Referrals are about helping, not making you $$$$

The retirement plan industry is very close knit. Everyone knows who does great work and the few that don’t. Word travels fast about the good, the bad, and the ugly in this business.


Whether you are a financial advisor, third party administrator (TPA), an ERISA attorney, or another plan provider; chances are you will have to work with other providers. You will meet other plan providers one way or another and one thing you have to realize is that these other plan providers are there to network with and they can be great help in growing your practice.


Too often, I would meet other plan providers and their question is whether I can get them clients. I’m sorry, I’m in the business of getting clients and most of the time, other financial advisors refer these clients and you can’t stay in business very long as an ERISA attorney if you are costing business for the folks that referred you. In addition, I get very few plan sponsors clients directly that have no financial advisor and I’m really not in the business of steering business to particular advisors. If a plan sponsor who needs a financial advisor contacts me, I would present a handful of names of advisors in their area to contact and let the decision rest in the hands of the plan sponsor. Most of the time it works and there was one time it didn’t, when my law firm selected an advisor I didn’t recommend. 9 years later, I’m still pissed off.


When it comes to helping plan sponsors get a TPA, again, I always like to give recommendations on a handful of firms to consider because it’s ultimately a plan sponsor decision and I never want to be suspected of greasing the selection in favor of one provider.


Yet, that happens a lot in this business. Plan providers pushing plan sponsors to specific other providers just because that provider change is helping the advisor who made the recommendation.


I once asked why financial advisors steer so many plans to the payroll providers and the answer was that because the payroll provider TPA was very generous in referring new clients to those financial advisors who steered business to them. Heck, there are plans that are a good fit for a payroll provider TPA, but should they be picked as the TPA just because the advisor gets to wet his beak (Don Fanucci rules) by referrals by the payroll provider.


Transparency is an important part of this business so that I stay clear of making a provider choice for the plan sponsor. I never want to be accused of steering a plan sponsor to one provider because I do plan documents for them or because I got some business from that TPA or advisor.


Plan providers should seek out relationships with other providers and the help they can provide you isn’t particular new clients, but it can be with information to get a better chance at getting that new client or keeping that current one. There is more to life than just getting clients, it’s more important that your clients gets the best possible providers for their plan and not because it benefits you in the short term.

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