Educational Series
Your Bundled Provider
Is a TPA Too
Understanding the Advisor-Compliance Divide
Short, candid conversations on the working relationship between advisors and TPAs, and how it shapes the plans they serve together.
Three-part video series
The Assumptions Advisors and TPAs Make About Each Other
In this episode, we break down five common assumptions advisors and TPAs often make about one another, and how those misunderstandings can create confusion, inefficiencies, and frustration within retirement plan relationships. We explore why these assumptions exist, where communication gaps typically occur, and how better alignment between advisors and compliance teams can lead to stronger outcomes for clients and plans.
Chapters
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Nevin Adams: Well, hey everybody, thanks for checking this out and tuning in. Um, we got some fun things to talk about today, and I'm here with a group of very special people to talk about it. Um, I guess I should start off by saying I'm Nevin Adams. Um, I like to think most people know who I am, but that's not true obviously in every case, particularly since I'm now technically retired. But I was once upon a time the former Chief Content Officer of, yes, the American Retirement Association, and I am living my own very special version of retirement, which is to say I continue to read a lot and think a lot and talk a lot about things about retirement. And ultimately, that's kind of what today's conversation is about. So I'm going to ask the very special people who are with me to tell you who they are in a very special way. Um, and while Norm— Norms would say suggests that I go with one of the ladies first, I'm going to break those norms and go with the only non-lady on the call.
Chad Johansen: So, Chad, pleasure to be here with you all. I am Chad Johansen. I am a quarter of the Retireholics, and my, my day job is as a partner and director of consulting with Plan Design Consultants. Uh, if you haven't heard of us, we're a 51-year-old family-owned and operated group of nerds that deliver great value to advisors and their partners. And their clients in the retirement plan space.
Nevin Adams: Did I, did I say we were going to allow commercials?
Chad Johansen: Okay.
Nevin Adams: Was that—
Chad Johansen: you said introduce ourselves. Oh, sorry. I'm a QKA as well. I forgot. We've got to come in with our credentialing too, just so that Shannon's put on the spot for hers.
Nevin Adams: Well, speaking of Shannon, take it away, lady.
Shannon Edwards: Uh, hello. I'm happy to be here with you all today. Uh, I'm Shannon Edwards. I'm the owner of TriStar Pension Consulting. We are a compliance administration and consulting firm. I started TriStar over 25 years ago. I am also a member of the American Society of Pension Professionals and Actuaries. I'm a certified pension consultant, which is a CPC, and I have other designations as well from ASPA. Do you really want me to say them all, Chad?
Chad Johansen: It's pretty fun.
Shannon Edwards: I'm an IRFA. I'm a QKA. I'm a QKC. I'm a QPA, and I think that's it. And I'm currently serving as the president of ASPA this year as well.
Chad Johansen: Thank you.
Nevin Adams: Hi, Ms. Mary.
Mary Patch: Hi, Shannon. Well, I'm Mary Patch. My designations are a lot shorter than Shannon's. I'm simply a QKA and a CPFA. I'm a retirement plan advisor with Atlatl Advisors out of Madison, Wisconsin, and I also own a consulting practice called Patch Retirement Plan Solutions. That's a non-advisory side of what I do. I grew up in the 401(k) industry, starting with processing payrolls back in 1990. So, I've been around quite a while.
Nevin Adams: As have we all. So, bringing you back here, I mean, if you think about it, years ago, literally years ago, I sort of like reached out and pulled together this like consortium. And the reason to bring the consortium together was quite simply is I've spent a lot of time hanging around with advisors and a fair amount of time also hanging around with TPAs. And what was obvious to me in pretty short order is that these are two professions that absolutely, in a perfect world, rely on and need each other, their perspectives, their expertise, their contribution, their involvement, their engagement. And yet, believe it or not, These are two professions that are like oil and water when it comes to trying to sort of actually cooperate, and there ends up being a fair amount of a lack of understanding, and certainly in some cases a misunderstanding of what these two roles are and how they might sort of fit together. And I think over time there has been a fairly strong tendency for people to make some really bad assumptions about what these two professions bring to the table, about how much value or lack of value those professions do in fact bring to the table, and how it is all supposed to work together. And what happened was I knew folks who did have positive interactions, and I said, how can we sort of connect these dots? How can we sort of build a bridge between these two professions? Because in my experience, their integration is absolutely essential to not only the plan working the way it's supposed to, the plan operating legally, and ultimately the plan sponsor and the plan participants getting from that plan what they should get from it. So how do we do that, and how can we sort of help sort of air all that kind of stuff out? I found in a lot of ways, these days I'm fairly consumed with AI and what's going on with AI. I think one of the things that's occurred to me pretty quickly is AI can be a great tool if you ask the right questions. And in some cases, if you ask more than one correct question and be willing to be sort of iterative. But life generally, pre-AI, a lot of it means, do you know the right questions to ask? And that, I think, is one of the things that we worked on to develop to sort of flesh out and help articulate the questions that really do need to be asked so that people don't get burned by a bad assumption. After all, you all remember what— when you assume, what happens, right? So we're going to try and avoid that today. But a part of that, let's just lay the groundwork here and talk about this, and that is what are some of the really bad assumptions that advisors and, and sometimes TPAs, or third-party administrators, or as we're inclined to call them, compliance administrators, the assumptions that they end up making. And the first one is perhaps the most basic one, and that is that all TPAs are the same. You know, one is the same as another, and it's kind of— it all gets under this umbrella of saying, you know, it's a commodity. You know, it's just kind of a thing based on price, but that's not true. It's not true at all, is it? What do you say to that, Shannon?
Shannon Edwards: Thank you, Nevin. That is, in my opinion, a bad assumption. I know we've talked about this a lot in our group, and we talk about it at a lot of different conferences that I'm at and stuff. And if you know one TPA firm, you know one TPA firm. And each of us has our own processes and procedures. Each of us does things a little bit different, even though we get to the same result, right? There are certain things that every plan has to have done. You have to have your testing done. You have to have eligibility checked. You have to have allocations done for contributions. Each of us has a different service model and a different way to get to the same end. Um, you know, Chad and I have talked. We both have, you know, really good— what we consider really good firms that offer great value to our clients and great services. But even between us, we do things differently, even though we produce similar products. So I think, you know, the assumption that we're all the same is, is not true.
Chad Johansen: Let's, let's create a bit of a distinction here too. Nevin, you teed it up by saying not all TPAs are created equal or are the same. Let's bump the TPA version or TPA comment out of that and say not all compliance administrators are, because let's remember, your bundled fidelity plan is also a compliance administrator to that retirement plan. Your bundled Empower, your bundled Paychex, your bundled ADP, you can name them, anybody who's doing bundled business, they're doing the same work that, that a TPA is doing in terms of the content that needs to get done. But we are not all doing it the same, nor are we all providing the same value. And recently I ran into a situation where it made it very clear that we're not all actually doing the same work. I ran into a situation that was mind-blowing to me where a bundled solution essentially told a partnership that the partners cannot make an elective deferral after the end of the year. I shouldn't say that. The partners cannot deposit the elective deferral after the year, that that was an IRS rule. I think most of you listening in know that a partner doesn't have compensation until the taxes are being done and they determine if that partnership was profitable. Because you can't make a deferral when you don't have profits in a partnership. Well, they were holding true and fast and they were just going to tell this business owner that you cannot make a deferral. That's not true. And that's where it became very clear to me that even though we are all doing the same work, we're not all actually doing the same work. We're trying to get to the same end result, but there are very different variations of that work that's being performed. And Some have put in stopgaps like I just described that are not legal stopgaps. This is an operational stopgap for them. This provider did not want to allow a deferral to go into the plan after 12/31 and still count it for the prior tax year, even though the client is legally allowed to do so. So there are variations of this compliance administrator, and it is hard for advisors to distinguish who's doing what.
Mary Patch: Yeah, I agree. When I was— this kind of started with me struggling with having meetings with TPAs and finding out that halfway through the conversation, one said something different than the other one. And I started kind of trying to put a list of things that I really felt were important that I ask as an advisor to say, what do you do? Because I couldn't, you know, ascertain one set of service models from the other. There were so many variations. And I had clients that wanted to also bid bundled compliance with a TPA as another alternative. And I needed to be able to get that to an apples-to-apples comparison. What does that recordkeeper do versus what does the TPA do? And am I actually getting— is the client getting the services, comprehensive services that they need from the parties that are involved on the plan?
Shannon Edwards: I know, like our first 4 meetings were all— were Mary telling us, you know, asking us if we determine eligibility and all of us saying, yes, we determine eligibility. And we kept going around and around because she was saying what she was saying, determine eligibility. And we all said yes. And we actually came to the fact after, I think, 4 meetings that we were verifying eligibility after the fact. And she was asking if we determine eligibility beforehand. So there was a lot of difference in the same words being used. But a lot of difference in what they meant to each of us.
Mary Patch: Exactly.
Nevin Adams: Yeah, I think that's, that's the other point, and Chad tapped on this a little bit. There are, there are things the law requires, there are things that the law allows, and people who are in the business of servicing retirement plans have done a pretty good job over time of defining how they want to operate, and how they want to operate sometimes is more restrictive than the law allows. Hopefully, hopefully not less restrictive than the law allows. But, but that's mathematically possible. But again, the issue is that, that sometimes the constraints that are there are there not because of what the law requires or allows, but rather what the provider has chosen to do or a way in which they have chosen to do it. Doesn't mean it's wrong per se, But it does mean sometimes that when you ask a question and you get an answer, sometimes that answer is a function of what the provider wants the answer to be, as opposed to what the answer might be. And that, again, is— it's all about, again, just going back to where I started. It's all about going back to being able to ask the right question and understand when you get an answer whether that is a full and complete answer, whether that is your answer or whether that is the answer. So again, something that you should keep in mind. So again, let's talk about another bad assumption. You know, there's this, this constant tension, if you will, between what looks to be a sort of a simpler, easier, a bundled solution where it's all in one place, as opposed to an unbundled situation where you might have multiple parties involved. And the assumption there is that unbundled is more expensive. It just has to be, right? Because it's not all in one place. It's in, you know, pieces. Those pieces require effort and time to communicate, et cetera, et cetera, et cetera. So is that a bad assumption? Chad.
Chad Johansen: I'll take it on. Let's first acknowledge that even at your bundled providers, you're talking to two different departments. If the individual that answers the phone that's been in the 401(k) space for you know, 14 months is the one doing all of your compliance work, you've got some serious worries. So even in that scenario, in a bundled solution, there are still levels of communication going to different departments and going through multiple resources, just like there would be in an unbundled. Let's go one step further and say there is a cost to the services that need to be rendered. And so most bundled providers out there where they'll bring the compliance in-house, When you tell them we don't want that compliance in-house, typically their costs are going to drop. They're going to have a reduction in their expense because they're no longer doing those rules. Now, does that mean that the bundled solution is more expensive or less expensive? I don't think we can clarify that as a whole and say that generally this is the way it works. But typically when they have a reduction in cost and you bring in a specialist that does compliance work, you're going to see a little bit of a bump in overall expense to the client. And I say a little bit of a bump because most of the time when we're benchmarking these things and we're looking against existing bundled or helping an advisor look at moving this bundled, which, which we will, we will do, and we will see both sides of that, the margin of expense differences is very, very minimal. And now you get a specialist in an area in which you, you need a specialist. The example I often give to advisors is is your client using an online CPA to do their corporate taxes? I've never had one turn around and be like, oh yeah, for their 10-person company or 50-person company or 3-person company, they're using, you know, an H&R Block to do their taxes. No, they always have a CPA because they know the value of the CPA. That is no different in our line of work. The TPA, an outside compliance expert, does a great job at designing a document that can create greater tax efficiency for the business owner, helps mitigate exposure and liability by doing essentially an audit check on the operations of the plan through the year, throughout the year. They make sure that all parties are staying compliant in the eyes of the IRS, the Department. All these little nuances create some prevention of liability, but also often save the client money in other ways. Like tax efficiency. So you can't make a blanket statement that, that bundling is less expensive. I think you should feel comfortable in a general sense saying, yeah, typically bundled will be a little less than unbundled. But that's only if you're looking at the direct line expense that the client might be paying versus looking at things like tax efficiency, participant costs, all these other areas that should be taken into consideration when you're looking at expenses.
Mary Patch: You know, and I'd have to say one thing in line with that too. First off, expense should be one of the last things you're having a conversation with your client about, and you should be finding out what they need. You know, I have a client that went through voluntary compliance and they had serious concerns about, you know, going to a regular traditional 401(k) and not having somebody double-checking what was happening with the records. So, you know, that client paid more and wanted to pay more to have that extra service added to their, their whole service plan because that made sense to them. So I think a lot of times, you know, we, we look at things from a perspective of, well, we can't show that to our client because it's more expensive, but sometimes that's what the client wants and needs anyway. So we shouldn't just assume we're going to show them the cheapest solution because it happens to be bundled. And I also think too, you can have a bundled recordkeeper that does have a more, I would say, robust compliance department. And if you compared that to an unbundled with a TPA and get it kind of close to service model-wise, sometimes you can get it less expensive by unbundling with the TPA because you might have a bigger recordkeeper who has more ability to bring their fee down than the midsize record keeper who maybe doesn't have that flexibility because they do have the QKAs and CPCs on staff as well. So I think it's— I think that's the part that gets missed the most is what's most important to the client. Like, start, start there and then work your way out to what you want to, you know, show to your client. I always show bundled and unbundled to my clients because I think that they need to be a part of the conversation about what's important to them.
Shannon Edwards: I love your approach, Mary, too, because a lot of advisors don't do that. They just make assumptions or they just, they work with the same record keeper all the time and that's built into their, into their practice, right? They're, I'm just going to work with this one record keeper all the time. Sometimes if they work with a TPA, it's always the same TPA. Um, but I also think, you know, it's important. There are some unbundled TPAs who are cheaper. I mean, there's one that will charge $500. To do the work that Chad and I are not charging $500 for. That doesn't mean that it's better. And I think that the conversation again should, like Mary said, be around what is important to the client. Does the client want to call an 800 number and talk to a different person every time? Or does the client want to call, you know, a local team that can hold their hands and walk them through things? And, and how do they perceive the value that they're getting for the price that they're paying?
Chad Johansen: Well, and it's important too, we're talking about the cost to the client. It's not— forget who our audience is in this conversation, which right now is the financial advisor community, right? And there is a cost to you in terms of what your client needs that they may not be getting. So you go a low-cost solution, you go an online-based solution, the client wants to set up some, some clever cross-tested profit sharing and And now they loop you in on these discussions. They're having trouble getting a payroll link into the Recordkeeper, and you, you know, you are pulled in to fulfill that role. Where if you as an advisor practice did the research and figured out who's going to help meet you halfway in the way you want to operate with your clients, now you can cut out some of those extra services, those expenses, that bandwidth that you're spending on 401(k) operations that you You really shouldn't. That shouldn't have to be your role. I always struggle with this analogy. I've been trying for 20 years to come up with a clean way of saying it, but forgive me if this does not make sense, but your clients don't know that there is a cheaper solution out there. And I mean that. Like, if you're walking in and saying, this TPA is $500 and this TPA is $1,500, but this $1,500 TPA is going to give my client exactly what they need then your, your client doesn't know that that $1,500 is $1,000 more expensive than that one that's not going to give them what they need, right? They don't know that this TPA is $1,000 more because they shouldn't see the one that doesn't meet their needs. It shouldn't be a part of the discussion. There is always a cheaper solution out there. But to Mary's point, you got to find out what, what your plan, what your client actually needs and what your practice actually needs. Mary, I know you diversify yourself amongst TPAs because you have such a great understanding of the differences between us all. But most advisors don't have that knowledge. We'll say yet, we're going to debut a tool that might help with that. But we're going to say yet. So I think many advisors are best suited for really figuring out who 2 partners, 3 partners might be, and understanding their differences and making sure that they're rolling with a clean approach for their customers.
Nevin Adams: Absolutely. Well, so I'm going to go to the next assumption, and I will, and I will just confess, this one confuses me. Um, and, and I say it confuses me because traditionally, when I think about the skill set that a TPA brings to the equation, I'm inclined to think that big plans need that help more than smaller plans. But apparently the embedded assumption— and there are some sophisticated planning devices that small plans certainly need and can take advantage of that a larger plan can— but the assumption seems to be that a TPA is really a better fit for small plans than it might be for large plans. So clearly I don't understand how people's assumptions work because I'd make the opposite thing. What do you all think about that?
Shannon Edwards: Well, I'll go. So, this assumption is— it does frustrate me a lot. We have our largest plan in our practice is 3,500 lives and over $100 million in assets. And they've been a client since I started my business. And so, when I hear from a former client, I ran into a former client, he moved from one job to another. And he said, I miss you guys so much. I loved working with you. I have this new advisor on this plan that we're working with, and we just moved it. And he said we should just go bundled because we have $20 million in the plan and big plans should just go bundled. And I said, that is not true. If you loved working with us, then we can still work with you. Let's go to lunch and talk about it because we also have plans that have 2 employees. We can range from one to the other. So the assumption that all large plans should just go bundled, I get that a lot of large companies have great HR departments. They do. They're far better than probably some of the smaller employers that we work with. But that doesn't mean that the HR department doesn't need help too.
Chad Johansen: So, well, and I think the general assumption exists, Neven, because listen to the conversation we've had so far. We've talked about customization and, and doing more work, and you tend to be able to do those things in a smaller, closely held business. You tend to be able to dial up profit sharing to heavily favor owners. You tend to be able to set up different eligibility periods, maybe to, to help with their retention issues when they hire new employees and, um, and their waiting periods to get in. Like those things exist more in the small plan space than they do the large plan. So, I think that's why the assumption is there. But to Shannon's point, and what I have found more often than not, is these larger businesses actually, I'm going to say, need us more because operationally they have things buttoned up on the HR side and maybe the payroll side. But they have such a broad landscape when it comes to changing legislation, when it comes to new rules like tracking long-term part-time. And they need a little extra handholding because the impact of these little things are massive within their operation and not small. And like most, most small businesses might have one long-term part-time or two, or they might have one highly compensated person that has to deal with Roth catch-ups now. But a larger firm might have 75 or 100. And how do you adjust that? How do you communicate that? They— I think they actually need as much help as the small group does. But the premise, the assumption is there. It's not a, it's not a bad assumption. What I would say more so is that small groups bring greater value. That's a bad way to say it. Small groups need a TPA more than large groups do, but that doesn't mean that TPAs are not good for large groups. I mean, that's my spin on it there.
Shannon Edwards: Very well said. You know, another thing that I have heard though is the opposite. We have a— what I would— I consider him a specialist advisor, um, who has told me, oh, I just put all my small little Safe Harbor plans bundled because they don't need a TPA. And I, I— that takes me aback a little bit because this— the small little Safe Harbor plan might be the doctor's practice where the wife is running the doctor's practice and has no idea what the definition of compensation is for her small little Safe Harbor plan. And to have, you know, and that's how errors occur. You know, they say garbage in, garbage out, right? And so whoever's feeding the information to the bundled provider, if they don't know what they don't know, they may be unknowingly feeding bad information. So I think the assumption doesn't work either in either direction. To always be right.
Nevin Adams: Well, I think that gets back again, you know, when you assume, you have a problem.
Mary Patch: And I would tell you that my largest client has a TPA. So, you know, and we have a lot of— we're doing 360 payroll, which doesn't work very often as well as it should. And we're doing a lot of cleanup of data. And I'm grateful I have a TPA on the back side at year end to help us clean it up. So you can't make the assumption that every client, you know, fits into a shoebox. They're all different.
Nevin Adams: Got it. Well, let's pivot to another assumption, and this is what we're talking a lot about, bundled providers, bundled recordkeepers. So that assumption is that bundled recordkeepers typically do all the required stuff that people are supposed to do. How does that play out in the real world?
Mary Patch: That hit me between the eyes. I assumed that the bundled on one of my clients got to the year end and I said, okay, well, where's the match calculation? Because you're doing the cross-tested profit sharing at the end. And they said, we don't do match calculations. And I'm like, you what? How are you going to do the profit sharing if you don't have the match in there too? That doesn't quite make any sense. And they wanted to charge the client like another $1,700 or $1,800 to add match calculation onto it. I'm like, well, you're You knew this when you bid the plan out. Why am I just now finding out about this at year end? So I found myself in a situation saying, who's going to do this match? And luckily it's an easy match, so I just do it for the client. It takes about 10 seconds and send it over. But they wanted $1,800 to do something that literally took me 10 minutes. That's crazy. So you can't make those assumptions. You got to lay everything out. I mean, it's in their document. They can see the source when they were taking over the plan. But it never came up for conversation. So, you know, and if you've got an other rights or features situation going on, you're going to have to make sure you got that covered because if there is something unusual in your plan— I had a former client of mine from my prior life, they went into voluntary compliance. They had a two-tiered match system based on employees. So this group of employees, when you're up to so many years of service, and this many people over here, so many years of service. And I said, you got to test that. You can't just look at that match holistically because there's two different matches going on. And there was a lot of other things. They merged two plans together. They never even bothered to look at the plan once the bundled provider brought everything together. And they had one plan was a profit sharing only, the other one was a 401(k) match. So all the profit sharing people did was add 401(k) and kept doing profit sharing. And the 401(k) match, kept doing 401(k) and match, got to the end of the year. Nobody even realized that not everybody got profit sharing and not everybody got match. And, you know, that should have been conversed with the client upfront and it wasn't. And so what ended up happening, the client ended up in voluntary compliance. So, I mean, I think you can't make the assumptions that everything is being done or, you know, it's all taken care of just because it's bundled. I mean, that's kind of a bad approach.
Shannon Edwards: Yeah, I, I think that's, you know, first I want to say there are bundled providers that do really great jobs, right? And there are some plans that are great fits for bundled versus unbundled. But I think like Mary said, it's not making the assumption. You have to, if you're referring your client to a certain provider, whether it's bundled or unbundled, you need to have a really good understanding of what services they're providing and what the client is getting. I mean, and sometimes it can be as small as who determines who the highly compensated employees are. We had a plan— I mean, we had a plan that we pulled out of unbundled or pulled out of bundled with a payroll company, and we had to do a VCP going back 12 years because they asked the client who the highly compensated employees were. And the client didn't know that the son of the owner was highly compensated. Um, you know, or, you know, they ask, do you own any other companies? And the client said no because they don't know the family attribution rules when it comes to, you know, related employers. And so we ended up having to go back 12 years to correct things because the client didn't know what they didn't know, and they were being asked versus having a provider who determines those things for you and double checks those questions and answers every year. So it just, it's really important to not make the assumption and really understand what you're getting.
Mary Patch: Yeah, I mean, I just had one where the, the owner and 3 of the kids were there and they never even asked the question if they were related to each other. I'm like, they all have the same last name. I would have thought you would have looked at that. And then when we went back and figured out they didn't do first year top heavy correctly, Pulled that one out and I said, hey, you know, we need to fix this. And they said, we don't go backwards and fix situations like that. And I'm like, well, if the client's got to go into VCP, who's going to fix it, right? I mean, I was shocked that they wouldn't fix something that they did, you know. And their theory was, well, the client didn't tell us that they were all related. I'm like, and you didn't look at their last names and see the whole family worked there? So.
Nevin Adams: I'm telling you, the providers have done, I think, a very good job over the years of doing a good job of defining what they choose to do and what they will do, as opposed to what you might need them to do. Right.
Chad Johansen: But yeah, Nevin, that's, that's where this conversation all came about, right? Is that you're right, the providers— and I'm in the provider conversation, it's the TPAs included. This is all service providers in our space. We internally define these things, but we can make it very difficult for advisors to actually figure out what it is that internally we've defined as, as we're doing. To Mary and Shannon's point, Mary, you mentioned earlier not tracking eligibility. You mentioned earlier not calculating match. Shannon, you mentioned not determining who highly compensated people are. They made those internal decisions, but never when you're reviewing their product in a point of sale are they going to come out and be like, well, actually, If you work with us, we're going to force you to tell us who highly compensated— don't worry, we'll give you the definition, the legal definition of what a highly compensated person is, and then you have to tell us. And you also have to know about attribution laws. No, right? So it's very difficult for an advisor to make an educated decision as to are they going to meet my client's needs if everybody's kind of hiding these roles and responsibilities to who's doing what.
Mary Patch: Well, even you and Shannon do things differently. I mean, I, I I heard both of you talk about some of your service models and it's, it's different. So if you're not asking the questions, how do you know that the people you're sitting in front of are gonna service your client the way you need 'em to? You know, I don't wanna run into my client at the grocery store and have her angry at me because she thought that that service model covered a service and it doesn't. You know, so as an advisor, those are a lot of times personal relationships, personal friendships we're bringing to the table. So we just need everybody to be honest about what they can and can't do.
Shannon Edwards: Well, and I think that goes to a good point, Mary. You know, when we have a client, we have two clients. We have the financial advisor who brought them to us, and we have the client. And our job, one of our jobs is to protect the relationship between the financial advisor and the client because the financial advisor doesn't want to look bad for referring a bad service provider.
Chad Johansen: Correct.
Shannon Edwards: And so, I mean, I think that that's, you know, something that advisors need to be aware of too is You know, does your compliance administrator, whether it's bundled or unbundled, have your back? Like, are they protecting your relationship? I have advisors that will literally bring me a client and say, this is the most important client I have in my book. Their plan's not very big, but on the wealth side, it's the most important client I have in my book. I need you to protect that relationship. And, and we take that seriously.
Nevin Adams: Well, let's go to our last assumption, and it's about size. And it basically is the assumption that you get better backup, better coverage working with a larger firm. And Chad, you touched on some of this kind of earlier in terms of people being maybe in different places and things like that. But what do you think about this notion?
Chad Johansen: Well, you know, when you first just said it, my original thought was, he's not wrong. And what I mean by that, you use the term backup. In a closely held third-party administrator shop, usually you've got, let's say, 20 people. And if you're doing a work retreat, if you're doing a team building effort, if you have— and in full transparency, this happened to us this past year, we had a family member pass away. Well, when you employ 3 or 4 members of a family, and they have a close family member pass away, well, those 3 or 4 members of your team are now going to go and be away for a period of time. And so you have to have backup in place. And when you have 20 employees, the backup is thinner than when you have 500 employees. To your, to your point, Neven, larger can equal greater scale. But I think when we talk about coverage, I think we also have to look at things like response time and knowledge and accuracy of answers. So yeah, someone might be there to respond to you, but are they giving you accurate guidance and advice and support? Does it, does it get handled with one reach out versus five reach outs? That to me, that statement right there is a big one and it's one I struggle with. You have to remember that advisors don't— most of them don't just focus in on 401(k)s. And the client, I can confidently tell you with 100% certainty that their client doesn't operate 401(k)s as the primary competency of their business. They have a business to run. So when that client picks up the phone and calls because they need to handle something that's 401(k)-related, they need that thing kind of handled then, not 5 calls later, not 4 days later, not someone finally called me back 3 days later. So being present and the ability to handle an interaction, then provide the coverage that is needed and the guidance that is needed when the client is ready to talk about the 401(k) before they go back to the other 5 hats they're wearing is super important. I think there is something to be said that coverage exists with larger firms, but I'm not willing to say that the coverage is equivalent to that of a specialist compliance administrator.
Mary Patch: And I would say that a lot of times with bundled solutions, you also have basically a hunt group that the calls all go into. So, Sometimes I can call in there on behalf of a client question and I can get lucky and get somebody who actually does work on the plan more frequently. The next time I can call in and they don't have a clue. So I'm repeating the problem again and trying to reeducate them on the features of the client because there isn't any company out there that handles recordkeeping or administration that doesn't have like an assigned— you have your block of plans that you're working on. Now, whether it's the primary person or the backup person, the backup still has their own block of business they're working on. So do they know this client over here in this block and they're just backing it up? Um, I don't know that I feel that I get any better coverage on a larger firm that has that type of service model because I feel like I'm explaining the history of the client to help them understand why I need this specific answer answered in a certain way. So, you know, I kind of like that you have the TPA that you can call and then they know that client because they typically have a relationship manager who's been on that case. I mean, I can tell you with my TPAs, I've got the same person for the last 6 years. So, you know, they are more familiar with the client and I don't have to go through that, you know, overkill of talking about what's going on with the client.
Shannon Edwards: Yeah, and I'll, I'll just chime in a little bit too. I think in a smaller firm, you probably have some requirements for response times. I know I have expectations of my team for how long it is before a client or a financial advisor gets a response. I have noticed sometimes when we have to go to the recordkeepers with questions, even if we have a client account rep assigned to that plan, They're not the ones doing the work. So if I have a question about a report or this or that, they have to go ask the team that did the work. And that can be 3 or 4 or 5 days before I get an answer. There was one recordkeeper that we emailed, and the email response, an automatic response we got back, was, thank you for your email. We've received it. It will be 5 to 7 business days before you get a response. And I was like, that doesn't fly in my office. That's right. And it wouldn't fly with my financial advisors either. So, I mean, I just, I think it's a different service model and you need to know what to expect. And that's a good question to ask. It's like, when can I expect a response to a question? Are the people, who are the people answering the question? You know, are they educated? Do they take continuing education? Things like that, and know the level of person that you are asking the question to.
Chad Johansen: Amen.
Nevin Adams: Well, that's our 5 basic bad assumptions. Hopefully our discussion has illuminated them for what they are. Um, I should also mention that again, to something we've said at the outset, this group has put together a tool. We call it a checklist. I I kind of hate that name. It's kind of clunky, but, but it is a device, if you will, that will help you know the right questions to ask on behalf of your client or on behalf of yourself as a fellow service provider to make sure that the things that need to get done, who is actually going to do them? And as the partners that you're signing up with, whether it's a bundle provider or a TPA, Are they in fact prepared to step in and do that service? And/or if they're going to do it, do they charge extra for it? Because you need to know that as well, to the points that Mary was making earlier about, oh sure, I'll do it, but it's going to cost, you know, X amount more for you to do that. So it's a way to, to sort of front end those discussions, to eliminate some of the assumptions that are out there and to give you a better sense of exactly who you are stepping off to do business with, making sure that that's somebody you want to do business with. So I'm not sure at this point in time exactly how we're going to make that device available to you, but somehow with this video, a link, something, we will let you have access to that and you can check it out and let us know what you think. We're going to do another episode of this, and in that one we're going to talk about some questions, some good questions to ask potential Advisor Partners, and I think that's something you'll definitely want to tune in for as well. Anything else anybody wants to say?
Chad Johansen: No, I'm happy we're bringing this discussion to the front. I think it's been needed.
Nevin Adams: Awesome. I hope you all do in fact check this out. Um, hope you find it informative, and I do of course hope you'll check in on our next episode. Y'all take care.
How Better Advisor-TPA Alignment Creates Better Plans
In this episode, we explore five important questions TPAs should be asking advisors to better understand their approach, expectations, and long-term vision for retirement plan clients. We discuss how stronger alignment between advisors and TPAs can improve communication, create more effective plan strategies, and ultimately lead to better outcomes for both plan sponsors and participants.
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Nevin Adams: Well, hey there everybody, Snippet Adams back here for part 2 of our series on building a bridge between advisors and TPAs, third-party administrators, or as we like to call them, compliance administrators. Uh, with me today of course is the illustrious Three Musketeers, um, and as we did last time, we will pivot for a quick introduction from each of our parties here. Let's start with Mr. Chad. Chad, who are you and why are you here?
Chad Johansen: Uh, because I'm a 401(k) nerd and I love this stuff. Uh, you know, Chad Johansen with Plan Design Consultants. Uh, all because Nevin many moons ago said we should get deeper on this conversation, and now I've hung on to the coattails and come along for this great ride.
Nevin Adams: Okay, so it's all my fault.
Chad Johansen: It is.
Nevin Adams: Well, Miss Mary, how about you next?
Mary Patch: Uh, Mary Patch with Atladal Advisors. And, uh, much like Chad, Nevyn reached out and said, hey, you're that advisor with some ERISA geek in you, why don't you join this group and see how we can help bridge the gap?
Nevin Adams: Okay, well, now I'm going to blame Shannon because Shannon's the one who made me very aware of the problem. So Shannon, it's actually all up to you.
Shannon Edwards: Okay, I'm Shannon Edwards. I own TriStar Pension Consulting, and it is my fault because we have been looking for ways to bridge the gap between, um, ASPA and NAPA and the members of both organizations for a long time. And Nevin happened to sit in on a conversation that we had in one of the Third Thursdays for the women in retirement, and there was a lot of discussion about how people don't really understand. We, the two groups don't really understand each other's language and what each other needs. So this group, Nevin, pulled us together to see if we could bridge that gap.
Nevin Adams: Yeah, because the people on that call actually were stupid enough to ask me what the answer was. And I was like, I have no earthly idea. So anyway, in our last episode, we talked about 5 bad assumptions that people make about TPAs generally and about how TPAs work and the markets they should work in. And also some questions about bundled providers as opposed to unbundled situations and some bad assumptions about that. So again, if you haven't checked that out yet, you definitely want to go back and check that out. It's not a prerequisite for this session, but it's a nice warm-up. So there, today we thought we were going to talk about some good questions that TPAs should ask their potential advisor partners Although arguably it's the kind of thing where if you're an advisor listening to this, these are questions that you should, you should think about as you consider sort of flipping the tables around and talking to a potential TPA partner. So we're going to walk through some of these. The first one that we lined up is what percentage of your business is focused on retirement plans like 401(k)s? Why does knowing what your practice focuses on— why does that matter, guys?
Chad Johansen: I don't think— I was gonna say the question itself is probably the easiest way to ask what we're trying to get underneath too. And it's not so much about the focus as much as it is your understanding of the space, and for TPAs to get an understanding of what kind of support you're going to need. If you've been doing this and you truly understand the 401(k) arena, you probably want us to operate very much so like a compliance administrator. Documents, tax work, creative design, answering the phones, helping with loans and distributions. If you have not been in this space or spent much time working on 401(k) plans, you probably need a little more help analyzing the different recordkeepers and what's the importance of payroll integration into the operations of the plan, things that we don't necessarily do, but that the plan really needs. And if you're an advisor who doesn't specialize in this space, we try to bridge some of those gaps as a community. Like that pun there? I hit it perfectly, didn't I? Bridge that gap.
Nevin Adams: Yeah, somebody's collecting revenues or gruelty somewhere. Um, we talked about recordkeepers. So a second question we put out is what recordkeepers have or do You recommend clients at present. Now, what does that tell us about how an advisor operates, Mary?
Mary Patch: Well, I think it one helps the TPA understand if the advisor is only using one platform or maybe two platforms, and are those platforms that something that you can use or work with as a TPA? I know some TPAs when I've called on them will say, oh, Well, we only work with these 5 recordkeepers, and if I'm not using one of those 5, then odds are I'm not going to be able to work with that, that TPA. The other side of that is I've had some say, well, we'll work with anybody, and I'll ask them like, how many do you have on X platform? And they'll say, well, none. And then that kind of as an advisor helps you figure out, you know, is that TPA a good fit for the way your practice is built?
Chad Johansen: Got it.
Nevin Adams: Anybody else?
Shannon Edwards: No, I think a lot of us as compliance administrators have, you know, tried to— our relationships with recordkeepers tend to be built upon our relationship with the wholesaler. So it may not be that I don't work with a recordkeeper, but that my wholesaler doesn't— we don't have a lot— a good partnership. At this time. So, for instance, I don't have any plans at a certain recordkeeper. I got a new wholesaler that came from a different recordkeeper that I used to work with, and now he wants to partner at this recordkeeper. So, you know, yes, I want to get plans with them, and I do work with them, but I know it's going to be, you know, and the advisor probably is going to know it may be a little bumpy at first until we get used to that recordkeeper and get our processes in place.
Chad Johansen: And also shed some light, Nevin, on the licensing that an advisor might have. If they're only selling with an insurance product, they might not be securities licensed. They might not have the ability to go fee-based. Um, I noticed too, when I asked that question of advisors, sometimes it's the most recent business card of, of who came into their office last. You can tell us as TPAs when we ask that question whether or not they need enrollment support. We know which products do and don't provide that. And so if you have an advisor that's only working with products that tend to provide enrollment support, that might not be something that they've built into their own practice. So it can help us if those two questions are asked in conjunction. It can help us learn a lot about the type of individual we're trying to support and build a partnership with.
Nevin Adams: Got it. Well, this is an interesting question from my standpoint, and, and the question flipped back is, have you, have you ever worked with a TPA before? And then the follow-on question, that is either why or why not? And that sort of assumes that people's experiences might be good or might not be quite so good. So, Chad, you're bobbing up and down. Talk to me about that.
Chad Johansen: It's one of my least favorite questions to ask because if they've worked with a TPA before and they've had this awesome experience, then I don't want to disturb something that's working really well for them. There's no need for me to get in there and try to pry myself in if a TPA is doing a great job for them. If they fire back and they're like, no, I had this experience. Oh my gosh, it was nightmarish. It didn't work out. The TPA could never get ahold of them. All they did is talk in jargon and send my client bills, and I'm never doing it again. And it's like, well, yay, here we go. Let me try to roll up my sleeves and help you understand how we're all not the same. But that question does tell us a lot. Why? Because it gets people talking. When you're in the service business, I've said this for decades now, we are in the service business, we just happen to do compliance work. That's what it is. But when you're in the service business and you ask a question, open-ended question like that, what you're trying to get is people to talk. And they start shedding light on what they have or have not experienced, whether it was good, whether it was bad. And you can learn a lot, but you gotta listen. You can't go in thinking, oh, you had a bad experience, I'm gonna fix this. You got to listen to what their experience was and try to, try to figure out how you are able to help, or if you're able to help.
Nevin Adams: Well, I guess the good news is if they've worked, if they've worked with somebody before and it was a bad experience, and yet here they are talking to yet another TPA, I, I guess that's the part one, and they've learned that all TPAs are not the same, right? So, Shannon?
Shannon Edwards: Yeah, I think it's important to know if they have PTSD, right, Chad? Like, that's And to find out, because I had, when I asked that question to an advisor one time and I said, okay, why, why are, what did you think was bad about the experience? What didn't you get that you thought you needed? There were things that I was like, I can't fix that. Even though I want to think that every financial advisor is a perfect fit for TriStar, they're not. And so I think getting to the bottom of what is frustrating them and what they're unhappy about is important to know whether or not you can even solve that problem. Or like when Mary was asking us when we started this, do you track eligibility? And the answer was, well, we basically, we check eligibility after the fact. And we were like, but that's what everybody does. And so for Mary, nobody was going to offer what she needed. And so that was kind of one of those things where you have to, you have to find out whether you can even solve their pain point.
Chad Johansen: It's Nevin, when, when we started talking about trying to transition the name from TPA to just compliance administrator. I think if you ask that question with compliance administrator in there rather than TPA, it does create like this circular loop for people because now you finally get them to start thinking about that role regardless of where the plan is. Now they're like, oh yeah, I had this experience with a bundled solution that blew up on me. Well, that's a compliance administrator too. That's a TPA too. It just happens to be in-house. And so there is some positioning to that question depending on what verbiage you're using.
Nevin Adams: Well, that plus in a lot of situations, compliance is not necessarily a happy experience for a lot of advisors. So there's that. Agreed. Well, a follow-on question then that we put out is, you know, kind of what is your biggest concern about working with a TPA. And I think if you go back to the 5 bad assumptions we had before, I think we can articulate what some of those concerns might be, right, Mary?
Mary Patch: Yeah, I think, you know, one of the concerns, you know, a lot of advisors have is simplicity. You know, is it going to be easy for my client? Because there's so many people now that they have that they're interacting with when you add another company to the mix. So a lot of times an advisor might choose the easy button and think, hey, I'm just going to bundle it all at one place so my client only has one place to call. I, I don't necessarily subscribe to that because I think each client has their own set of needs, and if you aren't evaluating that, you're just making that decision for your own benefit and not for the benefit of your client. So, um, you know, I think Concern-wise also, I ran into a situation once where I had a TPA basically hijack an account right out from underneath me. So it left me questioning, is this normal behavior? Why would you just go write this plan and then not attach an advisor to it? So I think there are a lot of things out in the industry. A lot of advisors feel just kind of more protective of their business, so they're trying not to introduce too many people, not to make it too complicated, not to do whatever. I mean, I think they're just trying to make it simple.
Nevin Adams: Got it.
Shannon Edwards: And I think that they look to us, they look, they want to partner with compliance administrators who feel like it's their job to protect that business for them. And I know we take that very seriously. I have one financial advisor that came to me with a large plan and said, you know, The plan is fairly large, but that's not our largest piece of work with this client. This is one of our most important wealth clients that we have. And so I really need you to take care of this client, not just on the 401(k) side, but also to protect the wealth side. And so, I mean, we take that seriously. I mean, you know, I went straight back to my team and said, hey, they're trusting us with this client. This is what, you know, this is the experience the client has had with another TPA. This is the experience the advisor has had, and this is what he's asked us to do. And so I think that's very important to know those things and for them to feel like we are protecting all of their book with us, not just, not just, you know, and then we're not going to pull anything away from them like that or have something happen.
Mary Patch: Yeah, we run into these people in our community. That's how we get them as an opportunity to give to a TPA. You know, I was at the grocery store the other day and ran into two participants from a retirement plan client. So, you know, they're all over the place for us. So last thing we want to do is be face down in the grocery store being chewed out because some bad experience happened too. So we have to put a lot of trust in the people we're working with.
Shannon Edwards: Well, we have one client and it's a large plan and it is two of the managing partners of the firm are my husband's best friends. Like we play golf with, he plays golf with them every weekend and I play golf with their wives. So my team knows like, this is, you need to really watch this one. I don't want to hear about it on the golf course.
Mary Patch: Exactly.
Nevin Adams: Well, speaking of awkward encounters, the last question on our list of things here is basically, have any of your plans had to go through a correction process with the Department of Labor or the IRS? And if so, how did that go? As though it could ever go well, right? But what do you think, Chad?
Chad Johansen: It's a great question for TPAs to ask because it is one of those, if it's happened to you, then you know the value of a good compliance administrator. You know the value of a good teammate that's going to step in there and mitigate the exposure, spend time with your client, help get them through this process. They have a great way of communicating what is a very, not only tough time for the client to get something corrected, but a confusing time. More often than not, businesses that run into a correction like this have really no idea how or why it happened. They thought they were doing payroll correctly. And the next thing you know, they didn't process contributions on time for a period of time. I've got one right now where the plan was filed as a partnership and they counted K-1s for 5 years instead of taking W-2s because the plan was an S corp, the business was an S corp. And so if you ask that question of an advisor and they come back and say, yeah, this was my experience, then you just put your arms around them and say, I'm so sorry for you. Let me tell you how that would have been different if you were with us. Um, it is, it's, it's one of those ones I, I love when they say yes, but I do enjoy asking that question.
Shannon Edwards: I think it's important for advisors to ask TPAs or compliance administrators what type of support they give a client who has to go through a correction program as well, because I think that there's several different service models when it comes to a problem like that.
Mary Patch: And as an advisor, when you have a client go through that, the client is literally like afraid to go to another provider or, you know, What steps or what questions do I need to be asking the next person to make sure it doesn't ever happen again? So, you know, we kind of feel a protective, you know, feeling towards our clients when they've gone through that. And I've had numerous that I started out as a prospect and I got into the conversation and found out they were just a hot mess. And I actually had to put them on my consulting side because I couldn't even bring them on as an advisory client until we got the disaster fixed. And I'll tell you, all those clients, they are very in tune with the administrators, who's doing what. I mean, they will even sometimes have voice a complaint that I would just go, why is that even a complaint? But it's because they're just worried that, you know, they're missing something that's going to take them down that path again. So you just got to make sure you've got the right team in place, the right expertise, the right credentials with your TPA partners too. That's a big concern I always have. You know, are you part of, you know, the industry? What do you engage in? Are you doing continuing education? Are you staying up on what's happening? You know, because if I have a client go through that, I want to make sure I got an expert on their team that's going to help them get to the other side and not feel like they've been orphaned along the path or nothing's really fixed.
Chad Johansen: Outstanding.
Nevin Adams: Okay, folks. Well, that is our list. I'll repeat them again for those of you who weren't taking notes. First, what percentage of your business is focused on retirement plans like 401(k)s? What recordkeepers have or do you recommend to clients at present? Have you worked with a TPA before and why or why not? Follow on, what is your biggest concern about working with a TPA? And then last, certainly not least, have any of your plans had to go through a correction process with the DOL or IRS? And if so, how did that go? Any wrap-up comments, folks?
Chad Johansen: I love the conversation as a whole. I think the two of you— I can't bypass the or step over the comments that Shannon and Mary both just made. The fear if the current administrator was part of the problem, the fear of leaving that current administrator versus trusting them to get the work done when perhaps they created the problem. Mary, that is, that is a really tough place for a client and an advisor to be in. And then Shannon, right on the back end of that, if I connect those two, to look and say, all right, if we're going to make a move to a new administrator or allow this one to fix it, how are they actually going to do this? Is it going to be the same person, same department? Do you have a risk council? Like, What is your process of supporting me? Because there are a lot of compliance administrators out there that don't support the correction process. They say that's on you. Go find an attorney and get it done.
Shannon Edwards: That is true.
Chad Johansen: Yeah, those, those were, those were fantastic ending points, you two.
Shannon Edwards: And I think it's important for TPAs, for unbundled TPAs and for advisors to understand that not everybody— it took me a long time to understand that not every advisor is a good fit for my firm. I have a certain level of customer service that I like to provide. I have a certain service model that I expect from my staff. Not every financial advisor is going to fit into that model, and you shouldn't try to force it if it's not a good fit.
Mary Patch: And the same thing goes for clients for advisors. Not every solution fits your client. So you have to be focused on what's important to your client first and foremost. You want to create a long-lasting standing relationship. You don't want to be trying to move providers. So you should do your due diligence on the providers you're bringing to the table and also making sure that they're— they match up to the needs that your client has for their service providers.
Nevin Adams: Well, amen on that. And with that, we'll just kind of wrap up this particular episode and cue up our last episode in all this, which is to say this illustrious group of folks plus a couple of others came together and spent over a period of months developing sort of a— we call it a checklist, but that's way too mundane a topic. We also used to refer to it as kind of like a dating app for advisors and compliance administrators. And regardless, I think it's a good outline to help you ask the questions and more importantly get the answers that you need in order to make sure that the entities you're partnering up with are a good fit. Because as everybody's saying here, everybody's not going to be a great fit for everybody. And a lot of that is about eliminating assumptions and getting some clarification on what the expectations are. And in our next episode, we'll talk some about that. Thanks for checking in, and we'll catch you in the next episode.
A Practical Look at What Compliance Administrators Actually Do
In this episode, we walk through an interactive checklist designed to help advisors better understand the services their compliance partners do and do not provide. We explore how greater clarity around responsibilities, processes, and expectations can reduce confusion, improve collaboration, and help build a stronger, more trusted advisor and TPA partnership.
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Nevin Adams: Hey there, welcome back everybody to our series, uh, our 401 Nerd series with, uh, the people here. And you're at this 3rd, uh, episode of this series. You probably know who we all are now, but we'll just do quick. I'm Nevin Adams. I'm now retired. I was a former Chief Content Officer of the American Retirement Association, which kind of got us into this because members of the American Retirement Association end up being on every various side of the people providing services to plan sponsors and plan participants. And so that explains my involvement. I've got here with Mr. Chad Johansen, Ms. Mary Patch, Ms. Shannon Edwards. I don't know if you all want to say who you are again and what you do, but— Sorry, I'm troubleshooting.
Chad Johansen: Great timing, Shannon.
Nevin Adams: Sorry. COVID may be over, but we've still got those little incidents. So all good. Well, look, we have talked about a lot of different things. We have talked about the misperceptions that people have in their minds about what everybody's role or responsibility is supposed to be. We've talked about the fact that advisors have sometimes a lot of misconceptions about what the role of what we call a third-party administrator, or what we like to call it, a compliance administrator, compliance consultant has, and whether they bring value to the table or not. We've talked about the pros and cons of bundled providers versus an unbundled approach and how people have some misconceptions about what value you get from each of those different approaches. So, you know, lots of different discussions around that kind of thing. But ultimately, when this group of people got together over a long period of time, And tried to sort of say, how do we help entities, in this case specifically advisors and third-party administrators or compliance administrators? How do we help these 2 entities which don't always coexist peacefully? How do we help them sort of better understand what each other can do for not only each other but for the plan itself and make those services better and help people better understand, help advisors better understand kind of what's going on? That needs somebody to deal with it, but also helps the third-party administrator, the compliance administrator, better explain to an advisor what they might bring to the table. Because as we've said before, all compliance administrators, all TPAs, are not created the same, don't have the same expectations, don't have the levels of service. And as we all know, when service breaks down, like, everything breaks down, right? So In this episode, we're going to walk through an interactive tool. From time to time, we call it a checklist, but today we're going to call it a tool. It was designed specifically to help advisors better understand the services their compliance partners do, and in some cases do not provide. We're going to explore how getting some greater clarity around the responsibilities, processes, and expectations can reduce some confusion, can improve the collaboration, and help build a stronger, more trusted advisor-client relationship. We have— we worked hard to cull this tool down to a small amount of space. Still, when you access it, and we'll have a link to a PDF of it here, I'm sure some of you are still going to say, what the heck? How big was this thing anyway? And all I can tell you is that we worked really hard because we wanted— we knew it needed to be short. And relatively succinct, but we also knew it needed to be comprehensive because if it doesn't deal with the full array of things that you ought to be considering, there's likely something that's going to get forgotten. So there you have it. The form has 1, 2, 3, 4, 5 specific sections, and then a final one that actually talks a little bit about why some of these sections that might be a little more obscure, why they actually matter. So there we go. And what I'm gonna do is I'm gonna tee up each of these sections. Hopefully by now, if you haven't, go and access the PDF so you can pull it up and follow along, if you will. And we'll just kind of talk through this with you all as to why it's there and why it's important. No surprise, I guess, we start out with a section titled Experience and Background. So that feels like kind of the basic place to start, right, guys? What's What's that all about?
Shannon Edwards: Well, I think one of the things that we've been focused on since we've started having these discussions and building this tool is like Chad reminded us earlier in one of the other recordings that there are certain things that have to be done for every plan, but not all of us do them the same way. Um, so I think when we start talking about experience and background, it's helping the advisor understand what level of person their client is going to be dealing with that's actually doing the work. And I think when we talk about bundled versus unbundled, a lot of times when you're calling the bundled recordkeeper and trying to talk to somebody about the compliance work, you're not probably talking to the person that did the compliance work. There's generally another department behind that person. Doing the compliance work that has to interpret the compliance work, even though they didn't complete it. And I think, you know, if you flip that around a little bit and look at when you're working with a TPA firm, a lot of times if you are calling a representative at the TPA firm, you are probably more likely to be dealing with the person who did the compliance work. And I think understanding the difference between the 2 service models and the The level of expertise and education of the person that is talking to you and giving you advice on the plan is hugely important, which is why we came up with this section.
Chad Johansen: And I think it's—.
Nevin Adams: Sorry, go ahead, Evan. I was going to say, I think we're trying to get at with this is we're looking for, you know, we know different size plans have different requirements, different levels of specific sophistication. Different needs, different plan designs and things like that. And so the idea at the outset was for the TPA to say, look, these are the type plans, these are the size plans that I actually work with and have some background and things like that. And so if you're an advisor and you're looking for somebody who works with plans that are the same size as what's in your book of business, you're probably going to be gravitating towards a TPA that's familiar with those kind of plans and those kind of designs and things like that. If you're working with a cash balance plan, no sense going and tying up with a TPA that doesn't have any experience in cash balance plans. That's going to be frustrating for everybody. And so at a high level, as basic and simple as this first section seems to be, it's certainly going to be one of the easier ones, I would say, for a TPA to figure out. It really is about trying to match up experience, background, and a client familiarity, right?
Chad Johansen: And I'll say, I'll say size and accountability too. I know that our community tends to preach a bit on being a small business, being dynamic, being— having a deeper level of accountability than calling an 800 number. And some of these statistics that you're getting and experience and background is helping you determine if that's the type of group you're working with. Or maybe you're one of those advisors that really wants to work with a very, very, very large shop and you feel comfort in that, especially through all the acquisitions that have taken place in the last 5, 7 years in the TPA space. So this section was really to lay some groundwork for what type of firm is filling out this questionnaire.
Mary Patch: Well, even if you're an advisor and you're working with specific recordkeepers, you want to make sure that that TPA has familiarity with that recordkeeper. So the last thing you want is them to be the— your client's the one-off. On some recordkeeping platform that they have no experience going anywhere near. So that's real important as well.
Shannon Edwards: I think too, I like our question about your client retention rate, um, because I think, you know, at least for our firm, when we have a client, we have 2 clients, right? We have the client and we have the financial advisor, and part of our job is to protect the relationship between the financial advisor and the client. And I think that a retention rate can, can be telling upon, you know, how that firm actually does business. Are they just churn and burn, get as many new plans in as they can each year, understanding that they're going to lose plans on the backside? Or are they somebody who really wants to build deep relationships with their advisors and their clients and retain that business over long term?
Mary Patch: I think one of the other questions we asked on here was, are any of your team members receiving compensation on the advisory side? That's really important to disclose that. You just don't want to be as an advisor sending your plan in there and then there's a problem that occurs and the next thing you know is you're unseated as the advisor and the TPA or whomever, because they're producing TPA, decides to take over your piece of business. So you want to understand if there's a conflict of interest there potentially or what that looks like. It's not bad that they are producing TPA, but you want to understand what the conflicts of interest look like.
Nevin Adams: Absolutely. Cool. Okay. Section 2, staffing, support, sales. Got a lot of good metrics here. What jumps out to you all in terms of the things that are really key on this section?
Chad Johansen: There were 2 pieces immediately, Nevin, that I loved in this section as we built it out. One was, do you have a forward-facing sales team? Because let's be honest, many folks in our world are fantastic practitioners, but maybe not the best communicators. And so if you're a TPA shop that has found value in putting a communicator that is also a practitioner or understands the depths of ERISA in a supporting role for advisor partners, that's a factor that advisors need to know, that you can have in-person sales support or Zoom sales support, people that really can communicate this topic. The other one that, that got me, and I don't know how I feel about it truthfully, but the other one was, you know, how many plans do you have in comparison to your staffing? Um, like how many, how many clients is an individual staff member servicing? And the reason why I don't know how I feel about this, because 20 years ago when I started in this space, we used to tout that our, our account managers only had 40 plans. That's all that they were responsible for. They were attentive, they were there. And I remember sitting with— and I'll name drop— I remember sitting with Guy Hawker leaving a golf tournament at one point. Guy's like, you say that like it's a positive, Chad. What that tells me is you're just not efficient enough if your people can only handle 40 plans. And I'm like, I had never thought about it from that aspect. Now, there— if you can handle more plans and still be attentive and responsive, then yes, but I don't know what the right answer is to that question. 52 years of our firm being doing this, I'm still continuing to find the right balance. You embrace technology, allows them to take on more. But I think that this section, the staffing section, really helps you figure out what type of group you're working with. Are they, I'll say, a volume turn-and-burn type of compliance shop? Where it's about how many plans can they get in the door, or are they a service-focused TPA, or perhaps somewhere in between? But this section really opens up those doors.
Shannon Edwards: Yeah, I think you're right, Chad, because knowing the type of TPA firm you're dealing with is the first step. You may not care if it's a turn-and-burn firm. You may only be doing startup plans that want to pay $500 a year to a TPA firm. That may be where that financial advisor, you know, makes their living. Who knows? So, I think, you know, the financial advisor first understanding what level of service they're wanting to give their clients, and then that will help them decide which TPA firm best fits their service model. The other thing I think is really important is the question that we ask about designations. And I think we might even ask it in a couple of different places on the tool, just because it is important to understand again what level of education the people that you're working with have and how they— do they have credentials? Are they maintaining credentials? And it also tells you how important it is to that firm that their employees be credentialed. For instance, I, you know, I require my employees to be credentialed, but I also pay for it. I pay for their education. That just gives you a better sense of the firm that you're working with and what, you know, how important that is to them.
Mary Patch: And I would say the single point of contact for the sponsor, that's, that's a big one. Um, you know, I have a client that has a problem. I don't want them talking about that same problem to 6 different people. It's like bad Groundhog Day, and you're just repeating it over and over again to just a different person because I'm calling into a call center. So, but I may have a client that doesn't usually have a lot of day-to-day issues, and that might be fine to put them into a call center. So again, it goes back to the, to the theory that you should be getting to understand what your client's needs are before you start figuring out where you're placing the business.
Nevin Adams: And that's a great point. You know, Chad, I like, I like what you're talking about. You know, it's like, I don't know what the right answer is either. And again, a lot of that's going to depend on the size plans you work with and things like that. But I think the opportunity here is to be able to speak to that, to be able to explain to that, and, and to, uh, not just to say this is how many plans we work per staff and all that kind of stuff, but this is why that ratio— that's why this is our ratio, because we put whatever emphasis or whatever, because we have, you know, a certain number. Because let's say, let's assume for a second that people with higher, uh, more credentials might be able to handle more business, for instance.
Mary Patch: Mm-hmm.
Nevin Adams: So again, I think it's not that there's necessarily a right answer or a wrong answer. It's, it's again going to depend on the situation that you're trying to deal with. But it also is an opportunity to have that discussion to say, why is that your number? And how do you maintain that going forward? That kind of thing.
Shannon Edwards: What I think is technology changes, that number is going to change dramatically, right? With, with all sorts of, you know, AI and things like that, that's going to make us be able to do more faster. The other thing too is, you know, there are firms that I know that don't have any large plans at all in their book of business. And then there are firms that have a very high percentage of their book of business that are large firms, which take more time. So that number, it's not something you can just figure out. It's going to be based on the book of business at that firm and also the level of education of the people working on them.
Mary Patch: And the complexity of the client.
Shannon Edwards: And the complexity, yes.
Nevin Adams: Yeah, well, if you all figure out a way to identify the complexity of a client, that, that would be the real— Yeah.
Mary Patch: Well, I know which ones of mine are more high maintenance than the others. So, you know, I mean, you kind of start to learn it as you deal with their issues.
Nevin Adams: Oh, for sure. Um, okay, next section, communication. This is a big one. We sort of touched on it a little bit earlier kind of thing. But again, what we're trying to get to here is to provide an opportunity not just to sort of provide a black and white answer, but have a discussion about how do you view communication? How do you staff for that kind of communication? What is— what can my client expect in terms of what they're doing there? Right.
Mary Patch: Well, I would say in terms of communication, you know, one of the things that we have on there is what's the standard method of communicating? I find lately that I rarely will get a phone call from anybody. Always email. If I get a phone call, I'm like, did something start on fire? You know, I mean, it totally takes me off guard because it's so rare anymore that I get a phone call. I will tell you though, when I do call in and then they hear my voice, they're kind of going, you never call in either, you know? So it's, it's kind of a two-way street. You know, we're just not used to talking to each other as much anymore. I get a lot of automated emails. And things of that nature. And I have, you know, we just had a client call because the administrator changed the way that they review the eligible people for the notice mailings. And they were all like, why is this process changing? And I'm like, it's not a big deal. It's like multifactor authentication. They want you to log in and get the report versus emailing it to you.
Nevin Adams: Oh, okay.
Mary Patch: So it's just little things like that about how you communicate. Different, you know, changes or anything along that line. I kind of like to see that from the providers.
Nevin Adams: Sure. And one of my favorites here is that, do you typically include the advisor of the plan on all correspondence to a client? That's something we've talked about a lot.
Mary Patch: So yeah, and I can't tell you how many times I get calls from clients and it's an email I was never copied on and I have no idea it's even happening. So usually what I tell my clients is if you see I'm not on there, forward it to me. So I try to make sure that that gap is filled because it means different things to different clients. I just went through a year-end and we had a 750-hour, 6-month eligibility requirement, and the recordkeeper was messaging the client directly telling them that that's— that once a person hits 750 hours, They come in that next month and I'm like, no, they have to be there 6 months. But if the client hadn't copied me on this, I have no idea what they would have done to the eligibility on the plan. So, you know, and sometimes clients don't understand it, then they get paranoid, like, have I been doing this wrong this whole time? So, I mean, that's what they hire all of us professionals to do, is to make sure that we keep it between the lines for them.
Nevin Adams: So.
Shannon Edwards: Well, and I think it's helpful too. I mean, when a client gets an email from us, 9 times out of 10, they like panic. I don't know why. It's like getting an email from the IRS. Oh my God. TPA is emailing me. And the first thing they do is call the advisor, and that panics the advisor. It's just easier if everybody got the email, right? And the advisor can typically read it and go, okay, no, it's no big deal. Like, just— or you should call TriStar about this, but I don't think it's a big deal, or anything like that. It's just easier to keep everybody in the loop.
Mary Patch: And a lot of times we are the interpreter for the 2 parties, the client and the third-party administrator, because you might talk extremely technical. Yeah, the client has no idea what you just said, and somewhere in between is what I've got to help explain why it's not as bad as the client thinks it is. So.
Chad Johansen: The only other question in that section is my favorite, and I pushed this one in our initial review here. I like to know that there is a policy that is measured to see how a team is responding back to inquiries. Like, what are your goals? What are your objectives? Is it within 24 hours? Is it a same-day response?
Nevin Adams: What's your—.
Chad Johansen: Well, and how are you maintaining that? How are you holding your employees accountable, especially in a remote society like we tend to all operate in fairly heavily now? How are we making sure that we're keeping up with these inquiries? And I know as a community, this is something that I will say we're all pretty late stepping into, I think, when you look at the TPA community as a whole. And so I love that question. What's your policy and how are you measuring your response?
Shannon Edwards: I love that question too, Chad, because my biggest pet peeve is when we send a service email in, like, to a recordkeeping partner and get an email back, hello, we received your email and we'll be back to you within 5 to 7 business days. In 5 to 7 business days, the building is burning down. Okay, I need you— I need something faster than that.
Chad Johansen: At least there was an acknowledgment. What if it came back and said, we've got your email, we'll be back With you within three hours.
Mary Patch: It's an auto. It's an auto acknowledgment, though. I know exactly what Shannon's talking about. So it's just like I send something and it just says our policy is.
Chad Johansen: So here's where I'll fight you on that one, Mary. To me, that is important because it means it's been ticketed. So if I get that notification back, it means it's in their system. It's unlike leaving a voicemail. Sometimes if I call and I leave a voicemail, I'm like, well. I'll never know if they actually get it. Like, I hope someone's checking that inbox. I don't mind the auto response because at least I know I've been heard and it's entered a queue for someone to get back to me. I'd like it to be far more personalized than that for my record-keeping partners, but if I get that, I do not mind it.
Shannon Edwards: But if I get 5 to 7 business days, I guarantee you I'm immediately looking for somebody I can elevate that to.
Chad Johansen: That's the difference.
Shannon Edwards: Who do I know at this company?
Mary Patch: I'm on the phone. And sitting in a queue until somebody picks me up. I've even called the receptionist.
Nevin Adams: Well, it's important. We all know that.
Mary Patch: You need your answers back as soon as you can possibly get them. But when— and I understand things need research sometimes, so sometimes it does require 5 to 7 days, but at least give me some idea of what I can expect to get, get a response back on a question.
Nevin Adams: Well, I think one of the things that people have a tendency to do, and that is to say, I don't— I'm not gonna get back to you until I have the answer. And sometimes, you know, it's just like, just get back to people and say, I'm still working on it.
Shannon Edwards: Yeah.
Nevin Adams: Does so much to sort of like, okay, fine, good, then, then I know, whatever. At least I know somebody's there and I know somebody's working on it, that kind of thing. And, um, company I used to work for had something they called the sundown rule, and they called it because it's like sometime before Before the end of business, I will get back to you either with an answer or with an update. And I always thought that was a great policy because it, it was something that, that we were held accountable to. And that's to, to Chad's point. I think the reason it's here on the questionnaire the way it is, is fine. Tell me what you, what you plan to do, but how do you monitor it? How do you measure it? Because you know that when you measure things like that, that's the kind of thing people do pay more attention to.
Mary Patch: So, and I like it when they ask me what my timeframe is to get a response from them.
Chad Johansen: Yeah.
Mary Patch: So when do you need to get this back to the client by? Because then I can help frame it up. So if I don't get that back from them, then I'm saying, how soon are you going to— what's your timeframe? Because here's mine.
Nevin Adams: Right. Well, and ASAP is not usually a very good one. I mean, because possible has all kinds of potential answers.
Mary Patch: So yeah, if my client's trying to run payroll today and they have a question about somebody being eligible or not, I can't wait 7 to 10 days. And that's—.
Shannon Edwards: But that's a good point, Mary, because I think it's helpful to us as service providers to understand what— how fast the answer is needed, right? If I just get an email that asks a general question and they don't tell me I've got to know this because I'm running payroll today or something like that, I might go, okay, I'll, I'll look at this tomorrow or whatever.
Nevin Adams: Mm-hmm.
Shannon Edwards: But if they'll tell me how urgent it is, I'm happy to hop on it. And my, my team is trained too. Like maybe they don't have time, but they can escalate it to me and I can take care of it. So, I mean, that kind of communication back and forth is vital to the relationship. It has to go both ways.
Mary Patch: Yep, absolutely.
Nevin Adams: Cool. Okay. Services. Who's— all right. So now Chad's introduced to the concept of this is my favorite, or this is the one I did. So, um, what, pick on the list, guys. What, what do we want to talk about in terms of services, in terms of your favorites or the things? That you focus most on?
Mary Patch: I don't think we want to tackle 316 right away, but that could be a whole other episode.
Shannon Edwards: But right, that's, that's an upcoming episode on what does 316 mean, right?
Mary Patch: That's a whole other tool.
Shannon Edwards: Chad and I wrote a whole article on that.
Chad Johansen: Right.
Nevin Adams: Well, that's, that's why it's a yes, no, or limited.
Chad Johansen: The question that, that sticks out on there is one that frustrates me, that I wish didn't exist in our world, quite honestly, which is how do you handle TPA rev share? Life would be so much cleaner and so much easier if, if TPA revenue share didn't exist.
Shannon Edwards: Yes.
Chad Johansen: Um, it's there, we have to deal with it, we all do. Um, I understand why the record-keeping community has it, why they've launched it. Why for years they hid it to try to incentivize people to sell more plans. Why now they're out there transparently stating that your TPA is going to lower their costs because they're getting this. So I get all the reasoning behind it. I just wish it wasn't there. But the question is in this sheet because you need to make sure that those that you're partnering with have a process for it. Do they directly offset? Do they take into consideration and lower their billing from day 1? Do they push it all into a plan expense account, never select, never collect a dime? Like, there are different ways of handling it. You just need to make sure that your TPA is thoughtful in it. Unfortunately, I've ran into too many times over the years where advisors come to me like, I've got 15 plans at this TPA that have grown dramatically over 15 or 20 years. There's never been a pricing concession, and I had no idea they were getting 5 basis points on every single plan. And we're talking $20, $30 million plans that have significant rev share behind them, and the advisor had no idea. So, and I think, I think for pricing, you need to know that, period.
Mary Patch: You know, I need to know if I'm doing apples to apples between multiple TPAs. I need to know if that guy showing me a $500 fee actually is getting 20 basis points on the assets from the record keeper. That makes a difference in how you look at one TPA to the next. So I think if you don't analyze that, you really don't have a clear picture on services versus fees on your provider. I mean, I've had them bill out like what I thought a traditional TPA would bill. Then I found out they had 10 basis points of rev share sitting on the other side. It's like, okay, wait a minute now. Now you're overpriced for everybody else. That makes a big difference.
Shannon Edwards: It does make a difference. And I don't think, you know, there's not a right or wrong answer, right? Every TPA firm does it differently. Um, but just knowing that revenue sharing exists and just asking the question is hugely important. Right.
Nevin Adams: Absolutely. And we've also got some, some questions here because I think a lot of this, even though it's called services, it, it really should almost be called services and fees because It really is about what do you— not only what do you do and how do you do it, but what do you— what's your approach to billing, to charging for this kind of thing? Because again, what you want to do is you want to have an opportunity to talk about something before it shows up as an invoice that the client is not prepared for. So I've always liked that aspect of it as well.
Shannon Edwards: Well, I think knowing what's included in the services, because there are TPAs, for instance, who bill separately for the $5,500. And we get that question a lot. Well, does— what does that include? You need to understand what it includes. You know, some TPAs charge a document maintenance fee and they don't charge for amendments and they don't charge for restatements. Some documents charge— some TPAs charge for amendments and restatements every single time one has to be made. Some TPAs charge both a document maintenance fee and for amendments and restatements. So I think just knowing what's included in everything that you're paying is hugely important to be able to Compare.
Mary Patch: Yeah, even like distributions. If I've got a client that has a lot of turnover and they're paying distribution review checks, that's important to look at that kind of stuff. So you kind of got to look at everything holistically. But the base fee too is another thing. Some don't necessarily say that their document restatement is wrapped into their ongoing base fee. Well, that makes a difference if, you know, I'm comparing them to somebody else and fees need to still be analyzed. Doesn't matter. And the other one is charging only when they need to do it. You know, it's, it's, it, and I ran into a situation where they did build it in, but then they didn't do it. So then I'm like, okay, well then the client moved TPAs. They've been paying, prepaying towards this documentary statement that you're not even going to do. Are you going to refund that back? Because you wrapped it into your base fee and you're not doing it. You know, so those were the questions that the client had.
Nevin Adams: It's—.
Mary Patch: You got to make sure you understand all those pieces.
Nevin Adams: Absolutely. Well, our last big section before we get the explanations is called Administration and Compliance. And this is a lot of like, what do you do kind of questions? And it's, it's like, like, yes, I do it and it's included. This is the thing we've been talking about. Yes, but there's an extra charge or no, we don't do it. So there's some clarity here that I think is really, really important. It's a, it's a pretty easy part of the form. We spread it out some so it's easy for people to look at and things like that. But what do you think about this? Where are there anything in here particularly we want to talk about?
Shannon Edwards: I think we should start with the first question that started the whole conversation.
Chad Johansen: I was looking for a tee in my drawer so I can say, well, we just teed this up for Mary because this was a This was a merry uncovering and maybe a little bit of a pet peeve of yours, I think, as well.
Mary Patch: Yeah, I ran into a couple of situations whereby the recordkeeper wasn't doing any tracking of eligibility because they said that the TPA did it. And I'm like, okay, I called the TPA and I'm like, where's my quarterly list of who I got to enroll this quarter? And they're like, we don't do that either. And I'm like, okay, who's on first? Somebody's got to do this. It shouldn't be the advisor, right? I mean, I should be the last person doing eligibility verification. And, you know, in one of the conversations we had, it was kind of funny because I said, no, you verify it after the fact. The problem is, if I didn't bring the person in, now I've got a corrective contribution to the plan because nobody told me that this person needed to be enrolled. So how do you get to that solution? And a lot of times the TPA can help me set up the process with the recordkeeper so that I can get it working the way that it needs to work. But then again, you've got to make sure you're doing all of those things and understanding who's going to tell you who you need to enroll.
Shannon Edwards: Well, I think those conversations too pointed out the fact that When we're talking to advisors or advisors are talking to TPAs, sometimes we're using these same words and they mean completely different things based upon what side of the table you're sitting on. And that's where sometimes the confusion comes in and why it's so important to like have the conversation and really get an example. If you say you do this, how do you do this? Right.
Mary Patch: Absolutely. Okay, I think some of these are important to know, like even on a transition, or who's sending out the notices? Are you sending them, or are you sending them to the sponsor? Sponsor needs to deliver. What's— am I handing them out at an education meeting? How are, how are we putting blackout notices in people's hands? You know, all these types of things that are legally required for us to have out there. What is the process to get them to the employees that need to have them. So—.
Nevin Adams: No, that's a great point. It's something we've talked about before. There is— the law requires that certain things be done with regard to the plan. And the law and the people who enforce the law are going to naturally be inclined to look towards the plan sponsor or the plan fiduciary that you are responsible for seeing that this takes place. And then the question becomes, and a lot of people in those roles, they're not experts on this kind of stuff and they don't know all the things that have to be done. And they don't appreciate the fact that they are responsible for actually seeing that it happens. And they make certain assumptions. And I think that's particularly true when people come in and basically say, we're a one-stop shop, we'll do every— everything for you. Well, people hear everything for you and they think it's an all-inclusive term.
Chad Johansen: Yeah.
Nevin Adams: But sometimes Your definition of everything might be a little shorter than what the law requires, and that's the gap. And the kind of thing we're trying to highlight with this particular part of the tool is that these are some of the things, and eligibility was a big, you know, monitoring that was a big thing. Like, these are the kind of things that you need to know upfront who's doing it, because somebody has to do it. And if you don't have an acknowledgement from a party, whether it's an advisor or TPA, that you're going to do it, it's going to fall back on the plan sponsor. And by the way, it can fall back on them at a time when it's a very awkward thing. Let's say in a DOL audit, when, when they find out all of a sudden that they haven't done it, and that's when they awkwardly turn to their service provider team and say, well, I thought you were doing this. But ultimately, that won't matter.
Chad Johansen: It's—.
Nevin Adams: What's going to matter is it's going to be up to the to the plan sponsor to fix it and deal with the penalties and the filings and stuff like that. And that's something nobody actually wants to make them go through. So that's what we're trying to highlight here is to give people a chance to sort of know, A, this needs to be done, B, to know who's doing it.
Shannon Edwards: Yeah, we have one going through an IRS audit right now that we pulled out of bundled, and they're auditing the year, the first year they were not bundled, but they're asking for a ton of information on the final year that they were bundled, and it's still at the same recordkeeper. And we're— so we're asking for all the required notices and stuff that they prepared before we took over. So they would have prepared them in 2023 for 2024. And we have notes saying that they said they were doing it, they were responsible for it. And when we were asking for the notices, they're like, we don't have the notices, we didn't do those. And we're asking for the testing from 2023. And it's a Safe Harbor plan. So mind you, there's not a lot of testing, right, that really matters. But we're just asking for the testing results because the IRS wants to see them. And there are some testing results that still apply, like annual contribution limits and things like that. And they're like, well, yeah, we don't think those really got run.
Chad Johansen: Oops.
Shannon Edwards: I'm like, but it was bundled with you. And okay, so yeah, it's things like that where you, you want to know if that's what's happening before you get pulled for audit.
Mary Patch: Yeah, and you want to make sure that they are doing everything that needs to be done. You know, I just had a client, they have a true-up year-end match on their Safe Harbor contribution. They wanted it because they're sometimes seasonal, and, um, the recordkeeper said that they didn't do it because the client didn't request it. I'm like, request it? It's Part of the document. It's required. It's not an option for somebody to request it. It just needs to be done.
Chad Johansen: So that was, that was the point right there of this section, right, Mary, is that there's this assumption that all of this stuff is getting done routinely because to us, this is the core competency of what we do. And remember, the premise of some of this is even your bundled administrator is a TPA too. Well, as we started to dig in deeper, what we realized is that there were some TPAs and some bundle providers that just weren't doing the normal things that we all look at and go, how in the world are you not doing an end-of-the-year true-up when it's an annual match funded per pay period? Like, you have to. There's no way around it. So that's why this section was here, and, and it did— it opened up some thoughts for us, and hopefully it will for many of the The folks completing this.
Nevin Adams: Absolutely. Well, folks, our last section is one that we came up with because, again, some of the things that we're talking about here are not things that are top of mind for people to ask. And sometimes just asking the question like, why does that, why does that matter? Why do I have to worry about, you know, fill in the blank kind of thing? And so we took certain of those sections and we talked about For instance, why does it matter? Why does it matter? We ask, do you perform eligibility verification prior to each entry date? And we talk about why it matters. We ask, do you provide or distribute required plan notices to them? And if you don't, why don't you? Why do you perform the following compliance test? And on the questionnaire, we add— we list those tests. Why? Because they're there and they're required, and we need to know, like, why, you know, who's doing it. So you have that kind of verification. A biggie, obviously, do you reconcile contribution deposits to participant contribution records? So there's a number of things here. You all may have your favorite. We've already established that eligibility verification is a favorite. Are there any other favorites here you all want to highlight besides the one that I've just mentioned?
Shannon Edwards: Well, I really like the reconciling contribution deposits to participation contribution records, participant contribution records, because I have found that a lot of people do— like this bundled provider I was just talking about literally just took whatever census they were provided and did a cash basis $5,500 and spit it out like nothing was ever asked for. And, you know, we're going back and trying to put together records with over, you know, 2,000 employees, and all of this data is missing and nobody can get to it. So I think really understanding what level of service— are they just taking what you give and spitting it back out on a 5500, or somebody actually looking at the information and reconciling it and make sure— making sure that what's being reported on the 5500 and in the reports is accurate? That's one of my— Pet peeves.
Nevin Adams: It's a—.
Chad Johansen: It's one that I would say is probably overlooked, Nevin, but do you speak with participants regarding loans and distribution calculations? And the whole speak with, I think, is probably why it gets overlooked, because most modern technology does a pretty good job helping people model a loan and request it. But sometimes, and this is the way I typically phrase it, The folks that need access to their dollars are experiencing one of the worst moments in their life sometimes.
Nevin Adams: Yeah.
Chad Johansen: And to have a person on the other line that understands what needs to be done to make sure that this happens timely is very reassuring to folks. There are some groups that say, nope, want nothing to do with it. It's an online-based loan system. We will not, will not answer that phone call. And there are others that are attentive to that line of work. I think that's a simple Question that could tell you a lot about the group you're trying to engage.
Nevin Adams: Excellent point.
Shannon Edwards: Excellent point.
Mary Patch: And I like the corrections and the voluntary compliance. And I like that because I will tell you, problems happen. I mean, no plan is administered exactly 100% perfectly every single time that, you know, something's done on it. So, I want to know and understand if that happens, do you have the experience to do a correction? Do you even understand how the correction needs to be done? Do you have the ability to file VCP, or does my client have to hire an attorney to deal with all of this? So I think, you know, to me, you want to make sure that as a failsafe, you know, Plan A, the plan runs really well. Plan B, it doesn't. What happens?
Shannon Edwards: I totally agree. I was going to say that too, Mary, because more and more we're finding, especially in the bundled environment, that they don't do corrections. We're actually getting a lot of correction projects from bundled where they don't do the correction. They don't want anything to do with the correction. So they're hiring TPAs to consult at least on the corrections. And so it's really important to know what your service provider will and will not do. Even if it's a self-correction, you know, even if you're not going in through VCP, they're not even doing self-correction calculations in some instances.
Mary Patch: Right. Well, and even what I've run into a couple of times too is they've got the investment elections for the person and they still want to use a DOL interest rate calculator.
Shannon Edwards: Yeah.
Mary Patch: Like, that's not fixing the participant to the position that they should have been in. So, you know, you have a variety of things that happen in this space. I had one gave me a spreadsheet. I had to revise the entire spreadsheet. It made absolutely no sense. I'm like, you can't send this to the to the, you know, to the VCP program, they're going to laugh at you. It doesn't even tie out. You know, you're rounding and doesn't even tie to balance anything. You know what I mean? It's just like, if you're going to round something, at least round it correctly in Excel before you try to sum it.
Nevin Adams: I'm trying to imagine them actually laughing at them, but okay. Yeah, you, you should be so lucky that they laugh.
Shannon Edwards: Yeah, right. They're just gonna start asking for more information, right? It's gonna be like, tell me more. That's true.
Mary Patch: And they'll want like 85 more pages of substantiation of the underlying calculation within the Excel formula.
Nevin Adams: And yeah. Well, folks, that's, that's the tool. Um, it's called a TPA/Compliance Administration Assessment. Kind of a fancy name for an actually a pretty compact tool that covers a whole lot of ground. And the folks both here on the call and a couple of others who are not on this call actually, who sort of built into this thing. I mean, it's done from the kind of war stories that have come up a couple of times even in this conversation here. So the scars run deep in terms of things that weren't asked and got missed and had to be dealt with. But they're brought to light here in a way that I think you'll find will really help you have a really honest and open conversation with your TPA, if— or a TPA candidate if you're the advisor, or with an advisor if you're a TPA looking to put your services forward. It's going to be a good way for both sides to communicate and have clear expectations about what you do, what you charge for what you do, and also an opportunity to identify the things that have, for whatever reason, kind of fallen out between the cracks. So we hope it works for that purpose, and I hope you all take a look at it. And if you've got any questions, comments, we've gotten some great ones over time from different people, but would encourage you all to, if you use it and you've got some additions or some questions, Please let us know. Anything else, team?
Chad Johansen: Been fun.
Nevin Adams: Okay, awesome. Thank you all for coming by and checking things out. We'd love to hear what you think.