The Bridge Builders

When the advisor/TPA partnership works as it should, typically it’s characterized by:

• a clear understanding of each other’s role and expectations;

• a shared dedication to ensuring that plan administration runs smoothly and the plan is in full compliance; and
• the plan’s design is tailored to the plan sponsor client’s needs and goals.
• To the degree that those attributes are diminished, optimal performance of the plan suffers, along with the advisor/ TPA relationship and ultimately, client satisfaction. In far too many instances, this has been the unfortunate outcome of the TPA/advisor partnership. That’s a problem. And since this often-negative dynamic has existed for decades, it’s reasonable to assume that it’s likely to be with us in the foreseeable future as well.
• Or is it? Can it be fixed? And what can be done to help advisors and TPAs improve their partnership as service providers?
• Early this year, a group of TPA business owners and executives came together to answer those questions. Here’s their story.

GETTING OFFTHE GROUND
It was ARA Chief Content Officer Nevin Adams who was inspired to try and bridge the communications gap between TPAs and advisors after sitting in on several ARA Women in Retirement Conference (WiRC) “Third Thursday” sessions in 2020 and 2021. On those calls he noticed that the issue of communication issues—frustration with one or the other “not staying in their lanes”—kept coming up. The issue was something that also popped up occasionally on the Retireholi(k)s’ vlog, Adams notes, which, though conducted by the TPAs at Plan Design Consultants, often includes advisors. The seeds of the focus were actually planted in a live session with the Retireholi(k)s at the TPA Growth Summit a couple of years ago.

“I had good enough relationships with people on both sides of the discussion to think that we could actually bring some folks together and work on this,” Adams continues. “It helped that I didn’t really have an ax to grind, just wanted to take a concern that was being expressed by both TPAs and advisors, and see if we couldn’t find common ground. I didn’t know, at the outset, what we’d be able to do. I just wanted to bring together knowledgeable, passionate people who wanted to help solve the problem. And I think we ended up with that.”

In addition to Adams, the group consists of:

• Shannon Edwards, President of TriStar Pension Consulting

• Amanda Iverson, COO & Partner, Pinnacle Plan Design

• Justin Bonestroo, SVP with CBIZ • Mary Patch, a plan advisor
with Independent Financial

Advisors (IFP)1
• JD Carlson, owner of Plan

Design Consultants (PDC) • Chad Johansen, Partner and Director of Retirement Plan Sales at PDC

Edwards, Iverson, Bonestroo and Patch are well-known members and leaders of ASPPA. Bonestroo is the current President-Elect; Iverson is the current Vice President, Edwards is a member of ASPPA’s Leadership Council, and Patch, a member of both ASPPA and NAPA, is the longtime Chair of the Plan Consultant Committee. Carlson and Johansen, both ASPPA members, are perhaps best known as two of the four members of the Retireholi(k)s.

‘POLLING’ PLACES

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

Bonestroo notes that the group’s initial focus was just getting a better understanding of the mindset on both sides. So with Adams’ help, the group conducted a pair of polls: one asking TPAs about their views on advisors (see “TPAs’ Views on Advisors” sidebar) and the other asking advisors about their views on TPAs (see “Advisors’ Views on TPAs” sidebar).

Iverson recalls the impact that the survey results had on Edwards, Bonestroo and herself as they prepared for a workshop session at the 2022 NAPA 401(k) Summit. “As we were going through the surveys and hearing from advisors and even other TPAs, it was clear that not every advisor/TPA experience has been amazing,” she says. “Sometimes we had to swallow our pride and listen, and initially we were like, ‘Oh, we would never do that.’ But we heard it happening over and over, so it was clear that there are opportunities for improvement and obstacles to overcome. We’ve spent a significant amount of time over the last year just digging into those service provider relationships, interactions and problem situations to determine, ‘How did this happen?’ ‘What can we do to prevent these kinds of scenarios from happening?’”

The group soon found that a lot of the problem had to do with either not having the same expectations or having communication that wasn’t clear. “When we started to dig into this, we were surprised at some of the things that we heard from the advisory side, as far as where their frustrations came from,” Bonestroo recalls. “A lot of it came across as miscommunication or a misunderstanding of the roles on both sides. So we wanted to learn more about what’s causing frustration and figure out how we can fix those things. Instead of just accepting the existing flaws in our interactions, we can all be deliberate to identify those flaws and their origins and then address them and create meaningful improvement.”

COMMUNICATIONS AND EXPECTATIONS
One of the first steps in that journey is “to really open up the discussion about the areas of conflict and to get both sides to start speaking the same language and start understanding the landscape for the other party,” says Bonestroo. “From the advisor’s perspective, the idea is that if you’re intentional in creating a partnership—if you recognize where your needs or your shortfalls are,
and understand how a specific TPA could interact with you in those areas, and then purposefully create the collaboration—it will lead to better overall results.”

Because of her experience as both a TPA and an advisor, Patch provides an advisor’s voice in the group’s discussions. “Mary has done a lot during her career,” says Edwards. “She brings something unique to the table because she is so familiar with the TPA world, and is also so good when it comes to the fiduciary aspects of being a good plan advisor and really taking care of her clients. She really expects a lot of value from her TPA, and she expects the job to be done right.”

“I have a lot of friends in the industry who are advisors utilizing TPAs, and I feel like there are times they become frustrated with situations that happen,” Patch says. “I believe some of it is just not understanding 100% exactly how the TPA functions. I also feel that sometimes an advisor has so much on their plate that they just don’t have the time to engage at the level of really diving in and understanding what a TPA does and the differences between different TPAs’ business models.”

Of course, in all plans there are many things that must be done, Edwards adds: compliance work, the Form 5500, financial statements and audits for large plans, to name a few— all of which are the responsibility of the employer but carried out by the TPA, whether bundled or part of a standalone solution. “We need advisors to understand that by not choosing a TPA, you’re still choosing a TPA—you’re just choosing a bundled TPA.”

“I have never come across a modern TPA that likes to be called an administrator,” notes Johansen. “Understanding that we want to be an extension of our advisor partner teams is a crucial differentiator between a bundled TPA and a specialized TPA.”

“Advisors like what they refer to as the ‘easy button,’ and sometimes it’s just easier to work with a bundled solution and have one place to call for everything versus separating it out between a TPA and a recordkeeper, and then dealing with the nuances of where your client is supposed to call or who handles what on the plan,” Patch adds.

There’s another aspect of the bundled/unbundled issue, Patch points out: the many different types of advisors and TPAs. “There are specialists on the advisory side but also a whole lot of advisors who don’t really specialize in this space,” she notes. “So when the TPA is answering a question, they could answer it from either end of that spectrum. A TPA may work with one advisor who is more experienced and wants to stay really involved. But they may support another advisor who doesn’t ever get involved and wants the TPA to handle everything. So communication is a challenge on both sides of the house.”

Johansen agrees. “There is a certain tendency on both sides. If you’ve had a bad experience with somebody who wears one of those labels, it’s easy to just sort of generalize and say they’re all like that,” he says, noting that, “ultimately, the shared goal is about being able to build and develop a trusted relationship. But the reality is that a lot of advisors don’t have a full appreciation for what a good TPA will be willing to do for them as a part of their normal service.”

SHOPPING LIST

To address that gap, the group’s next goal was to highlight both the areas that are critical in terms of keeping the plan in good, solid compliance, and also identifying the services to be provided, Adams explains. That way, an advisor could get a sense of what should be on their “shopping list” when it comes to looking for a TPA. “Do you want somebody who does this, or who knows about this, or who has experience with this—that kind of thing,” Adams says, “because in a lot of cases, the advisors don’t even know what to ask for. And often then they have to pick up the slack, taking on work that a good TPA would normally do as part of their service—if asked.”

The result? All too often, opportunities are wasted. “We all see opportunities—opportunities for better client service, opportunities
for growth, opportunities for more productive partnerships,” says Iverson. “So how do we find those partners and then ensure we are able to be the kind of partners that will create a better client, plan, advisor and TPA experience?”

The group started with a list of top 10 areas of plan compliance “pain points”—areas where the best TPAs differentiate themselves—and that eventually provided the basis for a capabilities checklist that advisors can use to evaluate potential TPA partners. “One of the frustrations we’ve found is that ultimately, unless you have a process that identifies what the pain points are, and a process for looking at all of the ones that are important to you, it will be difficult to really put together a partnership that works,” Bonestroo explains.

In between that initial draft and the checklist, the group collaborated on a series of monthly posts on NAPA Net and ASPPA Net intended to lay the groundwork for a shared understanding and appreciation of the respective roles: “Finding the Right TPA Partner,” “Bundled Versus Unbundled: 5 Myths,” “Resource ‘Full?’” and “What’s in a Name?” The last one makes the case that “the most used and least understood/appreciated acronym in the retirement plan industry is ‘TPA.’”

This led back to the notion that advisors would benefit from knowing the service/support questions to ask their TPA partners—and that TPAs would benefit from advisors having a consistent and uniform list of potential services that would allow them to establish/validate their partnership value. And that, in turn, culminated in the checklist.

For example, for an advisor looking for a TPA partner, one of the questions to ask a TPA, Edwards notes, is: “Do you have a workflow client management system, where you have notes about how I want you to work with me, and are you able to do it that way?” That’s the essence of the checklist the group has created— without getting overly complex or too deep “in the weeds.”

It was shared with about a dozen advisor volunteers who provided insightful feedback and suggestions that have been incorporated in the updated draft. The next step in its development “is to actually have some advisors meet with a TPA and use it, put it into live practice and see how it flows for the advisor and for the TPA,” Patch explains, adding that the group plans to tackle other deliverables in the future.

THE IMPORTANCE OF CULTURE
Another important point in choosing a partner is to understand what the culture is in that firm, Edwards notes. “It’s about knowing how information gets from the person who sells the plan to the people who work on it and have the daily relationships. Because they can’t read my mind; they don’t know what I told the client and the advisor in that meeting, or what I promised, or how the advisor wants this plan to look,” she says.

“So it’s important for an advisor to understand, after the plan is sold, what does it look like? Where does it go in the TPA firm, and how does the information flow down?”

“It’s one thing to claim to be a partner, but the fact is you have your business owner, and you have your sales team. They understand
the advisor relationship,” Bonestroo points out. “But it doesn’t mean anything if the people who actually have boots on the ground—working with the plan moving forward, working with the plan sponsor, working with the recordkeeper—don’t have that same feeling.”

For a TPA, “If your culture doesn’t flow through from the top all the way to the bottom, and your consultants don’t feel that way—if they feel that it’s always ‘us-versus-them’ or ‘here’s a chance for me to look good because I can make somebody else look

bad’—you’re not going to have a good experience with that,” says Bonestroo. “In the end, the only enemy is things being done wrong. We just want to make sure that we can get there together.”

WHAT’S NEXT?

What does the future hold for the group? “It would be great to have this group continue to work on the objective of improved collaboration between retirement plan service providers,” says Iverson. “Who knows where it’ll take us? We may expand it with additional members. We could ask applicable parties additional questions, and then take on overcoming additional obstacles. We could seek feedback on what we’re delivering to see how we can improve it.”

Iverson also suggests adding the involvement of more NAPA members. “Mary has been the lone advisor in our group so far and she’s done an excellent job—she’s just been very transparent and honest in her feedback, and she hasn’t worried about hurting any of our feelings, which is wonderful,” she says. “It would be great to have a few additional advisors involved to help decipher the obstacles that we need to overcome.” Patch sees the need for more ongoing discussions and communications—perhaps in the form of discussion opportunities at ASPPA’s Annual Conference and the NAPA 401(k) Summit. “I feel like until we find a good way to create a crossover between the two entities, it’s really hard for each of them to understand what the other does,” she says.

No matter what the future holds, look for lots more to come from this process. “I think all of us are passionate about the industry as

a whole and making us all better together, rather than just focusing on the individual ARA sister organization than I’m a member of,” says Edwards. “It’s about bringing us all together so that we can serve the retirement plan community even better.”

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