2015 New Year Tips for Retirement Plan Providers.

With a new year, comes a renewed focus on business now that the holidays are behind us. For the retirement plan provider, there is never enough time to rest on their laurels because of the competitive nature of the business. So with a few minutes to spare, here is an article that will offer suggestions on how you can improve and grow your business from someone who knows how competitive the retirement plan business really is.

It's a different retirement plan industry 

  Maybe it's an insecurity of mine, but I always felt and still do that there are many times that I haven't been taken seriously. There were family situations and professional situations where that came to be and it wasn't a good outcome for those that didn't take me seriously.

I have been an ERISA attorney since 1998 when the stock market was booming and that meant that daily valued 401(k) plans were part of that boom. Even when I started out, I was alarmed about revenue sharing because it just didn't seem right to me that some funds paid them and some didn't and those that paid revenue sharing to the plan administrator had a better shot to be picked. Plans that just offered index funds were few and far between because they were considered as being more expensive to run because of the lack of revenue sharing payments. I was also amazed that while a plan sponsor had the fiduciary duty to pay only reasonable plan expenses, they had no way of knowing how much their plan providers were charging them unless the plan provider was transparent and prior to 2008, that was few and far between.

When I first heard about litigation concerning revenue sharing, it was a lawsuit against Nationwide Insurance in 2000 and in those days, plan sponsors were the usual victors. Then times changed and court started recognizing participant rights and made it easier for them to sue. With a falling stock market in the early 2000s and the late 2000s, there was an increased call for free disclosure because litigation against plan sponsors were increasing.

About 8 years ago, I was starting to be openly critical about revenue sharing and TPAs being less than transparent. Well, there were a lot of people I knew who laughed at me and that included co-workers at the time. Well, they aren't laughing anymore. Fee disclosure regulations, more litigation, and more competitive fee pricing have changed the 401(k) plan business for the better.

The point is that change is inevitable and that was fee disclosure was inevitable because of a spotlight shown on 401(k) plans because of the poor savings and investment returns went the stock market went through two major corrections in the past 14 years. There is no business that is stagnant except maybe those in the funeral business and any ideas of change shouldn't be scoffed at or dismissed.

Happy Clients Don't Leave. 

But unhappy ones do.

  Maybe it's a simplistic approach when it comes to things, but I kind of see things the way they are in very simplistic approaches.

When it comes to employees working for a client, I always say that happy employees never leave. When it comes to clients of a retirement plan provider, I also say that happy clients never leave.

There was so much concern with fee disclosure regulations that retirement plan clients would drop their current providers to save a quarter or a small amount of money across the street and I don't believe that has really materialized because fees have fallen industry wide and again, happy clients never leave. Clients that changed providers and saved a lot of money in doing, in my opinion, were never happy to begin with and just used that fee savings as cover.

Maybe I'm oversimplifying things, but keeping clients happy goes a long way in keeping them as clients.

401kwire's Top 100 Most Influential in 401(k): #100. 

Thanks to all of you, still on the list.

  I am proud to have been named of the Top 100 Most Influential in Defined Contribution/ 401(k)  by 401(k)wire.com for the second year in a row. While I dropped from #73 to #100, you get no extra money for finishing higher. Actually you don't get an award either.

Like I stated last year, it's a win for the underdog because I was the associate who had a managing attorney who didn't believe in me and I was the ERISA attorney that the head of a third party administrator (TPA) laughed at when I suggested I could help sell (actually there was more than one head of a TPA to do that, boss and prospective bosses).

The only reason I'm on the list because of you, the reader. No matter how good a read my articles and blog posts maybe or how many references to Caddyshack and Airplane! I could provide, I am only successful because I made a connection to you, the audience and for that, I am forever grateful.

I only wish my friend Richard Laurita was here to see this. Many of you know of Rich or know my stories of Rich, but he was the TPA salesman that I worked with at two TPA firms and he was the only person who saw something in me when no one else did and I would not have had the confidence to start my own law practice if he didn't make under his wing so long ago. He's gone almost 8 years and as long as I'm in the retirement plan business, he will not be forgotten. Wherever you are Rich, I hope you are enjoying the golf.

Again, thank you for the recognition and continued readership.