Perspectives August 30, 2013

10 Ways TPAs Can Help You Grow Your Business

If you haven’t already reached out to third-party administrators (TPAs) to help you grow your retirement plan business, you may be missing out. TPAs bring a lot to the table—including expertise, relationships and resources.
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With their skills in advanced plan design and unbiased opinions toward retirement products and services, TPAs can develop and deliver solutions that attract new plans and resolve issues for existing plans. And they can free you to focus on other areas of your practice.

Specifically, TPAs can help you:

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1.       Increase your market opportunity. Just over half (54%) new business opportunities in the start-up to $5 million retirement plan market use a TPA service model. (Retirement Research, Inc., 2013) TPAs influence almost $800 billion in 401(k) and 403(b) plan assets. (Cerulli Associates, Jan. 2013)

2.       Boost close ratios. TPAs can add an additional level of confidence in sales meetings due to their niche expertise and industry experience. This can help build credibility, fill the pipeline and improve close ratios.

3.       Add expertise. When a retirement plan committee meets, they often like to see a team of people handling their plan. This lets them know that there are several experienced and specialized professionals to help meet their needs.

4.       Expand your service offerings. From handling complex plan designs and unique investment options to the development of customized reporting or processes like payroll submission – there are a number of areas in which TPAs can provide added services to plan sponsors. This can help you attract new clients or expand your relationships with current clients.

5.       Reduce administrative burdens. Expert TPAs can provide plan administration, compliance testing, government filings and more. Clients often work directly with TPAs in this area, freeing you to continue to bring in new business or to consult with existing clients. TPAs also lift an administrative burden from the client, allowing them more time to focus on their business.

6.       Gain local presence and support. When issues come up, many plan sponsors value face-to-face discussions. The TPA can often provide one-on-one service for even the smallest plans. This is especially helpful if you have clients throughout the country. The TPA can be the local support to help you attract and retain new business.

7.       Strengthen relationships. Because of their image as an independent third party and their presence in the local community, many TPAs gain “trusted adviser” status with their plan sponsor clients. You can use this to your advantage when trying to retain business. After all, if a plan sponsor has a strong relationship with a TPA, you can only gain by embracing the value of that TPA.

8.       Receive referrals and feedback. Due to their “trusted adviser” status, there are also times when the plan sponsor asks the TPA for a financial professional referral. TPAs can also be valuable sources of client feedback, helping you fine-tune your skills and improve your retention.

9.       Improve retention rates. The majority of TPAs keep a tight rein on client loss, with an average loss rate less than 1% of their business base. (Cerulli, May 2011) This often leads to better retention rates for all parties involved.

10.       Access education and training. TPAs may also provide sales support, education and training—including guiding financial professionals who are new to the industry through their first sales.

Start networking!

Reach out today to the TPAs in your area. By demonstrating your own retirement industry expertise and offering to bring them referrals, you may create mutually beneficial relationships for the long term.

 

About Rick Bruce

Rick Bruce is director of Business Development for Third Party Administrators (TPAs) the Principal Financial Group.  Bruce has more than 25 years of retirement industry experience, including owning his own TPA firm.

 

The subject matter in this communication is provided with the understanding that The Principal® is not rendering legal, accounting, or tax advice.  You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements.

Insurance products and plan administrative services are provided by Principal Life Insurance Company a member of the Principal Financial Group® (The Principal®), Des Moines, IA 50392.

© 2013 Principal Financial Services, Inc. 

t13082602tv – 8/2013

Compliance August 30, 2013

Singing Adviser Charged in $4.7M Ponzi Scheme

Larry Dearman, Sr., and his friend Marya Gray, were charged by the Securities and Exchange Commission (SEC) with offering fraudulent securities, raising at least $4.7 million.
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Dearman, a former investment adviser, and Gray are said to have squandered money—taken from more than 30 of Dearman’s advisory clients—in gambling, personal expenses, and in Ponzi payments to other investors from approximately December 2008 through August 2012. According to the SEC complaint, filed in the U.S. District Court in Tulsa, Oklahoma, Dearman invested his clients in various businesses that Gray owned in Bartlesville, Oklahoma. At the time, Dearman was working as an investment adviser in Bartlesville.

Dearman and Gray misled investors about the safety of the investments and how their funds would be used. They were told in some cases that funds would be used to purchase equipment for Bartnet Wireless Internet, Inc., one of Gray’s companies. But in fact, Gray and Dearman squandered the vast majority of investor funds on gambling, personal expenses, and Ponzi payments. The complaint also alleges that Dearman stole roughly $700,000 from some of his clients through various ruses.

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The complaint said that Dearman and Gray were able to lure these clients in part because many of them had known him and his family since childhood, thought of him as an active member of their church, and knew him as a popular local wedding singer. 

Gray played a vital role in virtually every aspect of the fraudulent scheme that involved her company, Bartnet Wireless Internet Inc. All the money raised for Bartnet went into a bank account she controlled. Gray was the contact person for the self-directed IRA custodians used to house the Bartnet investments. She was also fully aware that Bartnet was operating at a loss and would be insolvent without the continuous infusion of new investor funds. In 2010 Gray obtained a $250,000 credit line from a bank for Bartnet, supposedly for Bartnet’s growth and the purchase of towers.

Dearman and Gray allegedly violated or aided and abetted Securities Act and Investment Advisers Act violations, and the SEC seeks permanent injunctive relief, disgorgement plus prejudgment interest, and civil monetary penalties from both defendants. 

In addition, the Commission has named as relief defendants three of Gray’s businesses, including Bartnet Wireless Internet, The Property Shoppe Inc., and Quench Buds Holding Company LLC, seeking to recover funds they derived as a result of Gray’s and Dearman’s fraud. According to the SEC’s complaint, The Property Shoppe is a shell company with no employees or operations. 

The SEC complaint is here.

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