In the movie, No Country for Old Men, the hit man Anton Chigurh (played by Javier Bardem) confronts Carson Wells (who was also trying to recover the same money Chigurh was after) in his hotel room.
Before killing Welles, Chigurh asked him: “If the rule you followed brought you to this, of what use was the rule?”
In the New York Post recently, a New York City principal was reassigned after she was turned in by her former lover who happened to be the father of a child at the school. The principal is caught on tape describe some of her escapades on school time. While a friend of mine blamed the father for being so vindictive (the principal financially supported him and he was jealous she was cheating on him), it totally misses the point. Regardless of whether the father was a fiend, the principal put herself in a situation where that father could hurt her. The principal did something wrong and let the father know about it. She was the master of her own fate.
It’s very hard for people to accept blame, it’s always someone else’s fault. I know from experience because in my lifetime, I uncovered two major scandals (one in law school and one in the 401(k) world). Rather than accept responsibility for their actions, they cast blame on me. For the law school situation, it was a law journal accused of cronyism by some staff members that was supposed to keep tab of the hours their staff worked in order to get academic credit. Well, they didn’t keep very good records. No matter how much blame I got for exposing the scandal while the editor of the law magazine, it didn’t change the fact they did something wrong. The same can be said about a certain third party administrator that had a relationship with an audit firm that questioned the independence of its plan audits. My name was mud for some time in the business, but my call to attention of this relationship didn’t change the facts and didn’t change anything when the Office of the Chief Accountant of the Department of Labor (DOL) put that accounting firm out of the plan auditing business.
For retirement plan sponsors who get into trouble with the DOL, many times it’s because a former employee made a complaint. Rather than harping on the fact that someone made a complaint, a plan sponsor needs to fully accept their responsibility if something wrong did occur. A complaint by a former plan participant doesn’t mean the plan sponsor did something wrong, but it does often end up uncovering a whole host of other problems. I’ve had situations where, the claims by the former participant were groundless but there were enough problems in the plan to keep the DOL agents busy.
Plan sponsors often find out that the rule of not being interested in their retirement plan led them to problems that made that rule a mistake. Plan sponsors need to be on their toes and never let their neglect lead them to problems where a plan participant (former or current) from dropping a dime with the DOL. Plan sponsors can blame the DOL complainer all they want, but it doesn’t change anything if there are issues with their retirement plan.
Plan sponsors need to follow a rule that will lead them to less compliance and fiduciary liability exposure issues because there is no country for lousy retirement plans.