“Surround yourself with smart people and you will look smarter.”
The old colloquial is true. Retirement plan administrators, or third party administrators, are experts in their field who can help with compliance and plan designs. Working with a TPA can also bolster your firm by building a deep bench of experts clients can count on. Working with them can also make you look smarter and give you added authority as an expert in retirement planning.
Here are three ways a TPA can make you look better and drive more clients to your door.
STAY OUT OF TROUBLE
We all know the severe consequences of disappointing a client by offering mediocre results: you'll get fired. But what happens when a client is fined or paying fees that they shouldn’t have to (with a different plan design) under your supervision? In addition to getting fired, you could possibly get sued. A TPA mitigates your risk and allows you to avoid mistakes.
While the investment results are largely left to you as the adviser, the plan design, regulations, etc. are left to the TPA. This allows you to maintain your reputation and get better results for your clients. It also takes a load off your shoulders regarding compliance.
A TPA informs decisions about what plan design is best through precise calculation. A simple 401(k) likely won’t cut it these days — they limit opportunities to increase tax deductions and maximize contributions to highly compensated employees. A TPA will help you draw comparisons to help you land on what plans are best for your clients.
As an example, a combination plan, aka: combo plan, combines a defined contribution (401(k) profit sharing) plan and defined benefit pension plan, allowing the plan sponsor to offer a two-fisted approach to saving for retirement. This hybrid design can hyper-increase the dollar amount allocated to an individual compared to a stand-alone profit sharing plan. Combining these plans allows you to maximize the benefits for owners and highly compensated employees while providing a minimum type of benefit formula to younger employees. This design is only possible with a TPA.
BOLSTER YOUR FIRM
Having a TPA on your side dramatically improves your ability to reel in new clients, seal deals with prospective clients, and maintain relationships with existing clients.
Having a deep bench and the help of experts looks great to prospective clients. It helps show them that you have authority over a knowledgeable team they can count on to answer their questions. For example, at PlanPerfect we have a 401k profit sharing plan with an adviser whom we work with regularly. In a meeting with her client, the adviser was asked if there are other opportunities for larger tax deductions. As the TPA in her pocket we were able to help brainstorm some other options like adding a defined benefit pension plan. We ran several illustrations and arranged a meeting with the client, adviser and CPA.
At the end, all questions the client had were answered efficiently and the adviser now manages more money for that client.
MINIMIZE YOUR RISK & GET BETTER RESULTS
TPAs lower your risk and help you navigate the choppy waters of working with retirement plans. Know that finding the right TPA takes time (or at least it should). From boutique to corporate, TPAs come in all shapes and sizes. It’s worth the effort to find a TPA that aligns with your goals and the goals of your clients. This will unequivocally improve the relationships with your clients and leave you looking like a champ.
Remember, surround yourself with smart people.