The Cardinal Rules for Retirement Plan Providers.

I have been an ERISA attorney for 14 years and while I took two retirement plan law courses while I was getting my tax LLM degree at Boston University School of Law, it never prepared me for my career as an ERISA attorney. While the books they use at law school will tell you the law, they just won't tell you how to act as an ERISA attorney. I learned how to act as an ERISA attorney because of my experience and because I learned from some great people like my paralegal Marge Tracy and the best 401(k) salesman I ever knew, the late great Richard Laurita. As a retirement plan provider, you also didn't get a book either that told you how to act and behave as a plan provider to your clients and working with other providers. There are some lines you should never cross and cardinal rules that you should never break. This article is some cardinal rules that I have developed for my own practice that maybe of use to you in your practice. Some of them are rather obvious and some are just my opinions of what I have seen in almost 15 years in this business.

Communication is key; speak to your clients on their level.

 Make a connection with your audience.

I have been an ERISA attorney for 15 years now and it's gone by pretty quickly. I have worked for a few ERISA attorneys and have seen quite a few out there giving speeches around here and there.

Probably my greatest talent for helping my own practice and the worst talent in working in a law firm setting has been the ability to connect with my audience. My audience is going to be plan sponsors, third party administrators (TPAs), and financial advisors. My articles, newsletters, and speaking engagements meet the attention span and interest of my audience. When I was working at law firms, that wasn't going to work because most law firm partners have a tendency to speak above the level of their clients and other attorneys and that's because they feel the need to justify their fees and their experience by speaking legalese and jargon.

I bill on a flat fee, I have a low overhead, people hire me because the fees are reasonable, I don't need to justify my fees. I've seen a lot in this industry (soon to be in a Kindle book) and some of it was pretty bizarre, so I don't need to justify my experience.  As a retirement plan provider, don't confuse your clients with jargon. Spit it out, tell your clients what you do for them and why your service is better than the one being offered across the street.

Throwing jargon and technical speak isn't going to justify your fees, service, or experience, it's only going to confuse your clients. Tell them what you do in simple terms, because no matter what, they aren't going to do your job. Communication is any business is key and the lack of communication often dooms any relationship. Speaking above the level of your clients isn't communication because there is going to very little comprehension.

No one is denying that the work you do isn't important, but if you can't communicate what you to do your client, often they will find another provider that will.

Payroll provider TPA plan documents and the Olympia Cafe from SNL: "No new comp, Pepsi".

Payroll provider TPA plan documents may shortchange plan sponsors.

I just recently restated the plan document of a plan sponsor that was leaving a payroll provider third party administrator (TPA), one of the 2 big playersin the market.

The plan document looks like it could have been drafted by the folks at the Olympia Cafe on those old Saturday Night Live skits. Maybe the choices were a little bit more than Pepsi or cheeseburger, but the fact is that many of the provisions were very stringent and limited the choices in the prototype that the employer could select.

If the employer wanted a safe harbor 401(k) contribution, it had to be a matching contribution. If the employer didn't want to offer hardship distributions, that wasn't an option. Neither was there a choice for a cross tested/new comparability allocation of profit sharing contribution.

It's nice that a payroll provider TPA wants to limit choices and facilitate administration by having a limited amount of differences between plans.  While this plans must  "fit the box" approach does wonders to cut down issues on day to day plan administration for the payroll provider TPA, I believe this box approach hurts plan sponsors that have the bank account and the demographics to support a plan that doesn't fit that payroll provider TPAs's box. A plan sponsor may leaving money on the table because they didn't fully maximize their  contributions or make some contribution unnecessary.

The plan sponsor client should always come first, the plan document should fit the needs of the employer and not of the TPA doing plan administration.

Change can be a good thing and sometimes it isn't, especially at the top.

Change at the top for your clients may not be a good thing for you.

When I was working for a third party administrator, we were getting bought out. Going from a closely held business by a larger business would bring some changes. I told employees that whenever there is a purchase of a business by another, change was inevitable. I told that to one of my fellow employees who was a bit nervous and told the boss. I was told that I was running morale, but that's a fact of business. Change is inevitable. Heck every sports manager or coach is on pins and needles when there is a change of ownership or in the general manager's office.

As a retirement plan provider, change of control of your clients and/or potential clients can be a blessing and a curse. If you have been prospecting a client with a change of the staff in control of the retirement plan, perhaps a new set of eyes can make the plan sponsor understand why hiring you can help limit their potential liability as a plan fiduciary.

On the other side of the coin, having a change of leadership for a current client can often be bad news even if you are doing the greatest job possible. I will never forget the story of a broker that my TPA did a lot of work for. He was fired from a company he did a lot of great work for because there was a change of the top operating executive. As it turns out, the Human Resources Director who liked the broker also got fired too. The Human Resources Director blew the lid on why there was a change of broker; the chief executive officer hired a new broker and was receiving a kickback. It's hard for any broker to compete with that kind of chicanery. I had a friend who is a top fiduciary being let go by a plan because the new folks in charge claim that he isn't a fiduciary, even though his work and his contract says otherwise.

People say that change is a good thing. Change can be a good thing, but there are times when change isn't good for the retirement plan provider and their clients.