.

I’m a huge Aerosmith fan since high school and it’s because the music resonates with me because it reminds me of the experiences that I have gone through life, which had some adversity and accomplishment. The lyrics from Dream On say it best when: “You got to lose to know how to win”. When I look about many of my defeats in my career, I know that to be the case.

My grandmother Rose (I fund a scholarship at Stony Brook in her memory) told me the story about her time in Auschwitz that really changed my life and changed the pessimism that plagued it. In her bunk, there was a girl her age (around 20) that was crying and declaring that she was going to die. My grandmother insisted she was going to live. Well, that girl died and my grandmother lived, even after the Soviet soldiers left her to die in a stairwell when she had typhoid.

What I learned from the story is that you need to be optimistic in life to succeed, you need hope. You can’t say you’re not going to make it. When I was younger and pessimistic, I let everything get to me. I let the C+ in Civil Procedure I convince me that I’d never get a job after law school. I let not making the law journal or the tax clinic at law school run my life. After hearing her story, I changed. My grandmother survived the Holocaust and saw untold horror that she took to her grave because they were so painful. Anything I have gone through in life is nothing close to what she suffered. It’s thinking about my grandparents and their suffering that made me go on after Hurricane Sandy totaled all of our cars and half our house.

When I worked at other place, I would see people who would complain about their job and just do nothing about it. I was working at one third party administration where most employees complained about their job, their benefits, etc., and just proceeded to work there and not try to find greener pastures.

The point is that in your life, career and in your business, you are going to have adversity and what matters is how you deal with it. You could feel sorry for yourself or you can put yourself in a position to grow.

For many reasons that I have detailed in my writings and in my book, I failed trying to start national, single employer retirement plan practice at this law firm who I have mocked ever since I left there. I tried using social media, tried talking to our law firm partners, and attended so many networking meetings that I can’t count. So after I left, did I cry? Did I feel sorry for myself? No, I started my own law firm, using the same tactics I used at that law firm because I’m stubborn and if I was going to control my destiny instead of depending on others, I was going to do well. This time I succeeded. Four years later, it’s still a struggle, but we’re doing quite well.

When you deal with adversity, learn to take the negative and turn it into a positive.