July Business Services, LLC purchased Sunwest Pensions, a retirement plan recordkeeper and Third Party Administrator based in Tempe, AZ. This strategic merger enables July to further enhance its services and expand its client base by adding over 500 plan clients.
July will now have a client base of over 7,500 clients, comprising 160,000 plan participants and $9.6 billion in plan assets.
In the old days, no one factored mutual fund fees when it came to 401(k) fees. Thankfully, fee disclosure changed that.
401(k) plan participants now incur far lower fees for holding mutual funds over, according to a study from the Investment Company Institute.
The research shows that from 2000 to 2023, the average equity mutual fund expense ratio paid by 401(k) investors dropped by 60%. The average bond mutual fund expense ratio has dropped by 63%. I’m sure much of the change is the increased use of low cost, index funds.
The expense ratios of target date mutual funds have fallen steadily since 2008. The average expense ratio of target date mutual funds dropped 55% from 2008 to 2023.
I’m not very popular, never have been, and never will be. It’s probably my personality or just not wanting to go with the flow, but I’m not a popular guy. Ask my family, ask my former bosses. While I won’t win popularity contests, I’ll make it up by doing quality work and doing my best in my relationships with my clients and my referral sources. But popularity isn’t everything.
You should never associate popularity with quality because many times, they are mutually exclusive. Even though Apple computers are far superior to Windows-based PCs, look who sells a lot more. Some of the most popular food establishments, movies, products, and services may be popular, but not be the best of the best.
So when a plan sponsor chooses a mutual fund, a financial advisor, a third-party administrator, or an ERISA attorney, avoid just picking a provider because they are popular or have so many plans or assets under management. Look for quality over quantity. Look for the best, not the most popular. A lot of things popular in this retirement plan business aren’t very good.
Long-term businesses in the retirement plan business don’t die overnight. It takes a very long time as we see with Sears, the goodbye takes a long time. A dying business can change course, but the problem is that there essentially has to be a change in culture to change.
The problem is that the hierarchy of a long-term business in the retirement plan space is that you have the very same leadership in charge that was at the helm when the business went into a slow, death spiral. Unless the leadership decides to change course, almost nothing will be done to avoid the catastrophe.
If your business has been suffering for some time, the best option is to change course and realize that whatever you’re doing is the same as what you’ve always been doing and that’s not helping out in trying to avoid the death of your business.
As long as I remember, any political discussion gets a little heated. Thanks to social media, any political discussion seems volatile.
Based on my writings and how I think, you might get an idea of my politics. While I may sprout my ideas, I try to be respectful to others. I don’t want to offend potential clients because they may disagree with my view on constitutional interpretation. In the end, Democrats and Republicans pay the same, when it comes to fees, and all their money is good if they’re hiring me.
I see people getting canceled for making stupid political comments, don’t be like that, and just be respectful.
As they once said in This is Spinal Tap, there is a fine line between stupid and clever. I can assure you that Michael McKeon who played David St. Hubbins in the movie and co-wrote it, was not in plan administration. Based on what I’ve seen when it comes to plan document drafting, the line fits just based on what I’ve seen.
The fine line between stupid and clever is plan provisions that are outside the box of normal administration. Complex provisions on eligibility, compensation, and vesting will lead to more errors than provisions that are in the normal realm of plan administration. For example, eliminating forms of compensation for purposes of an employer contribution or salary deferrals leads to many errors, as well as unique eligibility provisions and entry dates.
There are so many normal choices for plan provisions, yet being unique and creative when it comes to plan document preparation isn’t a great feature. As I always say: keep it simple, stupid. Unique plan parameters lead to more errors and some errors will cost you to fix. Creativity isn’t a great trait when it comes to planning provisions.
Congress always has proposed legislation that will never make it to law and this thrift savings plan idea is one that is just an awful idea.
Senator John Hickenlooper (D-Colo.), a sponsor of a controversial bill to create a Thrift Savings-like plan for private sector workers, said he’d reduce 401(k) savings to pay for the legislation.
Hickenlooper has proposed the Retirement Savings for Americans Act (RSAA) and he said that he would lower 401(k) tax incentives and contribution limits to pay for the program.
Supporters of RSAA say it would help low- and middle-income Americans build wealth and save for retirement. RSAA would require the federal government to pay matching contributions for workers, but only those who participate in the plan.
The proposed 5% match under RSAA would encourage plan sponsors to terminate their 401(k) in favor of the federal plan. Plus based on Social Security, the Federal government doesn’t have a great scorecard for retirement savings.
What is old is new again. Experts at an ERISA Advisory Council hearing recommended that annuities should be part of a defined contribution plan’s default The council is a 15-member body that advises the Department of Labor (DOL) and they had experts who testified in support of annuities.
Olivia Mitchell, a professor at the Wharton School of the University of Pennsylvania, testified in favor of a specific default annuity structure in defined contribution plans. She recommended that participants default into a product in which approximately 10% of their plan balance at age 65 is used to purchase a deferred annuity that does not begin to pay until they are about 80 or 85 years of age.
Michael Finke, a professor of wealth management at the American College of Financial Services, spoke more generally about the benefits of annuities as default options in Defined Contribution plans.
I understand the issues regarding lifetime income. My issues are the fees associated with annuities, and the burden of plan sponsors. Fully reviewing annuity options for cost.
Rhode Island is joining the list of states providing a state-run plan that affords private-sector employees retirement plan coverage if their employers do not.
Gov. Daniel McKee (D) signed the Rhode Island Secure Choice Retirement Savings Program Act into law.
Rhode Island Secure Choice will provide retirement plan coverage for eligible employees age 18 and over who work for an employer with five or more employees that does not offer a plan. Through Secure Choice, employees will contribute to a payroll-deduction IRA. They will be automatically enrolled but can opt-out.
The timetable by which employers who have no plan, will have to enroll employees in the program is as follows:
• Employers with more than 100 employees: within one year of the opening of the program
• Employers with more than 50 employees: within two years of the opening of the program
• All other employers: within three years of the opening of the program.
You will find stories of people getting fired for social media posts and I have zero sympathy for that. Probably because I almost bought it once, for trying to get a client.
As discussed over the past 14 years, I worked for two years at a law firm. It was so much dysfunction, that you would think I worked there for 10 years. When I started there, in the New York City office, the idea was that I would develop a national ERISA practice and I could use the existing clientele as a building block. Even though partners could net 50% of the fees I charged for their clients, there was not much interest. So I thought I could contact my former clients at the Third-Party Administrator (TPA) where I worked. Since I left that TPA, it took 3 people to replace me, and their fees were hiked by 50%. I sent an email to an advisor with multiple clients, offering my services on a required ancillary amendment for less money than what the TPA charged.
The TPA found out, and they weren’t happy. They sent a threatening letter to the most senior attorney of the New York City office and called him the Managing Attorney. I was supposed to attend the New York Comic Con that Friday and get some free, exclusive products as a Diamond Comics wholesale account holder. I had to cancel those plans when the firm’s Managing Attorney, Lois, demanded I show up the next day to see her at the Garden City office. She was mad.
Around that time, one of the partner’s sons became the Governor of New York at the time and since the partner of the firm was a big union lawyer, there were concerns over a conflict of interest.
So for about a half hour, I was berated by Lois. Lois had to name Governor David Paterson and the Nassau County Executive Tom Suozzi who both had fathers who were partners at the firm. What this had to do with an innocuous email to drum up business, I don’t understand. The stress of Paterson becoming Governor had gotten to her. Honestly, the large offices in Garden City couldn’t fit her ego because she was also miffed that the TPA’s attorney thought the attorney in the New York City office, a man, was the managing attorney, and not her.
By the way, Paterson was the most incompetent Governor of my lifetime and Suozzi lost re-election by 400 votes with millions in the bank. Lois just liked to name-drop.
As Henry Hill said in GoodFellas: “The way I see it, everybody takes a beating sometime.” With two toddlers at home and a mortgage to pay, I took that beating. No matter how absurd it was, no matter how much Lois disliked me from day one. Less than two years later, I knew my time there was up and I just decided that I could no longer work for someone like Lois. I don’t think my wife ever heard the story before, because I’d keep things from her, especially the abuse, and she can’t believe I’d get yelled at for trying to draw business.
Lois’ incompetence, eventually helped downsize the firm by 3 offices and 50% of their attorneys. I still go to the Garden City office because it’s the same building as my allergist. I never see anyone from the firm there, and I have never seen Lois. For the past 14 years, I have
talked about her and mocked her. I can say that from all the abuse, I was not going to be like her. I’m sure over the past 14 years, she has never thought about me and I certainly understand that, but I knew 14 years ago, how she was killing the firm and getting awards from the local publications for that.
In the normal world, we support and reward employees, who on their own, decide to try to draw business. In the Theater of the Absurd, we attack it, because we can’t handle stress or handle the job.
