Tweet
While we are not a retirement plan mill, we have about 50 clients in 20 states, and nothing I said above is actually wrong. Our business model is fiduciary/best interest one, and yours is sales-based one. You sell one platform only, and we set up a plan based on open architecture approach where we use the best components, and there is no way your approach can come even close to what we do. We provide advice, and you sell your platform – and maybe what you sell can work for some docs, but it is by no means the best solution for many of them, especially if they have significant assets or sophisticated needs.
1) Advice you get 1 on 1 does not come from a fiduciary who provides advice directly to the plan sponsor regarding their plan. That’s non-existent with this platform (or any other platform for that matter). We actually offer business level fiduciary advice to plan sponsors rather than sell them a plan that might not be optimal.
2) Advice you get will not include SIMPLE vs. 401k side by side comparison, or whether a Cash Balance plan would work well for their practice.
3) There won’t be any compliance advice on affiliated/controlled groups.
4) There won’t be any advice regarding brokerage windows and any ERISA issues.
5) There won’t be anyone providing comprehensive retirement plan advice that takes into account all aspects of plan sponsor’s retirement plan needs – this is the #1 service that is very valuable to plan sponsors with sophisticated needs.
Once the sales pitch is over, you are basically working with Lincoln Trust, which is just a large record-keeper, nothing special. For that matter you can work with any other record-keeper out there, as well as your own TPA and your own ERISA 3(38) fiduciary, and save money in the process, but most importantly, get a much better services for your plan. The key for doctor and dentist plans is customization, but you’ll get none of that with a bundled one-size-fits-all platform because that’s simply not their business model.
Most record-keepers like Lincoln Trust have a tiny percentage of custom-designed profit sharing plans, and most of their plans are run of the mill safe harbor. One hundred percent of our plans are profit sharing, and we have vast experience in optimizing plan design, which is not something you can expect from a conveyor belt record-keeper with a handful of TPAs for thousands of clients.
We’ll let channels outside of this board address the inaccuracies of the prior posts formally. What we do find unusual is that this thread started with a dentist asking an opinion about ABK, and Kon felt the need to attack our model in reply. To try and gain clients? The posts above, we’re shaking our heads, it’s so inaccurate throughout.
We really are not sure of the base reason for that since both models, (Kon’s and ours) espouse low fees, fiduciary support, solid investment options, and an adherence to effective plan design. We are in truth on the Same side. The differences are that AB401k has built a national brand with over 1000 clients and will surpass $1 billion in assets under management in January, while Kon has built a solid practice working for himself solo with 50 or so clients that he can support. This does not mean that one model, or our model, is the model.
Rather it seems the real argument if one might need to be made when discussing 401k providers would be toward those plans offered via brokers, insurance company and payroll companies. Those are the plans that are truly robbing the retirement savings of Americans. Not what we or Kon offers, or other fine 401k options out there that also have their hearts in the right place.
This however was a fantastic refresher for us to no longer engage in such back and forth. This particular thread was for dentists to engage in opinion, not provider opinion. We can’t expect all 50K plus dentists with 401k plans to use AB401k (maybe just 45k!!). Going forward, unless asked something directly, we’ll just observe the commentary, learn from them and use them for CANI (Constant and Never Ending Improvement)
We’re not hard to find, and I’m happy to address any questions directly.
[email protected]
The model in question is a bundled record-keeper model, and everyone uses it - there are many other providers that have identical structure and charge very similar fees. There is a place for it, and there are many alternatives. While this model is definitely scalable for the provider, it is not the best model for retirement plans that have sophisticated needs (which are most doctor/dentist plans).
I merely pointed out the drawbacks of such model. The whole point of this model is to get as many clients paying AUM fees as possible, while low-balling on administrative fees. Individualized and customized services are not part of this model because there is nobody to provide such service by - the record-keeper has a process (which is basically a conveyor belt, where there isn't one person responsible for everything), and nothing outside of this process is going to be done. It is the same model used by all of the record-keepers - there is a sales team, and once the sale is made, the plan is handed over to the record-keeper, done. Nowhere here is a fiduciary who's taking the time to understand the client's needs, perform proper financial analysis, do thorough design studies, and come up with recommendations that are made in the best interest of the client, as well as to provide ongoing services that are not limited to just picking a handful of investments. And when such models use an ERISA 3(38), that's usually an entity behind the scenes that simply picks investments, and often such entities are either subsidiaries of record-keepers, or share revenue with them, so they are neither independent nor unbiased. While this can work for some, I find that this still leaves the plan sponsor in charge of everything because they don't get ongoing advice from their fiduciary adviser regarding many other aspects of their plan, and there is no oversight/interfacing with the TPA by the adviser, because all of the parts in a bundled model work for the record-keeper, so there are no checks and balances as well as out of the box fiduciary advice provided to the plan sponsor.
The fiduciary model is not scalable - we take the time to do everything right (cost-effectively, I might say because AUM fees definitely cost a lot more than fixed fees in this case), while bundled record-keeper model is very scalable, but this comes at a cost which is paid by the client. So I always recommend open architecture fiduciary model vs. bundled record-keeper one.
We often find that existing plans need extensive voluntary compliance work, and thorough analysis of plan's architecture and design needs, and such plans can not be just transferred over to a new provider while forgetting everything that came before. Also, the open architecture model is much better because it allows mixing and matching of various providers, especially if the plan has existing TPAs/actuaries/record-keepers, and it would take a thorough evaluation to determine which providers work best, and which should be replaced.
Comment