Compliance April 14, 2016

DOL Files ERISA Complaint Against Interactive Marketing Group

A trustee to a profit sharing plan offered by a New Jersey-based marketing firm is accused of abandoning his responsibilities to the plan and its participants. 
Reported by

The U.S. Department of Labor (DOL) is asking the courts to order equitable relief for participants in an Interactive Marketing Group profit sharing plan, and to enjoin the plan’s sole trustee from alleged ongoing violations of ERISA Title 1.

The complaint was filed in the U.S. District Court for the District of New Jersey, naming as defendants the Interactive Marketing Group, Inc. 401(K) Profit Sharing Plan and Guruprasad Pai, “the sole trustee of the plan and a fiduciary with respect to the Plan within the meaning of ERISA Section 3 (21)(A), 29 U.S.C. § 1002(21)(A).”

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

Complaint documents show the plan in question is an “employee pension benefit plan within the meaning of ERISA § 3(3), 29 U.S.C. § 1002(3) and is covered by ERISA, pursuant to ERISA § 4(a), 29 U.S.C. § 1003(a).” The plan was sponsored by Interactive Marketing Group, Inc., with the last known address in Paramus, New Jersey, and was established on or about January 1, 1987.

“On information and belief, Guruprasad Pai served as the sole trustee of the plan since it was established,” DOL says in its complaint. “Guruprasad Pai was the only individual with signatory authority and the only trustee of the plan, pursuant to ERISA § 3(21), 29 U.S.C. § 1002(21).”

Following inquiries from concerned beneficiaries of the plan, DOL explains that it cannot get a response from Pai, who stopped servicing the plan more than a year ago without naming a successor trustee.

NEXT: Supporting an abandoned plan 

“At all times relevant during this action, Guruprasad Pai was the only fiduciary to the Plan with responsibilities for its administration, distribution of assets and day to day management,” DOL explains. “On information and belief, Interactive Marketing Group Inc., stopped doing business on or before December 15, 2014. Guruprasad Pai stopped performing fiduciary duties on or about [that date] and did not ensure the appointment of a new fiduciary to manage the plan or oversee the distribution of the plan’s assets. The plan has not been formally terminated.”

The plan’s assets are in custody at State Street Bank and Trust Company, which “has been the custodian of the Plan assets at all times relevant to this litigation.” As of May 26, 2015 the value of the plan assets held at State Street totaled $753,309.

“Without a duly appointed trustee or other fiduciary of the plan to instruct an asset custodian to distribute the plan’s assets, the plan’s participants are unable to obtain distributions of funds from the plan,” DOL says.

To solve these issues, DOL wants the court to appoint an independent trustee and fiduciary to administer the plan and distribute the plan’s assets to its participants and beneficiaries, and to order “such further relief that is appropriate and just.” As is customary in these cases, DOL also wants to bar Pai from gaining any new responsibilities for servicing ERISA-covered retirement plans. 

Read the compliant here. 

Data & Research April 14, 2016

Advisers Should Think Like Marketers

Advisers can set themselves apart by developing an effective value proposition for prospective clients and referrals.
Reported by

To grow their businesses, advisers should identify a target group of clients, create a value statement and generally think like classic marketers, according to research from Cerulli Associates.

These findings, published in the 2Q 2016 issue of The Cerulli Edge – Advisor Edition, examine business development and the value of strategic alliances and adviser events.

“Advisers need to identify their ideal target market and define a value proposition that is compelling to that audience—the same as any business venture in any industry,” says Kenton Shirk, associate director at Cerulli. “For example, an adviser with a defined value proposition might specialize in working with corporate executives who are concerned about planning needs such as managing concentrated stock exposure, minimizing taxes, protecting assets, and maximizing tax-deferred savings in retirement plans.”

Advisers can stand out from the competition by creating a strategy that includes articulating their firm’s story; defining their value proposition; asking for input from clients on the types of events they have enjoyed and activities they would like to attend; and creating strategic relationships cultivated over time. Defining their practice’s value proposition often makes advisers feel more confident when communicating their message, which creates more enthusiasm in their conversations with prospects, according to Cerulli’s findings. 

“An investor considering a new relationship with a financial adviser wants to understand the value that a potential adviser can offer before committing to a long-term professional relationship,” Shirk explains. “Given the difficulties many investors face when evaluating potential adviser relationships, they frequently seek recommendations from trusted family members, friends and professional providers who can vouch for an adviser’s trustworthiness, expertise and ultimate value. Advisers need to articulate a compelling value proposition to not only prospective clients, but also to their referral sources.”

According to advisers, 67% of their new clients are referrals from clients, friends or family members. Another 18% are referrals from other professionals, such as certified public accountants and attorneys.

NEXT: Success with niche marketing

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

Advisers find the most success with niche marketing because it forces them to be specific about their target market and value proposition, according to Cerulli. The adviser's message becomes tailored to their audience's needs, which makes it more powerful. 

Two-thirds (68%) of advisers have used niche marketing strategies, Cerulli says. Of those, 37% indicate that the approach is very effective, ranking highest among all options. An additional 59% consider niche marketing to be at least somewhat effective. Comparatively, roughly 61% of advisers have used social media marketing techniques, but only 5% consider their efforts to be very effective.

Advisers often fear that niche marketing will alienate prospects who fall outside of this tailored audience, but in reality, a more targeted value proposition helps advisers focus on marketing efforts with targeted tactics and messaging, Cerulli says. 



«