Here are a number of questions (and answers) you may find helpful.
We bring a great deal of plan consulting experience to the table. Sometimes new plan prospects focus on what is going on with their plan rather than focusing on investments. We can address concerns about dissatisfaction with the way the plan operates while you focus on the quality of investment services you will deliver.
The cost of TPA services varies depending on the number of participants with balances in the plan. We don’t focus on assets, however, some of our preferred providers pay us fee “offsets” that reflect asset size. Most of these fee offsets have no impact on the cost of the specific plan for which we are paid, but do help us to reduce our fees for that plan. For instance, a plan with $1MM in assets will generate between $500 and $1,000 a year in offsets depending on the provider involved. We typically waive all of our setup and document fees for that plan and reduce our participant fee to reflect fee offsets.
It is important to note that fee offsets are not commissions or advisory fees as we do not provide any investment services and do not get paid for such.
While we have worked with many different investment recordkeepers, preferred providers are those with which we have the most experience, and can recommend to a plan due to their ability to deliver superior plan sponsor services as well as effectively interface with us. While winning new business is exciting, retaining it is where both we and our advisors achieve profitability.
We work with all types of advisors, from those that have over 25 plans with us, to those that may come across one plan in their career. The most successful plan advisors seem to be those that put together a pro-active service model and can demonstrate their effectiveness. For instance, we have advisors that commit to 4 employee meetings per year and an annual review with the plan sponsor. In addition, they will prepare an investment policy statement, a due diligence file, and send the employer articles and bulletins about legal or regulatory matters that may affect their plan. Advisors that build strong relationships with the officers of the company typically find the plan much more profitable than just the fees/commissions earned from the plan’s investments.
Key advisors not only have the profile that brings success, but also works with us as a business partner. We typically make service calls together and assist with tools and information to make each of our roles more effective. Also, we keep each other informed on any activity, positive or negative, that may impact each other’s interest in the business. If we hear from a plan sponsor that a key advisor is not meeting their expectations, we contact the advisor to let him/her know this, and suggest ways to repair any damage in the relationship before it’s too late. We get the same treatment from our key advisors, so it’s not just one-sided. Key advisors truly become business partners and have a say in the manner and level by which we deliver our services.
Besides assisting you with sales presentations, we can “brainstorm” ideas on presenting the most attractive proposal to your prospective client. Some advisors want to present different options and let the prospect decide. Others review different options with the prospect and then recommend their solution. We can discuss your particular strategy in this regard and then use our knowledge of the many different recordkeeping platforms we have worked with over the years to obtain proposal(s) that meet your specific criteria. While we have our recommendations in the form of preferred providers, we do not require the use of those and will help you to obtain proposals from the platform(s) you choose.
In terms of tools, we offer the following:
Plan advisors contact us frequently to ask questions and obtain documentation on such topics as comparing advantages of 401(k) safe harbor to SIMPLE IRA plans, traditional pre-tax 401(k) contributions versus Roth 401(k) contributions, what is meant by top heavy, how to design a plan to cover only certain classes of employees, controlled group or affiliated service group situations, filing late returns or correcting compliance errors, and how to avoid the requirement for an annual independent audit.
Additionally, advisors contact us to help them with plans in which the participants (typically owners) want to invest in non-traditional investments or self-directed brokerage accounts which must be administered separately from the core investment platform. These “outside investments” must be accounted for manually and aggregated with the rest of the plan’s assets for reporting purposes.
We continue to provide education and training for plan advisors through one-on-one meetings and various seminars/workshops. Our training includes such things as data mining Form 5500’s for prospecting opportunities, using 4 easy plan design methods to attract new clients, effective sales strategies, 401(k) boot camp, and more.
We know over 500 advisors that have “touched” the retirement plan business in one way or another. However, we are in contact with about 50-75 advisors on a regular basis. Most of our advisors are local, but we do work with some advisors in other areas of the state and in contiguous states such as Virginia and South Carolina. We don’t have much business outside of this three state area, but have traveled to other states to support local advisors.