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Client left and owes considerable amount

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Hi,

A DB client left with owing four years or so in annual admin.  fees. (long time client, who kept saying each year, come on, after all these years you don't trust that I will pay you?). The new actuary is requesting a copy of the last valution report. While aware that per the code of professional conduct files cannot be held back due to outstanding fees, however, does this apply even to a val report that was previously provided to the client. Meaning is it permitted to say that being that this was previously provided to the client, if the client requests an additional copy he will first have to pay the outstanding fees ? Thank you.

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If it was already given to the client, then the actuary can get it from the client.

I can't believe anyone would let a client go 4 years without paying.

And I wouldn't take on a client that hadn't paid the prior provider for 4 years.

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Agree with all comments from  @Bill Presson.  I wonder if the new actuary knows this client has significant arrear payments. 🤔

Does your service agreement help answer your question?  

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Yeah, payment within 30 days, then send past due statement, 60 days,  another statement and follow up by phone and email, 90 days stop all work.  It astounds me how many TPAs carry multi-year receivables.   If you ever go to sell your business, a buyer will consider AR over 120 days at effectively zero value.  

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What does your service agreement say? 

Yes, the COPC states you need to provide the information, but you are also entitled to reasonable payment.  You don't need to provide support for work he never paid for. 

 

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Thank you very much Bill.Presson, David Rigby, shERPA, and Effen for your insights and time. As usual, your knowledge is much apprec iated. It seems that the new actuary is not aware of the outstanding fees. 

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4 hours ago, Effen said:

What does your service agreement say? 

Yes, the COPC states you need to provide the information, but you are also entitled to reasonable payment.  You don't need to provide support for work he never paid for. 

 

Thank you very much. I was under the impression that information must be given regardless and fees have to be worked out separately. The above sounds a lot better to swallow.

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Always a good idea to review the COPC:  The highlights were added by me.

Precept 10: An Actuary shall perform Actuarial Services with courtesy and professional respect and shall cooperate with others in the Principal’s interest. 

ANNOTATION 10-4. An Actuary may be requested to advise a Principal for whom the Actuary knows or has reasonable grounds to believe that another actuary has provided, or is providing, Actuarial Services with respect to the same matter. In such event, the Actuary may choose to consult with such other actuary both to prepare adequately for the assignment and to make an informed judgment as to whether there are circumstances involving a potential violation of the Code that might affect acceptance of the assignment. The Actuary should request the Principal’s consent prior to such consultation.

ANNOTATION 10-5. When a Principal has given consent for a new or additional actuary to consult with an Actuary with respect to a matter for which the Actuary is providing or has provided Actuarial Services, the Actuary shall cooperate in furnishing relevant information, subject to receiving reasonable compensation for the work required to assemble and transmit pertinent data and documents. The Actuary shall not refuse to consult or cooperate with the prospective new or additional actuary based upon unresolved compensation issues with the Principal unless such refusal is in accordance with a pre-existing agreement with the Principal. The Actuary need not provide any items of a proprietary nature, such as internal communications or computer programs.

Maybe I need to edit my response.  A strict reading of this would say if you don't have a service agreement, you cannot hold back your cooperation, but you are entitled to payment for work related to assembling and transmitting.  

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Thank you, Effen. The following sentence that you pointed out helps alot. " The Actuary shall not refuse to consult or cooperate with the prospective new or additional actuary based upon unresolved compensation issues with the Principal unless such refusal is in accordance with a pre-existing agreement with the Principal. "

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After bringing up the open invoices, the following is what we received in response:

I’ve been authorized to arrange for payment of the outstanding invoices and obtain the information we need.

Please resend your invoices, and ........will pay 50% of the outstanding amounts immediately. When I’ve been provided the following:
1. Your (last two) actuarial valuations
2. Calculation of each participants benefits due
3. Any RMD calculations (for past two years)
......... will remit the balance.

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I suggest that you respond that you will provide the requested information, but will only provide the final SB after all outstanding fees have been paid.  (Unless you already gave it to him.)

Keep in mind, once he has what he needs from you, he has no incentive to pay the remaining 50%.  You may want to increase that upfront piece to something closer to 100%.  He has already demonstrated he doesn't want to pay you for the work you already did.

 

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5 minutes ago, Effen said:

I suggest that you respond that you will provide the requested information, but will only provide the final SB after all outstanding fees have been paid.  (Unless you already gave it to him.)

Keep in mind, once he has what he needs from you, he has no incentive to pay the remaining 50%.  You may want to increase that upfront piece to something closer to 100%.  He has already demonstrated he doesn't want to pay you for the work you already did.

 

Thank you very much.

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Four years worth of work?   I would politely decline that "offer".  Payment in full first.  After four years there is demonstrated bad faith.

Unless you want to settle for 50%, as that is all you will see. 

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1 hour ago, SSRRS said:

After bringing up the open invoices, the following is what we received in response:

I’ve been authorized to arrange for payment of the outstanding invoices and obtain the information we need.

Please resend your invoices, and ........will pay 50% of the outstanding amounts immediately. When I’ve been provided the following:
1. Your (last two) actuarial valuations
2. Calculation of each participants benefits due
3. Any RMD calculations (for past two years)
......... will remit the balance.

 

 

Agree with the others. But I'm also betting y'all have already provided the items above.

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