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:
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.
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.
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