We’ve all made that mistake. We should know better, but when it comes to hiring people, we take their word for it instead of doing 5 minutes of detective work.

I have had a lot of work done to my house and my biggest mistake is not evaluating the service provider before they start their job. I hired a waterproofer that did a lousy job and was impossible to get a hold of. 5 minutes of detective work would have shown that they had multiple complaints against them with the County Consumer Affairs Department and that the person who ran the place (his wife was the licensee) was a former podiatrist who lost his medical license for Medicare fraud (which explains why he couldn’t be the licensee).

There was the contractor who claimed to be a member of a highly respected home contracting association and it turns out they weren’t.

Any time I neglected to check up on a contractor I hired to review if there were any complaints or whether they were who they claimed they were, it was on me and I got screwed.

When it comes to being a plan sponsor, you have to answer because you have a higher responsibility than a homeowner because you are responsible for the retirement plan assets of your employees.  The ERISA attorney you met? Make sure they’re a member of the state bar. The third party administrator you know? Make sure they don’t have many complaints and that their principals have clean reputations.

When you meet people in a social setting, there is nothing wrong with taking their word. As a plan sponsor, you can’t afford to because of the liability that goes along.