For years, a major barrier to the efficient operation of many 401(k) plans has been the working relationship between the plan’s advisor and its third-party administrator (TPA). When the advisor/TPA partnership is effective, it is characterized by a clear understanding of roles and expectations, dedication to smooth, compliant plan administration, and a plan design tailored to the sponsor client’s needs and goals.
There are many real-life examples where advisors and TPAs collaborate without struggling for “ownership” of the relationship with the plan sponsor. In these cases, both parties understand and value what the other brings and stay in their respective “lanes.” However, when these attributes are compromised, service and client satisfaction can quickly deteriorate. Successful relationships align expectations with reality, acknowledging that not all TPAs and advisors have identical skills, needs, and capabilities. Advisors sometimes take on tasks typically performed by a high-quality TPA, while TPAs might be left to clean up because they were not involved in initial discussions. Each client and advisor/TPA combination is unique, so alignment is achieved through open and honest communications.
A group of TPA business owners and executives, including a longtime NAPA member, explored solutions to bridge the communication gap between TPAs and advisors. Inspired by ARA Women in Retirement Conference (WiRC) “Third Thursday” sessions and discussions on the Retireholi(k)s vlog, American Retirement Association Chief Content Officer Nevin Adams recognized the recurring issue of communication gaps and frustration with “not staying in their lanes.”
Adams brought together knowledgeable, passionate people from both sides to address this issue. His goal was to take concerns from both TPAs and advisors and find common ground. Without an axe to grind, Adams focused on bridging the communication gap and fostering cooperation between the two parties. This initiative aims to enhance the working relationship between TPAs and advisors, ultimately improving service and client satisfaction in 401(k) plan administration.
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