Pearls of "Wisdom" for 401(k) Plan Providers.

I am no genius and I'm sure all of you will agree. I have only been success- ful as an ERISA attorney because of my ambition and an uncanny ability to connect with my audience even though I'm still that shy kid from Canarsie, Brooklyn. What has made me a success has been that ambition and the ability to let my previous experiences as a lawyer to shape my opinions on this business. This article will just show some nuggets of advice that you can take with a grain of salt, but has helped me and helped the financial advisors and third party administrators (TPAs) that I work with or have talked to.

It will continue to shake itself out.

When I was fresh out of school and started my first job working for a third party administration (TPA), the paralegal that I was working with told me her experience with the retirement plan business that was pre-ERISA. Marge told me that every time there is change in the business (she was talking about the Tax Reform of 1986 in particular), there would be a number of plan providers that will just go out of business after struggling with the change.

That is how I felt about fee disclosure. You could look up some of my views on this blog in 2012 and how I predicted how some businesses would thrive and some would die because of fee disclosure. It was just common sense and my knowledge of business history that any seismic change in an industry will be a boon for some and a disaster for others.

For example according to a firm named NEPC, the median recordkeeping fee for a 401(k) participant was $116 in 2006. In 2013, it was $80 per participant. Technology probably has reduced some costs, but not by $36 a head.

Many big providers sold their business like Hartford, others like Schwab and Great West consolidated their operations. Many small providers merged or sold to competitors. The changes will continue as the fallout from 401(k) fee disclosure will continue.

As a 401(k) financial advisor, Networking takes time. 

You don't get immediate results.

 Being a retirement plan financial advisor is a never-ending battle to maintain your book of business while trying to grow it.

When it comes to networking and social media, I think the way you meet potential clients and potential sources of referrals is to try it as if you were dating, It takes time to develop relationships because relationships require trust and that requires time.

Did you ever succeed in dating by trying to take things quickly, trying to roll up a month's worth of dates into one?  I don't know about you, it never worked for me.  When you watch it on film and television, you're kind of amused about the fellow at the bar with the really cheesy pick up lines and wonder how he ever achieved anything with someone of the opposite sex? But is it that different than the insurance agent I never heard from before who states on a business-networking site: "Lets meet to discuss what we can do together with your clients."?  Do I know you? Do you think the advisors who referred me my clients will mind?

The greatest relationships that I ever made in this business whether it's been clients or financial advisors or third party administrators that became great sources of referrals is that it has taken time. It has taken time because both sides need to develop trust and that takes time. In addition, I have never taken a meeting or had a phone call with any advisor or TPA with the idea that I had to sell them on being a client. The reason I have done that is because I'm more interested in developing a long-term relationship instead of a quick score for a legal bill.  If you have a good enough message about your practice, you don't need a hard sell, the way you handle your practice will sell itself.

I have talked with hundreds of advisors over the years. A few have become clients; more have been sources of referrals. Most have not, but that's fine because the funny thing about developing relationships is that you may not reap any benefit until several years later when that person you met may recommend you to someone who then recommended you to someone else, who then asked you to help them on a matter that makes them a client. Quite honestly, I have never received a client from someone who stated before I met that they can get me clients. Possibly because they don't have any clients or more likely that they think that can easily get business from me and my spheres of influence by promising me that.

The point is that you shouldn't try too hard. That means when it comes to networking with people either in meeting in-person or online, you should take things slow and not try to make a hard sell because are likely going to scare away someone that can be a valued partner to help build your practice or someone that can act as a referral of business.

You don't need to cut fast to the hoop to score; you just need to get it in the basket.

Please donate to The Berla Memorial Scholarship Fund. 

That time of the year to beg for contributions.

Yes, it's that time of the year again where December 31st is around the corner for tax-deductible contributions for 2014.