For an ASPPA Member who is a recordkeeper’s employee, who is her Principal?

To help me sort out how to interpret and apply ASPPA’s Code of Conduct, I ask for BenefitsLink neighbors’ thoughts about who is an ASPPA Member’s Principal when the Member is a nonowner employee of a service provider and does not control its relations with its customers.

The Code’s definition for Principal is “any present or prospective client of a Member or the employer of a Member where the Member provides retirement plan services for their employer’s plan.”

Imagine an ASPPA Member (under ASPPA’s Code, “[a]n individual”) who is an employee of a big recordkeeper. This employee never works on any employee-benefit plan the recordkeeper maintains for the recordkeeper’s employees. Rather, the recordkeeper uses the employee’s work to provide the recordkeeper’s services to the recordkeeper’s customers. Assume the work is, if provided to a Principal, “Professional Services” as ASPPA’s Code defines this.

https://www.asppa.org/member/code-conduct

1.    Is each of the recordkeeper’s customers the employee works on a Principal? Why or why not?

       Would whether the employee works on a dozen plans, a few hundred plans, or a few thousand plans affect your reasoning?

       Does it matter whether the employee knows some identity or information of a particular customer? What if the employee works on a process the recordkeeper uses in performing its services for many, most, or almost all its customers, but the employer seldom sees information on a particular customer?

2.    Is the recordkeeper its employee’s only Principal? Why or why not?

3.    Does this employee have no Principal, because she does no work on her employer’s plan and the recordkeeper’s customer is not the employee’s client?

4.    Do you have some different way to interpret who is or isn’t the employee’s Principal?

(As always, I own complete responsibility for whatever guidance or information I provide.)

What are your thoughts?

I’ll try my answer at my question.

Let’s reject interpretation #3 because it would leave many ASPPA Members with no Principal, and so no particular person to which a professional-conduct duty is owed. While the Code of Conduct has a few rules (2, 12, 13) that do not depend on a relation to a particular person, applying only those would leave little of the confidence-building standards a professional code is meant to communicate.

Let’s reject interpretation #2. About looking to the employee’s employer, the restrictive or defining clause “where the Member provides retirement plan services for their employer’s plan” isn’t met for a recordkeeper’s many employees who work only regarding external clients’ plans. And if one ignores the clause and looks to a Member’s employer as her Principal, the Code of Conduct wouldn’t do anything not already in the law governing the employee-employer relationship.

I’m left with #1, using the idea that one favors a textually permissible interpretation that furthers, rather than obstructs, the text’s purpose.

That would treat the recordkeeper’s clients (or some of them) as also the recordkeeper’s employee’s clients.

If a third-party administrator provides its services for about two hundred plans and the TPA’s employee regularly works on about twenty of them, perhaps such an employee might know her Principals.

But imagine a recordkeeper provides its services to 60,000 plan sponsors (with at least as many plans).

Should an ASPPA Member treat as her Principal:

       all plan sponsors the recordkeeper serves?

       only those plan sponsors the employee knows the identity of?

       only those plan sponsors the recordkeeper has assigned the employee to work on?

Or is there some other reason or context one uses to discern whether, or the circumstances in which, a plan’s sponsor or administrator is the Member’s Principal?

BenefitsLink neighbors, what do you think?

Maybe ASPPA can answer your questions directly.

Thanks. I'm unaware of an ASPPA publication that describes an interpretation that says much beyond the Code of Conduct's one-sentence definition. That's why I seek the thinking of our BenefitsLink neighbors.

Peter, your questions so very often require taking another look at what is taken for granted and makes us question what is the real intent.

One thing stands out with the Code - the definition of Principal says nothing about former clients or employer's of the Member.

Also, the definitions speak to the Member providing to the Principal "retirement plan services" but this term is not defined in the Code of Conduct. 

You suggest assuming the work is Professional Services.  The Code does define "Professional Services: services provided to a Principal by a Member, including the rendering of advice, recommendations, findings, or opinions related to a retirement or other employee benefit plan." 

Professional services as defined in the Code are vastly different from the services provided by many employees of a recordkeeper where the employee's job is to follow a fixed set of administrative steps with no rendering of advice, recommendations, findings, or opinions related to a retirement or other employee benefit plan is involved.

The Code also notes that "A Member shall render opinions or advice, or perform Professional Services, only when qualified to do so based on education, training and experience."  People in our industry more often than not try to help out a participant that is struggling with understanding plan provisions and available options. 

To quote Dirty Harry, "a man has got to know his limitations."

Paul I, thank you for your kind words and thoughtful observations.

I asked a commenter to assume the work is Professional Services so the focus would be on my question about which person is a Member’s Principal.

The Code’s definition for Professional Services also is awkward. Although the defined term “includ[es] the rendering of advice, recommendations, findings, or opinions related to a retirement or other employee benefit plan”, that phrase, set off with a comma, might be illustrative but nonrestrictive. Arguably, Professional Services is any “services provided to a Principal by a Member[.]” (I recognize other possible interpretations, including some under text-interpretation presumptions that the expression of one thing sometimes suggests the exclusion of others, and that one interprets a text so every word or phrase has some effect.)

If we exclude from Professional Services a recordkeeper’s employee’s nondiscretionary services, eight of the Code’s twelve rules might have no application. If a Member does not provide Professional Services, the Code’s rules 2 (advertising), 3 (communications), 5 (confidentiality), 6 (conflicts of interest), 7 (control of work product), 8 (courtesy and cooperation), 10 (professional integrity), and 11 (qualification standards) do not apply.

What’s left? A Member must not use an ASPPA or other ARA Credential or Title untruthfully [rule 12]. A Member must disclose her and her “firm’s” compensation [rule 9]. A Member regulated by a profession (such as the “three As”—accountant, actuary, and attorney) must obey those conduct rules [rule 13]. (Rule 4 requires only that a Member “be knowledgeable about” and obey the Code.)

Many interpreters, even many textualists, might reason that the American Retirement Association did not intend a Code that would have almost no application for many Members.

I suggest that the definition of Professional Services is limiting.  The definition is limited to "a retirement or other employee benefit plan".  Arguably, "rendering of advice, recommendations, findings, or opinions" further limits the definition that involves the personal exercise of professional judgement.

Consider a Member who two jobs.  One is working as a call center rep for a lawn care company and the other is as a call center rep for a recordkeeper.  The recordkeeper requires all call center reps to get QKA credentials.  Both jobs require the Member to stick to the script, and any freelancing or going off script is grounds for dismissal, the Member meticulously has stuck to the script and has not exercised professional judgement.  Is this Member providing Professional Services when performing either job?

If the Member goes off script with a lawn care client and offers advice, is this a violation of the Code of Conduct?  If the Member goes off script with the recordkeeper client and offers advice on a topic the Member knows about from the Member's QKA studies, and the Member meets the other standards in the Code of Conduct, is this a violation of the Code?

Again, I suggest at some level the definition of Professional Services is limiting which means it creates boundaries.  The conundrum often is the interpretation of where are those boundaries.