If you make yourself a target, don’t expect that someone won’t make you part of their target practice. That someone is usually an ERISA litigator or someone from the Department of Labor and Internal Revenue Service.
How does one make themselves a target? As a plan provider, it’s not very hard. It’s getting involved in transactions and relationships that give the appearance of wrongdoing even if it’s not wrong. A simple thing like steering business towards a provider that gives you business back through referrals or using too many proprietary funds is a sure way to grab someone’s attention. There are transactions that are certainly prohibited, like soliciting rollover business from a plan you’re working on and making more money on rollovers or paying fiduciaries in bribes. Yet there is a whole host of transactions out there that are very innocuous and done throughout the business that might grab someone else’s attention as wrong.
How does one avoid being a target? Looking at any deal from the outside and see how it looks through the eyes of a disinterested person, a government auditor, and ERISA litigator. So often, mistakes are made and problems are created because we only look through our view. If we theorize how someone else may see things will give us insight on how to avoid problems down the road.
