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The Secret(s) to a Good TPA Partnership

Strategic Partnerships

For years, one of the most persistent barriers to the smooth and efficient operation of many 401(k) plans has been the nature of the working relationship between the plan’s advisor and its third-party administrator, or TPA (note: a recordkeeper can be a TPA).

When the advisor/TPA partnership works as it should, typically it’s characterized by:

  • a clear understanding of each other’s role and expectations;
  • a shared dedication to ensuring that plan administration runs smoothly and the plan is in full compliance; and
  • the plan’s design is tailored to the plan sponsor client’s needs and goals.

Now, there are plenty of real-life examples where the two (and sometimes three) roles work in concert, where there is no struggle for “ownership” of the relationship with the plan sponsor client, but rather both parties understand and appreciate what the other brings to the table and, stays in their respective “lanes.” However, to the degree that those attributes are compromised—well, service and client satisfaction can deteriorate rapidly. 

Like most successful relationships, it’s often about aligning expectations with reality—and that reality is that all TPAs (and all advisors) are not identical in terms of their skills, needs and capabilities. But as human beings we often bring to these relationships an expectation based on previous experience(s)—for good or ill. Advisors often take on tasks that a high-quality TPA firm might typically perform. Similarly, TPAs might find their expertise relegated to an after-the-fact clean-up simply because they weren’t involved in the initial discussions, perhaps out of a concern that they’d derail those conversations prematurely. Since each client—each client relationship—and each advisor/TPA combination—is unique, how is this expectation alignment supposed to occur? Once again, relationships are developed and nurtured by open and honest communications. And that’s where, earlier this year, a group of TPA business owners and executives—including a longtime NAPA member—came together to consider possible solutions. Here’s their story.

Getting Off the Ground

It was American Retirement Association Chief Content Officer Nevin Adams who was inspired to try and bridge the communications gap between TPAs and advisors after sitting in on several ARA Women in Retirement Conference (WiRC) “Third Thursday” sessions in 2020 and 2021. On those calls he noticed that the issue of communication issues—frustration with one or the other “not staying in their lanes”—kept coming up. The issue was something that also popped up occasionally on the Retireholi(k)s’ vlog, Adams notes, which, though conducted by the TPAs at Plan Design Consultants, often includes advisors on “stage,” as well as in the “chat bar.”

“I had good enough relationships with people on both sides of the discussion to think that we could actually bring some folks together and work on this,” Adams continues. “It helped that I didn’t really have an axe to grind, just wanted to take a concern that was being expressed by both TPAs and advisors—separately—and see if we couldn’t find common ground. I didn't know, at the outset, what we’d be able to do. I just wanted to bring together knowledgeable, passionate people who wanted to help solve the problem. And I think we ended up with that.”

Read more about “The Bridge Builders” from the Fall issue of NAPA-Net the Magazine at https://issuu.com/usaretirement/docs/_nntm_fall22_complete/24

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