Fees on 5500-SF Lines 10e and 8f - Shady business practice

My apologies if someone else has already brought this up on one of the boards. If so, please redirect me there. 

Have other people encountered this recently? What are your thoughts?

This past week several of our clients have received e-mails from a large bundled provider attempting to drum up business. (we are a traditional TPA) The e-mail states in part "Your TPA is filing your 5500 wrong" and then goes on to explain that Lines 10e and 8f MUST match, and that they are opening themselves up to audit and penalties from the DOL. The e-mails have screenshots of the two lines from their most recent filed Form 5500-SF. 

I was outraged when I saw the e-mails. I'm just wondering if my outrage is a bit displaced, or perhaps a disproportionate response, because like many folks we are really really focused on getting everything done by 10/17 and things that I would typically be able to shrug off are getting under my skin. Clearly this has bothered me enough to make a post. 

Thoughts?

I know the company you're talking about. I work for a TPA firm and we have had clients receive the same emails targeting the same 5500 information. It is definitely a shady business practice and your outrage is justified. Employing this kind of fear tactic would be - I believe - an ethics violation for those of us with ASPPA credentials (I would think NIPA as well) so it's disappointing to see such a large, "reputable" company take this route.

Outrage??? Nay, nay, this is hilarious; they have just handed you the greatest marketing tool ever, evidence of their own incompetence!!  1) This firm's EIN is public record and all over any 5500 filing that had to report their fees; feel free to reach out to those Plan Sponsors to sell your own more knowledgeable services!!  2) Are they an insurance company?  If so their marketing materials have to pass strict truth/factual metrics; you should report this issue to their home state insurance commission, and your clients state commission, if different!  3) Laugh with your clients; share the good news with them that they've retained you, who knows better than many of your competitors, competitors who were brazen enough to put their own incompetence in writing!

BTW, what provider is this so we can all protect any mutual clients we may have with them?

Thanks for the responses to let me know I'm not off my rocker.

I'd rather not name names. I don't know if the action is limited to a specific salesperson or is a broader issue for that entire company. So far the e-mails I've seen are all from a specific sales person in a specific region of the country. 

I did think of the ASPPA ethics angle, but from what I can tell the salesperson doesn't belong to any industry organizations or licensing organizations. So I don't have anywhere to report them.

They are not an insurance company, but that is a really great thought.

I'm not sure we have the same kind of clients. I know there is a place in the market for most every kind of service provider, but our style of service and fees are very different from this particular bundled provider. So I don't think it's where we typically would look for new business. 

I'm not opposed to data mining per se. Companies data mine 5500s all the time. I've seen evidence of it on other solicitations over the years. But using it to blatantly lie about their 5500, and throwing us under the bus while they are at it crosses a line. 

Ugh I loathe this kind of "marketing".  

I once had a client get one of these where they claimed the sponsor could be in big trouble because per the plan characteristics, the plan didn't use DIA's.  It was a pooled profit sharing plan, with no 401k provisions...

2 minutes ago, BG5150 said:

 

Or, you can PM me a copy of the letter and I'll do it.  I love stirring up crap for creeps like this.

Interesting hobby you have there. 

I really dislike bad actors in our industry.

Seems like every couple years or so some guy who thinks he's outsmarted the system starts sending these letters trying to scare up business.

We had a somewhat similar situation in which a client's payroll company rep told him he was paying outrageous fees for his 401(k) plan and pointed to line 8h on his SF form.  Needless to say the majority of that number was due to employee distributions, which the rep forgot to mention.  We are a tiny little firm and have great clients that, like this one, would reach out to us before reacting, but it made me wonder how easy it would be to lose a client due to something like this and never know why.  So I would say this is not hilarious.

Pardon my ignorance?  Is it true that Lines 10e and 8f MUST match.

I agree the approach is dodgey but like all scams does it have some truth?

Ken

I'm going to err on the side of desperate moron, because not only is he lying(or not understanding?) about the two fields; his misrepresentation undermines his own selling ability!!  Instead or recognizing that 8 is an explicit expense, and 10 is an implicit expense that reduces the earnings paid out by the investment (ie opportunity cost); he's limiting his own cost savings analysis to just one of the amounts.  Actually, if a fiduciary did make a decision based on such a flawed examination could you have a breach of duty?

Come on, time to spill the beans on this joker; who knows what other damage he could be causing if not checked!!