The Rosenbaum Law Firm P.C. Blog

Reminding me of that coffee scene in Airplane II, I worked at a place where we didn’t have the greatest benefits and the raises were not the greatest. When it came to information, we were always on a need-to-know basis, so we didn’t need to know anything until it happened a few weeks before. The employees there (except for a few of us) were lambs ready for the slaughterhouse, but they did raise rancor when management stopped providing milk for the Keurig machine (which the employer did provide). We all have priorities and for some employees, free milk for coffee is a higher priority than health insurance and retirement benefits.

So when a friend of mine who is a financial advisor taking on a fiduciary role, tells me that plan sponsors aren’t interested in improving their plan and saving $30,000, I’m not surprised. The $30,000 in savings would go back into the participant’s back pocket, so some employers may not consider that a big deal. But the fact is that even with fee disclosure and increased litigation and plan sponsor liability, many employers just haven’t made improving their plans a high priority. When they already decided to pay $30,000 more, it’s very hard to convince them that improving the plan through the use of an independent fiduciary and saving money is a good thing because clearly, that’s not their priority.

Getting new clients and convincing plan sponsors to hire excellent plan providers such as you isn’t easy. It takes a lot of convincing and a lot of conversations to get plan sponsors to think that improving their plan and saving plan expenses is a good thing. That’s why conversation and communication with potential clients is key. If you already know that you can help plan sponsors out. make sure the conversation surrounds what they can do to improve their plan and why it’s important they do that. It’s all about trying to convince plan sponsors that improving their plan is as high a priority as it is to provide free milk for the employees’ coffee.

The worst things to argue about are politics and religion. That’s why I avoid suggesting that plan sponsors add an ESG fund to their 401(k) lineup. I’ve never been a big fan of these funds because each mutual fund company might have a different interpretation that an ESG company might be worth investing in.

Most of all, I think plan sponsors should focus on investment options that can maximize return and I don’t believe that an ESG fund is about maximizing return. I drive a Prius, I recycle, and I try to add more plants to my diet, but as a plan fiduciary, that has nothing to do with trying to put plan participants in a better financial position for retirement savings.

World Insurance Associates has devided to purchase Waukesha, Wisconsin-based Financial Solutions, adding to the World financial services division led by Pensionmark CEO Troy Hammond.

To date, World has completed more than 195 acquisitions and serves its clients from more than 260 offices across the United States.

My daughter works at my son’s favorite pizzeria. She can’t bring in outside food or drink? Why? Appearances matter even if David Portnoy only gave them a 7.2.

Mutual fund companies are going to have their own proprietary in their employee’s 401(k) plan. They have to because appearances matter. However, it makes them a target, and any financial settlement is the cost of doing business.

A former Federated Hermes employee this week sued the company because it included its own funds in the company’s 401(k) plan. The plaintiff in the proposed class-action case, Nicholas Koroly, claims Federated Hermes breached its fiduciary duty by filling its 401(k) menu exclusively with its own U.S. mutual funds.

The fee disclosure regulations were one of the best things that ever happened to the retirement plan business. Yet, what is great, can be improved.

Sections 340 and 341 of Secure 2.0 request that the Department of Labor (DOL) and the Internal Revenue Service (IRS) to review defined contribution plan fee disclosures and plan notices provided to participants, giving Congress three years to amend fee disclosure rules and two years to consolidate required plan notices. The DOL requested public feedback on these sections and other provisions of SECURE 2.0 on August 11.

I still think the DOL dropped the ball, by not requiring model notices or standardized language. Like food labels, a standardized format would make it easier for plan sponsors, participants, and other plan providers.

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

With January 1st coming down the pike, many in the retirement plan industry have issued a sigh of relief.

The Internal Revenue Service (IRS) has now announced an administrative transition period for the new catch-up contribution requirements under the SECURE 2.0 Act. The new rule requires older, higher paid 401(k) participants to make their catch-up contributions into after-tax Roth accounts, instead of pre-tax traditional accounts. Congress meant for it to take effect in 2024. Now, responding to begging from plan sponsors and payroll providers, the IRS has postponed that until 2026.

If you lived in my household as a kid, you wouldn’t be surprised I was a kid who saw a glass, half empty then half full. I think having my practice has made me more of an optimist.

A Fidelity survey shows that while 76% of sponsors were extremely satisfied with their current plan advisor, 22% reported they were actively looking to switch. For me, I think 22% dissatisfaction is kind of high and an opportunity for an advisor who gets it and understands the nature of their position.

Everyone has an opinion, but I think the independent opinion that is guided by beliefs and not by pay is far more important than the opinion that is greased by greed.

I had lunch with my local neighborhood third-party administrator (TPA) and we were talking about the business of retirement plans.

He told me that a recent client bolted to a payroll provider TPA (not the big 2, but another smaller one. Yes there are others) to save $600 in administration fees.

The client was told to move to the payroll provider TPA by their accountant because of the $600 savings. What I forgot to mention is that the accountant is the new broker of record for the plan. The accountant is wearing two hats. I own lots of hats (I love fitted Major League Baseball hats), but I only have one hat to pay.

What the accountant and the new payroll provider TPA failed to mention is that they were each netting over $10,000 for this change. Of course, the client wasn’t thrilled when the old TPA told them the “good news”.

The lesson here is that if you’re a plan sponsor and you get a recommendation by one of your providers to change the advisor, make sure it’s for the right reason and not for the recommending provider to get some pecuniary gain. There are many good reasons why plan sponsors should make a plan provider change, a windfall for your financial advisor and a new TPA isn’t one of them.

When I started my own National ERISA/ retirement plan law practice more than 13 years ago, it wasn’t easy. It still isn’t easy, but I could no longer see myself working for people who were either too arrogant or too blind to see what the retirement plan industry was turning into.

One of the things I’ve learned over the past 25 years is that no matter what happens to you in business, you can’t change who you are. You have your way of doing business, both professionally and ethically, and as long as you are on the up and up, never change that.

One of the things about my practice is that I want to be paid for legal services only, so I’m not going to receive a fee for pushing clients to seek certain providers or advisors I recommend. So when advisors have come to me with these “finder’s fees”, I tell them: ‘Thanks, but no thanks.” My legal fees compensate me for my independent legal advice, any other fee is a conflict of interest to helping my clients first.

There may be competing advisors who are unethical (I know of far more successful ERISA attorney who received paid solicitor fees for referring clients to specific providers) or clients who either don’t pay bills (you should see my list) or drive you crazy, but you should never change who you are.

Never change who you are, no matter the few who treat you badly or act badly in this industry.