TPA

Selling the small DC plan

In reviewing notes from a meeting with a Third-Party Administrator (TPA) earlier this year, one message became loud & clear.

Stop Selling & Start Servicing.

And as we’ve met and spoken with management at the record-keepers, that message resonates even more.  The record-keepers are working hard in producing sales material and internal strategies to gain share.

For a TPA selling a 401(k) plan to a small business, these simple questions continue to arise from plan sponsors:

1. Between different options (referring to record-keepers), will investing in one plan versus another be easier for my employees?
2. When my employees need advice and help, who’s best at answering their calls?
3. Do all the options offer plans with the same funds, at the same prices?
4. Do the plans all cost me the same?
5. How do you (the TPA) get paid by these companies?

To answer these questions effectively, the TPA creates his own competitive analysis.  He has to track changes across record-keepers including, fund price changes, fund availability, plan participant/sponsor Web site changes, and service discrepancies.   Maybe he does a good job.  Most likely his information becomes outdated.

When the TPA’s information becomes outdated, the record-keeper with positive changes but poor communication loses out.  The best record-keepers create a marketing process to continually remind the TPA community of their firm’s competitive advantages (versus others). Without that nuanced and important communication, improvements at the platform-level may go largely unnoticed.