Advisors Advantage

by Ary Rosenbaum

How a Retirement Plan Financial Advisor Can Survive In The World Today.


It takes everything you got.

If I could pinpoint what it takes for a financial advisor to survive and thrive in this business, I would say it takes two things: a hook and timing. A hook is a marketing term, it's something to attract a plan sponsor's attention or encourage them to hire you. Timing is everything in life because ten years ago in this business, very few plan providers talked about fiduciary responsibility and fee transparency and even less plan sponsors cared. If you have the right attitude in this business and you're willing to learn, the time is right to build a retirement plan book of business than can be of substance. Hopefully, this article will help you along the way.

To read the article, please click here.

Advisors have to offer Investment Education.

It's part of their job.


Advisors ask me all the time of the role of education in participant directed 401(k) plans. Participant directed 401(k) plans that are governed under ERISA §404(c) offer the plan sponsors liability protection based on a participant's gains or losses on their account when they direct their own investment.


There have been so many misconceptions that plan sponsors and advisors have had concerning ERISA §404(c) plans. They had this belief that if they just give a mutual fund lineup and some Morningstar profiles to plan participants that they are exempt from liability. ERISA §404(c) protection is about following a process and Morningstar profiles is just not enough education to give to plan participants. On the flipside, education to participants doesn't have to amount to an MBA education.


I think an effective education component to ERISA §404(c) plans should include enrollment meetings where the characteristics of the plan are discussed, as well as the investment options, and offering the building blocks of financial education to assist participants to get a better understanding on how to choose investments.


Advisors that may have issues in offering education should always consider using some of the online resources out there such as and, who could offer investment advice that an advisor can't if they won't comply with the investment advice regulations.

In addition, written materials such as plan highlights and some Morningstar profiles should always be distributed.


Also while many advisors dislike, one on one meetings to participants should always be offered. While most participants will probably shun such meetings, they should always be offered to those that want them because as we know, every participant has a different financial goal and need.  One on one meetings offer participant individualized attention on asset allocation and fund choices; it can be an effective means of educating plan participants more than what a general enrollment meeting can offer. It can help participants understand how retirement plan assets relate to their other assets as part of a comprehensive financial plan.


Advisors should always look at education as liability protection, because offering participant education help a plan sponsor minimize their liability under ERISA §404(c). While I always stress education as important part of the fiduciary process, it's not about achieving a specific result from participants directing their own investments. Offering participants educations is like the old proverb, "You can leada horse to water, but you can't make him drink." So no matter how great the education component is, there is no guarantee that it will help plan participants achieve a better financial result because like they say, there is no guarantee in life, except maybe death and taxes. The participant who put all his money into a mid-cap fund because he considers it the "average of the market" may still do so even after getting education at the enrollment meeting and through one on one meeting. As with most things with retirement plans, it's about following a process and not guaranteeing a result.


The needs of the Plan outweigh the needs of the Plan Provider.

The Plan and its participants come first.


A family member once said: "there are a lot of yous (sic) and only one me." That may not be the nicest and most selfless thing to say, but that's something retirement plan sponsors should think when it comes to the needs of the retirement plan. Maybe Captain Kirk said it best in Star Trek III, when he contradicted the viewpoint of Captain Spock who gave his life to save the Enterprise at the end of Star Trek II by saying: 'the needs of the one outweigh the needs of the many." The needs of the retirement plan sponsor's plan outweigh the needs of the retirement plan providers.


A retirement plan sponsor always needs what is best for the retirement plan and if their current plan provider can't handle what they need, it's time to wave goodbye. There are too many third party administrators (TPA) who don't have the flexibility to administer plan provisions or different retirement plans that a plan sponsor needs. If what's best for a plan sponsor that they have a defined benefit plan in addition to a 401(k) plan to maximize the retirement savings of their highly paid people and their current TPA can't handle it, it's best to find a TPA who can. Otherwise, the plan sponsor can't maximize retirement savings and Uncle Sam gets more tax dollars.


I recently came across a retirement plan sponsor that has a plan with two adopting employers where there is some common ownership, but not enough to be a controlled group. By not being in a controlled group, these three companies have to bee separated for testing purposes. The incumbent TPA said they can't handle this type of plan (the plan is now considered a multiple employer plan) and the plan sponsor would have to set up separate plans for the companies, which would unnecessarily drive up administration costs.


A plan sponsor has a fiduciary responsibility to the plan, not the plan sponsor. If the plan provider no longer fits, it's time to find one that does, like a glove.

Retirement Plans aren't built on an assembly line.

There is no cookie cutter approach to it.


  Henry T. Ford is considered the father or the pioneer of the modern day assembly line of manufacturing.  His development of the Model T and its way of manufacturing is considered one of the great developments in 20th century capitalism. His assembly combined the idea of interchangeable parts  and was a model of efficiency. His efficiency did have its limitations. In his autobiography, Ford wrote: "Any customer can have a car painted any color that he wants so long as it is black".


There are many retirement plan providers that have an assembly line approach when it comes to retirement plans. These providers use their own standardized prototype documents and have a consistent plan design structure. Like the color of a Model T, plan sponsors usually using these providers have no choice in plan design and these limitations may cost the plan sponsor money because they are not able to maximize employer contributions through plan designs that may increase contributions to highly compensated employees, which many times are the owners of the plan sponsor.


There cannot be a cookie cutter approach to retirement plans. Every plan is different. Even plans sponsored by the same employer are different. Every plan has its own set of circumstances as to why they were set up, what the goals were when set up, as well as the demographics of the plan sponsor supporting it. Their vesting schedule, eligibility requirements, and employer contribution should be drafted to the specific needs and demographics of the plan sponsor. Plan documents are legal documents and legal documents have legal consequences. They should not be churned out by someone who is not an ERISA attorney or a paralegal with extensive retirement plan drafting background.  Prototype plan documents that have that fill in the blank document look can be a very cost efficient, but they have their limits and there are very often situations where the plan sponsor's needs cannot fit within the confines of the plan document's limited choices.


Retirement plans are not widgets or tubes of toothpaste. Like a suit, they have to be custom made or tailored to meet the specific needs of the plan sponsor. Failure to have the plan fits the needs of a plan sponsor is the same as my 6 year old son wearing his 4T clothes or my clothes.  Plan design and drafting is an essential part of retirement plan administration and should not be discounted.


These plan providers that use that assembly line approach that doesn't offer new comparability plan design or a variety of choice among plan provisions does a disservice to the plan sponsor. Cost for a plan sponsor in retirement plan administration is a concern, but not the overriding concern. Plan sponsors need providers that can draft and administer the plan so it fits their needs.

It will determine whether you'll be a big hit or not.

laurita When it comes to being a retirement plan provider and selling your services, you have to have it. Those who have it, succeed. Those who don't, don't. You can't get it from a bottle, a book, or course.


What is it?  It's the ability to connect with potential clients. They have to buy what you're selling and what you are selling is really yourself. You can't be too pushy, you can't be too meek, but probably something in between.


It's all about connecting with that audience. Years ago, when I worked for a third party administrator, I thought I had it. My boss thought differently, but the salesman there by the name of Rich Laurita saw that I had it, so that's why he brought me on to many sales meeting. Probably also because despite how Rich had it, he knew very little about the operations of retirement plans.


Connecting with the audience is when the audience understands what you are selling and wants it. Talking over their heads or in some actuarial gibberish or ERISAese won't do it. Most plan sponsors have no idea about the basic concepts of retirement plans, so what you have to do is to talk to them in a language they can understand.


It should be noted that the talent for selling isn't like athletic talent; you don't have to be born with it. You can learn it and refine it over time. Believe me when I first started in this business, I was terrible. That's probably why my boss thought I didn't have it, I'm sure he thinks differently today.

It's all about class.

It's how you treat the folks who bring you business.

When it comes to your clients, your co-workers, and the other plan providers who refer you business, there is one simple rule to follow. When it comes to treating and interacting with these people, a little class goes a long way.


Clients, co-workers, other plan providers, and other professional resources for referrals are the folks that help you put food on your table. So they need to be treated with respect and some class. You should never take advantage of people who do right by you.


That's why I always mention and never forget Richard Laurita, my late friend and co-worker who helped me when it came down to meeting clients, helping out financial advisors, and understanding that the sales process requires the right communication to the right people. I can never forget the help he gave me.


When my home was devastated during Hurricane Sandy, I had no power and both cars were destroyed. I was marooned in a house with 5 feet of water downstairs with no heat. When I was able to get to an area where I could get Internet, I reached out to the only person I knew who would help me, my wife, and my children (who spent the previous night in a shelter, my friend Marlo. Marlo and her husband let us stay at their home for two weeks, so we could start to get our life and home back on track. Without their help, it would probably be months before we could get back home. When it was Marlo's birthday this past weekend, I made sure to go up to her and tell her how much I loved her because she has been more than a sister to me than my own sister. So anytime I see Marlo and her husband and we socialize, I always try to show my appreciation and class. They owed us nothing and they helped us when we needed it the most. Some folks couldn't bother to help; they did with actions and not just words.


One of the classiest and most famous people I personally knew died a few weeks back. Basil Paterson was a law firm partner at that law firm I have been deriding for the past four years. Basil Paterson was a former State Senator, candidate for Lieutenant Governor in 1970 (when few African-Americans sought statewide office in New York), deputy Mayor of New York City, member of the Harlem Gang of 4 (with Percy Sutton, David Dinkins, and Charles Rangel), and the father of a rather forgettable Governor (David Paterson).


I was in the Manhattan office and Basil was in Garden City most of the time. I spoke to him just a few times. Based on his accomplishments and being a living part of history, he was nothing but nice to me. While other partners showed their arrogance, Mr. Paterson only showed his class. He was a class act.


Mr. Paterson was well connected in politics and some of his clients were the most well-known and powerful labor unions in New York City. So when Basil passed away, I thought the law firm would put out a press release, mention it on their website, or tweet about it. He was a special man and a special lawyer who brought a lot of business to the law firm and mentored quite a few labor law partners and associates. Aside from a mention on his individual webpage, there was no tribute. Such a classy man didn't get a classy tribute. Shame on them, shame on the managing attorney. I always felt that in the two years I was there and the four years since I left that they didn't treat me well, they didn't treat me with any class. I feel worse that someone who was more experienced than I was who was such a trailblazer in city and state politics that brought them so much business over the years was not treated with the class and respect he deserved for such a legal and political career.


This isn't some diatribe about the law firm; it's all about class. Have some; show some, to those who feed you in some way.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ary Rosenbaum, The Rosenbaum Law Firm P.C. | Attorney Advertising

Written by:

Ary Rosenbaum

The Rosenbaum Law Firm P.C. on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.