Mistakes happen in the retirement plan business. I\u2019ve been doing this long enough to know that perfection isn\u2019t a realistic standard.<\/p>\n
What bothers me is when the plan sponsor repeatedly discovers the mistakes.<\/p>\n
A census gets uploaded incorrectly. An eligibility date is wrong. A distribution is mishandled. The plan document doesn\u2019t reflect what everyone thought the plan provided. Testing uses incorrect compensation. A participant who should have entered the plan wasn\u2019t allowed to participate.<\/p>\n
Then the sponsor finds it.<\/p>\n
The plan sponsor isn\u2019t your quality-control department.<\/p>\n
Providers are paid because retirement plans are complicated and plan sponsors need expertise. That means there should be procedures designed to catch mistakes before the client catches them.<\/p>\n
The occasional error isn\u2019t necessarily a reason to fire a provider. A pattern of errors discovered by the client is something completely different. Eventually, the sponsor starts wondering what else is wrong that they haven\u2019t found yet.<\/p>\n
That\u2019s when confidence disappears.<\/p>\n
Quality control isn\u2019t glamorous. Nobody wins a sales presentation by showing off their internal review procedures. Yet strong internal controls may be more valuable to the client than half the bells and whistles providers use to sell their services.<\/p>\n
Providers should regularly review their work, especially in areas where errors create expensive corrections. Eligibility, compensation, contributions, testing, distributions, and plan provisions deserve more than a quick glance.<\/p>\n
When an error is discovered, don\u2019t just correct that particular mistake. Figure out why it happened and whether the same weakness could affect other clients.<\/p>\n
A good provider fixes errors.<\/p>\n
A great provider builds processes that make the same error less likely to happen again.<\/p>\n
Your client hired you because they need help administering their retirement plan.<\/p>\n
They shouldn\u2019t also have to proofread your work.<\/p>\n
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