Investments
Unbundling Investments as a Value Proposition
Historically, retirement plans have been sold as investment vehicles with plan design, documentation and third party administration (TPA) services “bundled” together into a one-stop package. The investments may be excellent, but the rest of the package may be squeezed into a one-size-fits-all design with minimal personalized service and inadequate consulting skills. This often results in frustration and underutilization of savings opportunities. A bundled approach may be appropriate for a start-up company where owners and key personnel cannot yet afford to maximize contributions and in-house staff has the time to learn how the bundled provider requires you to work with them.
The Law Offices of R. David Danziger, P.C. “unbundles” (i.e., separates) a Plan’s investments from the rest of a Plan’s design and operational requirements. We do not offer investments or investment advice. Instead, we focus exclusively on adding VALUE through Plan design, contribution consulting and third party administration (TPA) services.
In a bundled arrangement, clients must choose a single provider for Plan Design, Third Party Administration and Investments. If any one component is weak, the client must drop the entire package and start all over again. In an unbundled arrangement, clients have separate advocates; each focusing on what they do best.
Sometimes, bundled arrangements are quoted with lower fees than unbundled arrangements. That may sound like a bargain, but there is truth in the expression: “You get what you pay for.” Or, as Warren Buffett says: “Price is what you pay. Value is what you get.”
We encourage you to ask your broker how he or she feels about unbundled arrangements. Surprisingly often they will recommend that you unbundle the investments from the plan design and consulting. It is a better value proposition because it allows each party to focus on what they do best. Even if our unbundled service model costs a little more than a bundled arrangement, you will have the comfort of knowing (a) that we do not have divided loyalties, and (b) we can only survive by providing you with value.
We offer a no-obligation initial design consultation. Why not ask us to demonstrate whether the additional benefits of an unbundled design can exceed the fees of operating in a flexible, unbundled, arrangement?
Consider the following before you buy into a bundled arrangement:
- Will your bundled plan document maximize contributions for preferred employees, and provide the contribution flexibility you need?
- Who will help you answer these questions?
- Are they more interested in ‘selling’ investments than customizing your plan design?
- How experienced is the staff assigned to your case, and how much personal attention will they provide?
- Is most of your communication handled by mass mailings or email?
- Do they illustrate how a contribution will be split among employees, or do they suggest different strategies, elections or amendments to improve contributions for Highly Compensated Employees?
- Do they help you determine who is Highly Compensated, or must you read pages of instructions and tell them?
- If you elect to change investments, will you need a new Plan Document and third party administrative service team?