The Rosenbaum Law Firm P.C. Blog

In the retirement plan business, there are way too many events and they cost a ton. Well, what if there was an event that cost a little bit of money, but you learned a whole lot.

Two of my best friends in the business, James Holland and Chuck Hammond have developed Evolution (k), a two-day event in Charlotte for financial advisors who want to be major players in the 401(k) plan space. The event will be March 3^rd and 4^th. Rumor has it that I will be there too and it’s not just an excuse to visit the NASCAR Hall of Fame (obligatory pro-Jeff Gordon and Jimmie Johnson message here).

Instead of shelling out thousands for one or two things you might learn about the business, Evolution(k) allows you to spend less and learn more from the experts.

Click here for more information.

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 over night.

When I started my own law practice three and a half 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. 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 advisors, 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 my 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.

My latest JDSupra.com article can be found here.

My latest JDSupra.com article can be found here.

The law firm I started a few years back is actually more than 13 years old as it was a shell where I could offer legal services on the side while I did my normal day job. It was an experiment on whether I could go out on my own and I learned during that time what worked and didn’t.  I can tell you that advertising in the local Pennysaver or advertising yourself as a low cost legal provider are likely misses.

So part of my practice was offering most services such as tax preparation and wills on a flat fee. For a time, wills were ridiculously low such as a will for $100. I had a tax client who wanted me to do a will and she knew about those fill in the blank forms that Staples offered.  I had software that produced wills in a Microsoft Word format. The clients asked me whether I would do their wills using those fill in the blank forms and whether I would cut my fee. I told them I wouldn’t because that was outside my comfort zone and my will fee was ridiculously low as it was.

A good part of my practice is working with financial advisors and TPAs. Some have me on a monthly retainer; most just call out of the blue with questions (feel free to call). Many advisors ask for my opinion on clients who request something outside the box, such as asking an ERISA §3(38) fiduciary who uses index funds to retain some of the actively managed funds that the previous advisor added to the fund lineup or a financial advisor being asked to assist a plan sponsor with an Internal Revenue Service (IRS). Being a retirement plan provider is hard enough without adding stuff to your plate that may put yourself out of your level of comfort. If you are a §3(38) fiduciary, the whole point was for the plan sponsor to offer discretionary control over plan investments and you don’t have control when the plan sponsors is asking you to retain their previously added investment options. Being a financial advisor doesn’t mean being an ERISA attorney in handling plan audits.

The road to hell is paved with good intentions and I am sure that there have been plan providers being sued for errors caused in favors these providers did for specific plan sponsor clients that the provider knew was out of their level of comfort.

It’s easier to say yes to every plan sponsor request, but it takes a better businessperson to turn down business that may increase your liability and get you out of that zone of comfort.

I didn’t have such a wonderful time at law school because I felt the administration and much of the faculty weren’t honest when it came to the study of law and more importantly, our job opportunities. There was one law professor who was a shining light because he told it like it was and was just up front and honest with people. His name is Bernie Corr. I don’t mind the C+ in Civil Procedure because he told us that some of us were getting that grade and I did better with him in two other classes.

History has shown that I love people who are upfront and honest about things and I show less love for those who hide the ball.

When it came time to a Bankruptcy seminar course, he told us that any changes in bankruptcy are a boon to bankruptcy law and was insisting that many of these changes might have to do with making money for bankruptcy attorneys.

Every 6-7 years every retirement plan has to be restated into a new plan document and every few years, there needs to be ancillary amendments. I admit that I steal professor Corr’s line that all these amendments and restatements are to keep ERISA attorneys like me employed.  Seriously, retirement plan laws change and plans have to be amended to reflect that.

For the past 10 years, there has been a host of plan restatements and ancillary amendments that have been required for all retirement plan sponsors. There have been so many ancillary amendments, that even I have to keep a full checklist of what was done. Plan sponsors are in worse shape because many don’t have all the ancillary amendments (whether they were done or nor and whether they were actually signed or not) and the Internal Revenue Service (IRS) knows that especially when it comes to plan audits. Not having all the required plan amendments and restatements is an excellent way for the IRS to make a few shekels on penalties when auditing a plan.

So it’s a good idea for a plan sponsor to take inventory of their plan documents and amendments to make sure they have a set that are up to date and correctly dated. If not, a submission to the IRS’ voluntary compliance program beats getting penalized on an audit because it costs a lot less.

I’m the guy who doesn’t win popularity contests and I’ve had bosses who just didn’t see it the way I saw how things were changing in the retirement plan industry and the legal industry. So I’m a bit overwhelmed that I was named #73 on the Top 100 Most Influential People in 401(k) by 401kwire.com. I guess this one is for the underdogs and for the talented law firm associates with managing attorneys who couldn’t see talent if it was right in front of their face.

Seriously, I owe this recognition to all of you, my faithful readers. You can write great content with many allusions to Caddyshack and the Shawshank Redemption, but it means nothing if no one reads it. I knew when you write great stuff and no one reads it from my time in college and that certain law firm, so it’s all because of readers like you.

This recognition won’t go to my head because I don’t have a big enough ego because I don’t take myself too seriously (you know if you read my writing). I just want to point out that there is nothing wonderful about me. I’m just a guy who thought he could start a national retirement plan law practice based on social media and developing content that would develop relationships with clients, third party administrators, and financial advisors. I always thought that most retirement plan marketing wasn’t good and TPAs and financial advisors could use my articles to develop their book of business and that was going to be the door opener for me to develop relationships with people who could refer me business. This wasn’t brain surgery; it’s human nature to understand that if you scratch someone’s back, they will scratch yours. It was all about developing a connection and it has been a thrill to be able to connect with readers like you through this blog, all the articles on JDSupra.com, and all the stuff on LinkedIn/Twitter/Facebook.

So all I can say it’s all about making a connection and I hope to continue to connect with you.

Plus this also a great plug for my Kindle e-book coming soon, “How To Succeed in the 401(k) Plan Business”.

My latest JDSupra.com article can be found here.

I referred work to an accountant I knew for a retirement plan audit. He did a terrible job and there are issues regarding his registration to do the work. Making a lousy referral is even worse than doing poor work of your own because at least you had control over your own work.

Of course, I’m embarrassed and the accountant is just coming up with so many embarrassing excuses and I look like a moron in front of this plan sponsor. Yet, despite everything, all I wanted was an apology from the accountant.

Sometimes all you have to do is to say sorry if you mess up or if the client is disappointed in anyway even if it was something out of your control.  Saying sorry and not making any excuses is a good way for your clients to release tension because unhappy clients leave and just fighting over something just because you won’t simply say sorry is silly. Saying you are sorry isn’t the same as admitting guilt and sometimes, it’s better to give in even though apologizing is not giving in.

Clients needs to know you care and just being indignant in refusing to apologize for anything can go a long way in causing grief for your business that you do not need.

One of the most annoying phrases out there is: “if it ain’t broken, don’t fix it”. I have disliked it for more than 20 years after seeing a student government political candidates use it back at Stony Brook.

Through out my career whether it was at school or at work, I would always here that phrase as well as “well, it’s always been that way”. Sometimes, what had always been that way has always been wrong too.

Civilizations progresses because people progress and people could only progress if they change. We wouldn’t have IPads if Steven Jobs thought that IPhones were good enough, we’d still be carrying around cell phones in a briefcase or plugged into our car paying obnoxious per minute charges if it wasn’t broken or if it was always that way.

Plan sponsors can’t afford to be complacent and they can’t afford to just write off any potential change to their plans because it isn’t broken. Complacency is just another form of laziness and when you are a plan fiduciary, you can’t just sit back and let time pass by. Saying that you’ve had the same plan provider for 20 years doesn’t mean they shouldn’t be replaced especially when you discover that they haven’t done the most competent job or are charging excess fees.

I had a client being sued by the Department of Labor because she used a TPA for 28 years without realizing they didn’t do valuations or distribution forms for owner-employees.

Plan sponsors have too much fiduciary liability to be complacent. Instead of being convinced that things aren’t broken, plan sponsors need to make sure that their plans have advisors that are at the top of their game and willing to be ahead of the curve because those that don’t change with the times will have the times change them.

If it ain’t broken, don’t fix it is a cop out. It means we are too lazy to be better.  For those who are plan sponsors, complacency can be a killer.