I always believe that regardless of whether it\u2019s business or in regular day to day life, that you can\u2019t be everything for everybody. Being honest with that is only half the battle.<\/p>\n
A few weeks back, I met someone who was interested in starting a registered investment advisory (RIA) firm. \u00a0He called me for my insight on the retirement plan business, as well as my work in drafting advisory agreements for RIA firms and their retirement plan clients to comply with the fee disclosure regulations (which I do for $1,000 on a flat fee basis, cheap plug).\u00a0 The next week or so, he called me and asked whether I could work on his RIA registration or whether he should use one of those businesses that only deal with RIA set ups and registration. Looking at my experience in doing that and comparing myself to these businesses, I politely told him that these firms would be a better fit for his RIA registration. It\u2019s not that I couldn\u2019t do the work; it\u2019s just that the fees and length of time in doing the work is probably better by using a business that does nothing but RIA registrations. Perhaps this new RIA will be a client of mine, perhaps not, but he appreciated my honesty. \u00a0Again, you can\u2019t be everything for everybody.<\/p>\n
I have a friend of mine who works for a great third party administration (TPA) firm in the Northeast. Only problem is that when it comes to smaller plans, the fees are high. Nothing wrong with that, except if you are a smaller plan and were dead set on getting this TPA to handle your plan. Anyway, this salesperson met one of the accountants he was familiar with. The accountant had a lot of opportunity in single employee, defined benefit plans. With a $4,000 minimum for the actuarial work, the salesperson told the accountant that they were better off finding another firm for these plans at less than half what his minimum fee was. Again, you can\u2019t be everything for everybody.<\/p>\n
Contrast this with a case at my old TPA. We had a 401(k) plan where the human resources director hated us from day one because we wouldn\u2019t do the work she received from the previous TPA she liked. She was a problem from Day 1, but we took the case because we had a great relationship with a southern RIA firm. So this client was a problem from Day 1, but they seemed to be interested in changing the plan by making it a K-SOP, basically adding an employer stock ownership feature (ESOP) to it. \u00a0The client\u2019s advisors asked me about our experience with it and I was honest, I said we had a couple of those cases. My boss who was an ERISA attorney, but didn\u2019t practice since the Ronald Reagan administration, knew better. He flew out to meet the client and since he always knew better (since he thought I couldn\u2019t speak or sell), he was going to educate the client on K-SOP even though he knew nothing on the topic. Story cut short, my boss\u2019 lack of knowledge was exposed and not only did we lose the client, the RIA who referred us the client lost the client as well.<\/p>\n
Regardless of whether it\u2019s a TPA, RIA, and an ERISA attorney, you know you found an honest provider when they basically tell you that they can\u2019t handle your plan because the plan is not a right fit for their book of business. These are providers who are telling you that one of their competitors is a bigger fit because they would rather you go somewhere else and be happy because it would be good for you and good for them.<\/p>\n
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