The Rosenbaum Law Firm P.C. Blog

In the movie, No Country for Old Men, the hit man Anton Chigurh (played by Javier Bardem) confronts Carson Wells  (who was also trying to recover the same money Chigurh was after) in his hotel room.

Before killing Welles, Chigurh asked him: “If the rule you followed brought you to this, of what use was the rule?”

In the New York Post recently, a New York City principal was reassigned after she was turned in by her former lover who happened to be the father of a child at the school. The principal is caught on tape describe some of her escapades on school time. While a friend of mine blamed the father for being so vindictive (the principal financially supported him and he was jealous she was cheating on him), it totally misses the point. Regardless of whether the father was a fiend, the principal put herself in a situation where that father could hurt her. The principal did something wrong and let the father know about it. She was the master of her own fate.

It’s very hard for people to accept blame, it’s always someone else’s fault. I know from experience because in my lifetime, I uncovered two major scandals (one in law school and one in the 401(k) world). Rather than accept responsibility for their actions, they cast blame on me. For the law school situation, it was a law journal accused of cronyism by some staff members that was supposed to keep tab of the hours their staff worked in order to get academic credit. Well, they didn’t keep very good records. No matter how much blame I got for exposing the scandal while the editor of the law magazine, it didn’t change the fact they did something wrong. The same can be said about a certain third party administrator that had a relationship with an audit firm that questioned the independence of its plan audits. My name was mud for some time in the business, but my call to attention of this relationship didn’t change the facts and didn’t change anything when the Office of the Chief Accountant of the Department of Labor (DOL) put that accounting firm out of the plan auditing business.

For retirement plan sponsors who get into trouble with the DOL, many times it’s because a former employee made a complaint. Rather than harping on the fact that someone made a complaint, a plan sponsor needs to fully accept their responsibility if something wrong did occur. A complaint by a former plan participant doesn’t mean the plan sponsor did something wrong, but it does often end up uncovering a whole host of other problems. I’ve had situations where, the claims by the former participant were groundless but there were enough problems in the plan to keep the DOL agents busy.

Plan sponsors often find out that the rule of not being interested in their retirement plan led them to problems that made that rule a mistake. Plan sponsors need to be on their toes and never let their neglect lead them to problems where a plan participant (former or current) from dropping a dime with the DOL. Plan sponsors can blame the DOL complainer all they want, but it doesn’t change anything if there are issues with their retirement plan.

Plan sponsors need to follow a rule that will lead them to less compliance and fiduciary liability exposure issues because there is no country for lousy retirement plans.

People can promise you the moon, but they may deliver far less. That is why despite the promises made by your plan providers; you should always read their contract to determine whether they are actually delivering you what they promised.

A years back, an advisor looking at a prospective client showed me the agreement that the potential clients had with their current ERISA §3(38) fiduciary. The only problem is that there was nothing in the contract that suggested that the fiduciary was an ERISA §3(38) fiduciary or was exercising discretionary authority over the fiduciary process. So for all intensive purposes, the provider may be providing the service, but the contract says differently.  So imagine if the plan sponsor has to sue the fiduciary for a breach of fiduciary duty and realize that the contract doesn’t protect them because the contract never claimed they were getting that 3(38) service.

So rather than taking the plan provider’s word, I recommend all plan sponsors to read those contracts to make sure they got what they bargained for. Otherwise, it’s another breach of fiduciary duty.

My newsletter geared towards financial advisors can be found here.

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

Everyone knows that I’m a big producer of free content. So in addition to my articles and newsletters, I have free continuing legal education credits to give you.

If you are a retirement plan provider and you know an attorney, forward this information to them.

If you are an attorney registered in Alaska, Arizona, California, Hawaii, Illinois, Missouri, New Jersey, and New York (or if you can get carryover credit for CLEs in these states), you can get 2 hours of continuing legal education credit.

The classes can be viewed on your computer and almost all mobile devices including the IPad.

The two courses offered by Lawline are:

Retirement Plans for Attorneys and Law Firms

How to Help Your Clients Avoid the Pitfalls of 401(k)

Click the link, sign up with Lawline, add the courses and they are free. Just a little gift from me to you.

When it comes to your clients, your co-workers, and the other plan providers who refer you business, there is one simple rule to follow. When it comes to treating and interacting with these people, a little class goes a long way.

Clients, co-workers, other plan providers, and other professional resources for referrals are the folks that help you put food on your table. So they need to be treated with respect and some class. You should never take advantage of people who do right by you.

That’s why I always mention and never forget Richard Laurita, my late friend and co-worker who helped me when it came down to meeting clients, helping out financial advisors, and understanding that the sales process requires the right communication to the right people. I can never forget the help he gave me.

When my home was devastated during Hurricane Sandy, I had no power and both cars were destroyed. I was marooned in a house with 5 feet of water downstairs with no heat. When I was able to get to an area where I could get Internet, I reached out to the only person I knew who would help me, my wife, and my children (who spent the previous night in a shelter, my friend Marlo. Marlo and her husband let us stay at their home for two weeks, so we could start to get our life and home back on track. Without their help, it would probably be months before we could get back home. When it was Marlo’s birthday this past weekend, I made sure to go up to her and tell her how much I loved her because she has been more than a sister to me than my own sister. So anytime I see Marlo and her husband and we socialize, I always try to show my appreciation and class. They owed us nothing and they helped us when we needed it the most. Some folks couldn’t bother to help; they did with actions and not just words.

One of the classiest and most famous people I personally knew died a few weeks back. Basil Paterson was a law firm partner at that law firm I have been deriding for the past four years. Basil Paterson was a former State Senator, candidate for Lieutenant Governor in 1970 (when few African-Americans sought statewide office in New York), deputy Mayor of New York City, member of the Harlem Gang of 4 (with Percy Sutton, David Dinkins, and Charles Rangel), and the father of a rather forgettable Governor (David Paterson).

I was in the Manhattan office and Basil was in Garden City most of the time. I spoke to him just a few times. Based on his accomplishments and being a living part of history, he was nothing but nice to me. While other partners showed their arrogance, Mr. Paterson only showed his class. He was a class act.

Mr. Paterson was well connected in politics and some of his clients were the most well-known and powerful labor unions in New York City. So when Basil passed away, I thought the law firm would put out a press release, mention it on their website, or tweet about it. He was a special man and a special lawyer who brought a lot of business to the law firm and mentored quite a few labor law partners and associates. Aside from a mention on his individual webpage, there was no tribute. Such a classy man didn’t get a classy tribute. Shame on them, shame on the managing attorney. I always felt that in the two years I was there and the four years since I left that they didn’t treat me well, they didn’t treat me with any class. I feel worse that someone who was more experienced than I was who was such a trailblazer in city and state politics that brought them so much business over the years was not treated with the class and respect he deserved for such a legal and political career.

This isn’t some diatribe about the law firm; it’s all about class. Have some; show some, to those who feed you in some way.

My latest newsletter can be found here.

My latest JDSupra.com article can be found here.

When it comes to being a retirement plan provider and selling your services, you have to have it. Those who have it, succeed. Those who don’t, don’t. You can’t get it from a bottle, a book, or course.

What is it?  It’s the ability to connect with potential clients. They have to buy what you’re selling and what you are selling is really yourself. You can’t be too pushy, you can’t be too meek, but probably something in between.

It’s all about connecting with that audience. Years ago, when I worked for a third party administrator, I thought I had it. My boss thought differently, but the salesman there by the name of Rich Laurita saw that I had it, so that’s why he brought me on to many sales meeting. Probably also because despite how Rich had it, he knew very little about the operations of retirement plans.

Connecting with the audience is when the audience understands what you are selling and wants it. Talking over their heads or in some actuarial gibberish or ERISAese won’t do it. Most plan sponsors have no idea about the basic concepts of retirement plans, so what you have to do is to talk to them in a language they can understand.

It should be noted that the talent for selling isn’t like athletic talent; you don’t have to be born with it. You can learn it and refine it over time. Believe me when I first started in this business, I was terrible. That’s probably why my boss thought I didn’t have it, I’m sure he thinks differently today.

Henry T. Ford is considered the father or the pioneer of the modern day assembly line of manufacturing.  His development of the Model T and its way of manufacturing is considered one of the great developments in 20^th century capitalism. His assembly combined the idea of interchangeable parts  and was a model of efficiency. His efficiency did have its limitations. In his autobiography, Ford wrote: “Any customer can have a car painted any color that he wants so long as it is black”.

There are many retirement plan providers that have an assembly line approach when it comes to retirement plans. These providers use their own standardized prototype documents and have a consistent plan design structure. Like the color of a Model T, plan sponsors usually using these providers have no choice in plan design and these limitations may cost the plan sponsor money because they are not able to maximize employer contributions through plan designs that may increase contributions to highly compensated employees, which many times are the owners of the plan sponsor.

There cannot be a cookie cutter approach to retirement plans. Every plan is different. Even plans sponsored by the same employer are different. Every plan has its own set of circumstances as to why they were set up, what the goals were when set up, as well as the demographics of the plan sponsor supporting it. Their vesting schedule, eligibility requirements, and employer contribution should be drafted to the specific needs and demographics of the plan sponsor. Plan documents are legal documents and legal documents have legal consequences. They should not be churned out by someone who is not an ERISA attorney or a paralegal with extensive retirement plan drafting background.  Prototype plan documents that have that fill in the blank document look can be a very cost efficient, but they have their limits and there are very often situations where the plan sponsor’s needs cannot fit within the confines of the plan document’s limited choices.

Retirement plans are not widgets or tubes of toothpaste. Like a suit, they have to be custom made or tailored to meet the specific needs of the plan sponsor. Failure to have the plan fits the needs of a plan sponsor is the same as my 6 year old son wearing his 4T clothes or my clothes.  Plan design and drafting is an essential part of retirement plan administration and should not be discounted.

These plan providers that use that assembly line approach that doesn’t offer new comparability plan design or a variety of choice among plan provisions does a disservice to the plan sponsor. Cost for a plan sponsor in retirement plan administration is a concern, but not the overriding concern. Plan sponsors need providers that can draft and administer the plan so it fits their needs.