As any of you are aware, the bulk of my career was spent working as an ERISA attorney for a couple of third party administration (TPA) firms including one that has truly inspired my work since I left the TPA world. \u00a0<\/p>\n
Most of my criticism of the 401(k) industry is a result of the horrors I saw working there and the horrors I found about after I left. They were a producing TPA that didn\u2019t fully disclose all their fees and I left in 2007 because I thought the future was full fee disclosure and the people that ran the company would never change with the times. Like crack, they became addicted to a very potent drug called revenue sharing.<\/p>\n
This TPA had been making the news for all the wrong reasons. Years after I left, the Department of Labor started to investigate them for a nefarious relationship between the TPA and the auditing firm they referred work to, for the plans that required independent audits. \u00a0It was discovered that the two men who had owned the TPA and managed it after selling it to Focus Financial Partners were the trustees of the auditing firm\u2019s 401(k) plan. It was also discovered that the staff accountants from the auditing firm were on the TPA\u2019s payroll. Which of course, begs the question as to who the participants were in the auditing firm\u2019s 401(k) plan?<\/p>\n
Why would a TPA go through the whole trouble of starting an auditing firm to produce audits that were not independent? Perhaps to hide poor administration or hidden fees. This TPA never disclosed revenue sharing payments and their parent company insisted that they do so. So in 2008, they invented a fee that never existed before to justify their act of pocketing revenue sharing.<\/p>\n
Needless to say, the TPA has been hemorrhaging clients since the story broke and the two men who ran the company were put out to pasture. It was just announced<\/a> that the TPA was merging with a fellow TPA from the Focus Family, in order to bury their name.<\/p>\n I am glad they buried the name because that name in the 401(k) industry stood for hidden fees, poor administration, and apparently, fraudulent audit reports. \u00a0I am also glad that 70+ employees there will still be gainfully employed because they should no longer suffer for the apparent illegal acts of two men.<\/p>\n <\/span><\/p>","protected":false},"excerpt":{"rendered":" As any of you are aware, the bulk of my career was spent working as an ERISA attorney for a couple of third party administration (TPA) firms including one that has truly inspired my work since I left the TPA … Continue reading