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Time to Reset the Advisor-TPA Partnership

Practice Management

Editor’s note: This panel discussion at the 2022 NAPA 401(k) Summit provides an interesting perspective on the relationship between TPAs and advisors, their work and connections, and the approach and mindset advisors follow. TPAs may find this information and insight useful and instructive.  

What should advisors be asking their TPAs? What should they be getting from them? What makes the difference between a good TPA and a bad one? And how can advisors and TPAs improve their working relationship and serve plan sponsors as a cohesive team?

Those were just a few of the questions tackled in a highly participatory workshop session on Day 1 of the NAPA 401(k) Summit in Tampa. In a twist on the usual speaker selection at a conference of plan advisors, the panel which led the workshop consisted not of advisors or home office execs, but three independent TPA owners:

  • Shannon Edwards, President of TriStar Pension Consulting
  • Amanda Iverson, COO & Partner, Pinnacle Plan Design
  • Justin Bonestroo, a former TPA owner who is currently a member of the CBIZ TPA leadership team

All three are well-known members and leaders of ASPPA, NAPA’s American Retirement Association sister organization. Bonestroo is the current President-Elect; Iverson (at center in the photo above) is the current Vice President, and Edwards is a member of ASPPA’s Leadership Council.

In addition, the three TPA owners are part of a new ASPPA initiative seeking ways to help repair the rifts that have existed for years between advisors and TPAs and help advisors work more smoothly and productively with their TPA partners—focusing on the value of independent TPAs. 

“One of the things that [the group] has been talking about is, how do we help the TPA and the advisor to better communicate and recognize where the lanes are?” observed ARA Chief Content Officer Nevin Adams, who facilitated the workshop session. “To quit fighting over who owns the relationship and come together in a way that will allow that relationship to really function for the betterment of everybody—not the least of which is the plan participants and plan sponsors we’re all trying to work with.”

‘Polling’ Places

With Adams’ help, the group has conducted a pair of polls: one asking TPAs about their views on advisors and the other asking advisors about their views on TPAs. The advisor poll was a chapter in Adams’ weekly “Reader Radar” series in February. 

Iverson noted that when advisors were asked why they work with a TPA, the top answers (more than one response was permitted) were: 

  • 76% - Assists with technical difficulties
  • 56% - Overall, better for plan sponsor
  • 45% - Makes my life easier
  • 34% - Assists with plan/client retention
  • 29% - Helps me win business

Why don’t advisors work with a TPA? The poll results:

  • 72% - My clients don’t want another party they have to talk to
  • 59% - Adds a layer of complexity
  • 31% - My plans don’t need a TPA
  • 28% - Too expensive
  • 7% - Too technical; doesn’t speak English to clients

Understand Processes and Procedures

“No matter what TPA partner you choose—whether bundled or independent—it’s important that you understand that partner and their processes and procedures, so that your partnership with them can work best for both of you,” Edwards advised. “That will help you decipher what your TPA partner is doing for you—or what you want them to do for you.” 

Understand Culture

Another key to a successful partnership is corporate culture, Bonestroo noted. “It’s one thing to claim to be partner, but the fact is that yes, your TPA business owner and the sales team understand the partnership relationship. But that doesn’t mean anything if the people with boots on the ground—working with the plan, dealing with the record keeper—don’t have that same attitude. If the culture doesn’t flow through all the way from the top to the bottom, and your consultants don’t feel that way—that it’s always an us-versus-them situation—then you’re not going to have a good experience with that TPA.”

Checklist in the Works

Edwards summed up the ASPPA committee’s overall findings so far, citing two types of challenges: communication and expectations. “We all see opportunities—opportunities for better client service, opportunities for growth, opportunities for a productive partnership,” said Iverson. “So how do we find those partners?” 

To address that question, she said, one of the things that the ASPPA group is working on is a checklist of capabilities that advisers can use to evaluate potential TPA partners. “One of the frustrations we’ve found is that ultimately, unless you have a process that identifies what the pain points are, and a process for looking at all of the ones that are important to you, it will be difficult to really put together a partnership that works,” Bonestroo explained.

Right now the group is working on a checklist at a high level, Iverson explained, and is seeking input from advisors. Currently the checklist looks like this:

What to Look for:

  • Knowledge
  • Processes (sales, onboarding, ongoing, data management system)
  • Responsiveness
  • Backups
  • Communication style
  • Retention rates (clients and employees)

What to Avoid:

  • Lack of willingness collaborate
  • No processes 
  • No backups
  • “One-uppers”/competing
  • Conflicts
  • Differing communication styles
  • High turnover (clients and employees)