Insperity Inc. a provider of outsourced human resource and business management services to small and midsized businesses has been sued by participants in a Insperity 401(k) plan. It has been alleged the company and its subsidiaries charged "excessive" record-keeping fees and made other fiduciary breaches of ERISA.
The complaint also alleges that Reliance Trust Co., the discretionary trustee for the plan, breached its fiduciary duties by allegedly making "imprudent" investment decisions.
The employees of Insperity's client companies are offered participation in the 401(k) plan. Insperity offers its services, which include payroll and benefits administration, to more than 100,000 businesses with more than two million employees.
The problem is that Insperity hired Insperity Retirement Services, a wholly owned recordkeeping subsidiary to be the service provider to the Insperity 401(k) plan. The 401(k) plan ended up being the new record keeper's first client. The problem also is that in 2013, 95% of Insperity Retirement Services' assets under administration as TPA belonged to the Insperity 401(k) Plan.
It was also alleged that the fiduciary trustee and advisor to the plan, Reliance Trust, selected and retained its own high-cost and poorly performing investments to benefit itself at the expense of plan participants.
Now the participants, Insperity, and Reliance Trust will have their day in court and the allegations in the complaint are allegations. However, I always believe that as an ERISA attorney, it's my duty to keep my clients from partaking in prohibited transactions and it's even my duty to avoid relationships that suggest that prohibited transactions take place.
Now perhaps no prohibited transactions took place, but do you think Insperity hiring a subsidiary for plan administration and hiring a trustee where the trustee's proprietary investment options are available just doesn't look right.
Now what did I say about not making yourself a target?
ERISA litigators love targets, whether there were improper transactions or not.
Whether you're financial advisor who is not in the 401(k) business and want to be in it or you're the financial advisor who wants to dramatically increase their small book of business, this is the perfect time. With dramatic changes in the industry because of fee disclosure regulations and the potential change in the definition of fiduciary, financial advisors who are serious in doing a top-notch job as a 401(k) advisor will find plenty of opportunity to develop and increase their book of business. As I always say, if you don't do it right, don't do it at all. A 401(k) advisor who will do it right by doing their job and making sure their clients do their job will find the 401(k) plan business very rewarding. So this article is for financial advisors who want to start or improve their lot as a 401(k) financial advisor.
Sometimes if you don't want to be a target, don't make yourself to be a target.
The law firm I started a few years back is actually more than 15 years old as it was a shell where I could offer legal services on the side while I did my normal day job. It was an experiment on whether I could go out on my own and I learned during that time what worked and didn't. I can tell you that advertising in the local Pennysaver or advertising yourself as a low cost legal provider are likely misses.
Suppose someone you never met before comes up to you and asks whether they can stay at your house or someone you never heard of, all of a sudden wants to be your partner and best friend. Any business relationship and any personal relationship you have requires trust and trust is something that doesn't develop over night.
I once referred work to an accountant for a retirement plan audit. He did a terrible job and there were issues regarding his ability to do the work. Making a lousy referral is even worse than doing poor work of your own because at least you had control over your own work.
If you are a plan sponsor or a plan provider looking for an inexpensive plan restatement, then look no further than The Rosenbaum Law Firm P.C. If you are a third party administrator with too many restatements to do and too little help to get the job done by April, we're here as well.
