Two Plan Documents

[goldtpa]

This is one that I have never heard of. A broker for one of the major brokerage firms wants to set up a psp. I told him that we would use a volume submitter. He said that in order to set up the account at the brokerage firm, he has to complete the brokerage firm's prototype and that the prototype mirrors the volume submitter. I asked why I cant give them a fully executed plan document to set up the account. He said that's the way that they do it. I explained the problems that two plan documents could cause and probably didn't even scratch the surface. Any heard of this???

[R. Butler]

I'm not sure I understand. Why would you need your volume submitter if thr broker is insisting on thir prototype?

[WDIK]

Have you reviewed a copy of the broker's prototype? They are typically quite basic. If it doesn't allow for the desired plan design, you have a rationale for advising your client to adopt the volume submitter and investigate other investment alternatives.

[E as in ERISA]

Who's doing the administration?

[Blinky the 3-eyed Fish]

I ran into this problem once with Piper Jaffray on a takeover case for which our office was the TPA. Because it was a qualified plan's investments, they insisted that the document be one of their prototypes. Nothing else would be considered. When the GUST restatements came around, they actually mailed the adoption agreement to the client to complete the provisions. Needless to say, I think the secretary filled it out and of course butchered the intent of the doctor sponsoring the plan. It was fun cleaning that one up.

[R. Butler]

Have you reviewed a copy of the broker's prototype? They are typically quite basic. If it doesn't allow for the desired plan design, you have a rationale for advising your client to adopt the volume submitter and investigate other investment alternatives.

I'm sure you are correct about the broker's prototype, but if the broker referred the client, the TPA might be stuck.

[Bird]

You need to back up and first determine if the broker is giving you accurate information. The broker's mindset is to close the case; he probably went to someone else who said "here's a prototype document; get it filled out and get the money." He may or may not have been told that the client HAS to use the prototype, but to him, you are merely an irritating obstacle in closing the case and if he thinks that telling you that you have to use the prototype moves him towards the close, he will say it. Be firm, speak slowly, use small words: "we...want...to...use...our...own...document"

Having said that, there is still some possibility that the brokerage firm DOES insist on using its own document. If that's the case, you have to decide if you can use it and/or whether you have to adjust your pricing. But you can't have two documents, unless you want two plans.

[goldtpa]

thanks for all of the replies. I spoke with the broker today who said," that to open up an account at his firm they need to use their prototype." He also said that," he knows that its stupid to have two documents, but that is what they require."

While on the phone with him I asked to speak to his trust dept. The trust dept said that they need a plan document, it does not have to be the brokerage firms' prototype.

To which this self proclaimed pension expert said, "Well you learn something everyday."

Scary to think that this guy is running around giving pension advice.

thanks for all of your help.

[QDROphile]

And you will still look to him for any advice or services of any kind after that incident? Ignorance is one thing. Irresponsibility is another. The broker was irresponsible.