Beware you may lose a case to Hancock

[thepensionmaven]

I have been in business for the last 28 years, have acquired some plans, and have lost some plans. We all have. Clients move their plan investments all the time.

Usually a TPA loses a client because the client is either unhappy with the way the TPA has been handling the business or because of fees.

However, over the last six months, I have lost 3 clients for neither of these reasons- these employers were approached by John Hancock agents to move the investments from wherever they were to Hancock and/or Hancock related products.

Nothing in and of itself wrong with that. It's just that most reps will ask the employer if they are happy with the TPA services --= these people do not even ask, they sell a bundled product, "go with Hancock and, oh by the way, you have to use our TPA."

I got a little suspicious after I lost the first case, but this looks like a pattern. I complained bitterly to one of the regional marketing reps for my area when I lost my third case. He did not see anything ethically wrong with this business practice.

Hancock seems to be the only company that condones such practices.

I am wondering if anyone else is or has been in the same situation.

[K2retire]

Haven't seen it with Hancock. But Hartford sales people have been telling our clients that they have to move because we're going out of business.

[Guest Betsy Oakey]

Don't get me started. I have witnessed some very unethical practices in the last couple of year. What hurts is when the sales representative makes a lot of commission due to the switch up and then disappears. I had one sales group that was no longer servicing their plans; hook up with another sales group. They targeted all their old clients, sold them new products through the second group, and both groups made lots of commissions. One of the sales pitches, we, the TPA, were not doing our job and that the old sales group was not doing theirs. What was sad is the client was essentially being pitched by the old group that was not providing any service through a new named group and ended up paying the old group/new group even more commission for no service.

My other heartache is when the new sales person pitches a switch and tells them that it will be painless. I find this especially true with payroll companies. However, the new service does very little to help make the transfer and we are then the bad guys if we don't do the work, or even worse, charge them for it. I have has so many exiting clients say, you know the new guy said you would be hard to deal with and all of this change over should be very easy.

[movedon]

I've had problems with American Funds. If my client has their assets at AF, I consider that client at risk for a "bundled" pitch.

[Guest VEBAPLAN]

I have heard a lot about this. Lance Wallach

[R. Butler]

I've had problems with American Funds. If my client has their assets at AF, I consider that client at risk for a "bundled" pitch.

This is more of an issue to me than some of the other situations mentioned. I expect that broker's have relationships with tpa's and if a broker sells a product to a client of ours he may try to steer the tpa business to the party with whom he has a relationship. I do not expect that investment companies with whom we work will try to move our clients to a bundled product.

[Guest VEBAPLAN]

I agree with you.

[movedon]

I've had problems with American Funds. If my client has their assets at AF, I consider that client at risk for a "bundled" pitch.

This is more of an issue to me than some of the other situations mentioned. I expect that broker's have relationships with tpa's and if a broker sells a product to a client of ours he may try to steer the tpa business to the party with whom he has a relationship. I do not expect that investment companies with whom we work will try to move our clients to a bundled product.

Exactly.

[Guest tpa555]

We've had problems with Fidelity bundled. We currently have a trading relationship w/ Fidelity Institutional for our plans on our daily val platform. Despite assurances from our local Fid. Inst rep that there is an existing internal policy that Bundled does not market to current Inst plans, it has not prevented them from Bundled approaching our Inst clients and offering FREE ADMIN.

So, AFTER Bundled has approached our client, offers free admin, they're told at that point, it's hands off?

You can only imagine the difficulty we encounter trying to explain to our client that's it's not free admin and why that offer was retracted.

Bill

[Belgarath]

I suspect that the ERISA 408(b)(2) regulations are designed with things like this in mind.

I have no axe to grind here, and I don't work for Hancock or anything like that. But IMHO, there isn't anything wrong, per se, with someone approaching a potential client with a package that includes administration and investments. As long as there is PROPER DISCLOSURE of all the associated costs and fees, then it seems perfectly reasonable and appropriate for a Plan Administrator/Fiduciary to consider the pros and cons, and act accordingly. I just suspect that such disclosure isn't properly made very often.

We also sometimes lose cases to other institutions/TPA's, but that's business. You can't keep every client happy (or at least we can't. )

[movedon]

I suspect that the ERISA 408(b)(2) regulations are designed with things like this in mind.

I have no axe to grind here, and I don't work for Hancock or anything like that. But IMHO, there isn't anything wrong, per se, with someone approaching a potential client with a package that includes administration and investments. As long as there is PROPER DISCLOSURE of all the associated costs and fees, then it seems perfectly reasonable and appropriate for a Plan Administrator/Fiduciary to consider the pros and cons, and act accordingly. I just suspect that such disclosure isn't properly made very often.

We also sometimes lose cases to other institutions/TPA's, but that's business. You can't keep every client happy (or at least we can't. )

I'm not sure about the OP, but my gripe here is not just in losing a client to a bundled provider, but losing a client to a bundled provider that we have a TPA "alliance" type relationship with. I.e., I'm the TPA for a plan, Company X provides recordkeeping and investments. Company X and I have a sort of relationship (pretty loose, varies from provider to provider). We communicate with Company X independently, they provide us data to do our work, there's revenue-sharing, they may even send out a wholesaler to visit me from time to time, etc. Then Company X comes in and prospects the client to ditch us and let Company X take over the administration services. Me no likey. What I'm talking about is along the lines of what R. Butler and tpa555 mentioned above.

EDIT - I'm not talking about Hancock. I have not had this problem with them.

[mming]

Add Raymond James to the list.

[Tom Poje]

I think no matter what the investment house, its going to depend on the person involved. talking to an individual at Bible study last night, an individual who works for one of the above mention houses, she said she 'could' do something like that and get her 'cut', but wouldn't because she has to sleep at night.

[K2retire]

I think no matter what the investment house, its going to depend on the person involved. talking to an individual at Bible study last night, an individual who works for one of the above mention houses, she said she 'could' do something like that and get her 'cut', but wouldn't because she has to sleep at night.

If only more sales people had that attitude!