The Rosenbaum Law Firm P.C. Blog

I used to attend a lot more networking events when I first started my law firm when I had very little clients and I think that experience kind of made me attend far fewer events.

Networking is an instrumental part of building any business whether it’s a law firm, third party administrator, financial advisor, or even a limousine owner. To meet networking, it’s all about building relationships that can help you generate business. It takes times, lots of effort, and is quite rewarding.

The biggest pet peeve I have about networking is what I call the obnoxious direct sell. Picture being at a networking event and you own a third party administration company. You meet a financial advisor and the first thing he asks you is who is the financial advisor on your 401(k) plan. You just met this guy and he’s already trying to be your financial advisor. You barely know him better than a stranger on the street and he’s trying to sell you a service you probably don’t need if you did a diligent job of hiring an advisor.

To me the purpose of networking is to meet people who are spheres of influence, who can refer you business when someone they know needs someone of your caliber to help.  These relationships require trust and they require time, so doing the hard sell to sell a service to this potential source of business is going to backfire.

When I’m meeting another retirement plan provider or another professional, I’m not going to ask them who their ERISA attorney is. They know what I do for a living if they listened to the introduction. If they like what they hear what I have to say, they will develop a relationship and if they need an ERISA attorney, they’ll call or if someone they know who needs an ERISA attorney, they’ll send them my name.

Networking is like dating. If you go too fast to the hoop, you’re likely to get blocked/rejected. Any good relationship is developed from trust that takes time and you need to see the bigger picture. Concentrate on developing pipelines of referrals and less on the quick score.

If you develop a good reputation in this business and you develop great relationships, you will make it. If you see relationships just as a direct way of selling, you’re going to fail and offend a lot of people.

Another quick tip on networking: if someone is trying to sell you a product or service to you and promises that they can bring you clients in return, they never do.

My latest JDSupra.com article can be found here.

Too often brokers and financial advisors think about their client’s retirement plan needs and only think about the 401(k) plan. It’s understandable based on their lack of understanding retirement plan basics, but it’s not when there are a vast selection of retirement plan consultants and ERISA attorneys who can help advise the client and the financial advisor.

A 401(k) plan is an attractive savings vehicle for plan participants and if done correctly, a great employee benefit. However, there are a few plan designs such as new comparability and safe harbor design that can help augment the retirement savings of highly compensated employees. In addition, there are other plans that can be added to a 401(k) plan that can certainly add a lot more firepower to retirement savings like a cash balance plan, a defined benefit plan, or in many cases, a non-qualified deferred compensation plan.

Too often, plan advisors just don’t look beyond the 401(k) plan. This is more so when the advisor is using a bundled or payroll provider as the plan’s third party administration (TPA) firm.  Bundled or payroll provider TPA tend to be more mechanized about retirement plans, so I find they are the last ones who will try new plan designs or bring the option of adding another plan. Unbundled TPAs tend not be boxed into the 401(k) plans, so I find that they think outside of the box more often.

Last week, I met a financial advisor with a law firm client asking whether they could do better than the typical insurance based platform 401(k). Based on the law firm’s demographics, a cash balance plan could be a great option and this broker would never have thought about anything other than a 401(k) plan if he hadn’t talked to me. Based on the way he acted with how much more money I told him the partners could save for retirement, you thought I found a hidden treasure. Needless to say, I made a new friend.

401(k) plans are great plans if done correctly, but there is no reason that a plan sponsor should stop there if their pocketbooks can afford more.

One of the problems with being a plan sponsor is trying to make sure that when it comes to the interaction and work of plan providers that the “ball” isn’t dropped. The problem for the plan sponsor, most of the time, they don’t know there is an actual “ball”.

The “ball” that seems to get dropped a lot is when plan sponsors haven’t updated in quite some time. I have seen this problem more often these days and I’m surprised by that. Every 5-6, years, a plan sponsor has to update their plan documents and every year or two, has to execute an ancillary plan amendment. Some will say that this Internal Revenue Service requirements are to fee us ERISA attorneys, but it’s also to make sure that the plan document had the language to conform to current law.

Too many times, you have a third party administrator (TPA) who rarely looks at the plan document to make sure whether it’s up to date because most of the plan provisions are listed on the recordkeeping software. I once joked at some of the TPAs that I worked at, that if you wanted to hide something from a plan administrator, you should hide it in the plan document file (thanks to Chris Rock for inspiring the joke).

There are so many reasons that a plan sponsor doesn’t get the plan document updated such as when the TPA doesn’t draft plan documents or assumes another plan provider (such as an ERISA attorney) has the responsibility.

Part of the problem is that the plan sponsors don’t keep all the copies of all of their plan documents, so there is mass confusion whether a particular restatement or amendment was done because there has been a few TPA changes over time.

Regardless of who is to blame, it’s always the plan sponsor’s blame. A plan sponsor should keep copies of all their plans and consistently ask their TPA or ERISA attorney whether their plan documents are up to date. Heck, my Retirement Plan Tune-Up plan review (cheap plug here) does a pretty job of that.

Regardless, the plan sponsors needs to know about the plan document “ball” and that it shouldn’t be dropped.

I was quoted in this Consumer Reports article.

Sometimes there will be a proclamation in retirement plans that something is the best thing since sliced bread. I guess when someone first used a knife to cute bread that must have been a big deal too.

But the fact is that despite something being so great, it’s not great for everyone. When safe harbor 401(k) plans were implemented in 1999, that was the greatest thing since sliced bread, but it wasn’t for the plans that regularly passed their compliances costs or those firms that couldn’t pay the required 100% vested contributions to employees.

An ERISA §3(38) fiduciary is a great thing to have, having a financial advisor assume the responsibility in managing a plan’s fiduciary process. But if the plan has an employer with a staff that can effectively manage the process, it’s not as good as sliced bread. The same with an ERISA §3(16) service (I know, I have one).  The same with cash balance plans, automatic enrollment, and everything else that is the best thing since sliced bread. As a plan sponsor, it’s up to you to figure out what’s the best thing since sliced bread and what isn’t.

There is nothing offered in the retirement plan business that’s the right for everyone. Like a suit, it has to be the right fit and there is no suit that is a one size fits all. The same with any retirement plan feature or service.

An article featuring many of my tips can be found on this BenefitsPro article.

My latest JDSupra.com article can be found here.

When I started my own law practice 3 years ago, it was a struggle. To this day, it’s still a struggle. When I started my own practice, I really tried to develop relationships with financial advisors and third party administrators just like I did when I was working at the law firm.

One of the relationships that I was trying to develop was with a Connecticut broker who seemed really interested in my past clients when I was working at a New York Third party administrator and a lot of interest in my Retirement Plan Tune-Up (the affordable legal and fiduciary plan review, only $500 through September 30^th. Cheap plug here).

So I schlepped all the way up Interstate 95 for the meeting and they seemed very interested in my plan review and they thought they could refer me so much business that they were asking for some sort of exclusivity or favored nation status. So it looked like I was getting a nice pipeline of business. To cut it short, I got blown off as the broker said that his team was concerned that I didn’t have a big enough name to partner up with. I thought that was kind of ridiculous since my old firm wasn’t that well known outside of Long Island and the plan review service was far more important than any “brand name”. Of course thanks to my articles and readers such as yourselves, I have a name or brand name.

The point is that when picking plan providers, plan sponsors may prefer to use plan custodians, third party administrators, or financial advisors that have names or brand names. Having your plan administered by one of the largest mutual fund companies sounds great because it’s the name you know, but it’s a major headache if the name you know doesn’t know how to properly administer the plan.

Bernie Madoff was a name you would know if you were a high flyer and we all know how that turned out.

When it comes to hiring your plan provider, concentrate less on name and more on competence.

My latest newsletter can be found here.