The Staffing Crisis

At a time of growth, the retirement industry is beset by rising salaries, candidate shortages and job-hopping. What are industry execs doing to combat the current crisis in hiring and retention?

How did we get here? Recruiter robert brady, who has specialized in serving clients in the retirement plan industry for 30 years, cites the covid-driven shift to remote work as a primary driver.

“When that happened, it seemed to usher in a lot of movement because people who were working for firms that would not allow their employees to work remotely now had plenty of options to work remotely elsewhere,” says Brady.

During the last two years, in Brady’s opinion, so many people were hired away from other firms that it caused a dearth of available candidates. Today, he observes, “The historic ratio of jobs open to candidates available is imbalanced, resulting largely in greater demands on hiring from a shrunken pool of available candidates.”

Shannon Edwards, President of Oklahoma-based TriStar Pension Consulting, knows too well what
the consequences of that dynamic look like. “We made an extremely good offer to a candidate a couple weeks ago,” Edwards recalls. “But she didn’t go with us. The firm she ended up going with basically offered her slightly less than we did in salary— but gave her the potential to make something like $20,000 in bonuses over and above her salary. When I discuss that with my friends around the country, you know, very few of them have bonus structures, and when they do, it’s nothing like that.”

Edwards also recognizes the emergence of the remote or hybrid workforce as a double-edged sword. “I would have thought it was a
huge benefit because now I can get employees from anywhere. However, everybody’s doing that now. So [consulting firms] in Oklahoma that previously did not have to compete with California and New York salaries—well, now we do. And I think that part of the problem in the pricing of staff is that we now have both of the coasts looking for our Midwest employees.”

Of course, the dynamic of TPAs and recordkeepers competing against each other for the same shrinking talent pool will drive up salaries over time. That has happened “pretty quickly,” Brady observes. “Individuals who have, let’s say, 1 to 3 years of experience—they’re very attractive because they can come in and hit the ground running. So that person with 3 to 5 years of experience, who might have been quite happy to accept a $65,000 offer 2, 3, or 4 years ago, is now getting $75,000, $80,000 or even more. I’ve seen some crazy, outlandish offers made by employers, and I’ve had to tell clients, sorry, you lost out on Joe Smith because XYZ Company gave him a $20,000 raise—or more in some cases.”

Getting the right candidate can become a race for talent, Brady acknowledes. “If you get somebody that you like, please, just move on them as quickly as you possibly can,” he advises. “If your interview process used to be two weeks or longer, try to make it within one week. Some of these good candidates are hitting the job market, getting interviews and finding themselves with an offer in hand three to four days later, or even on the same day.”

“Ascensus, much like many in our industry—and for that matter, pretty much every industry—has been affected by the Great Resignation for the last year or so,” Tony Petrucelli, VP of Talent Acquisition at Ascensus, notes.

In addition, the technical nature of TPAs’ work exacerbates the problem. Pinnacle Plan Design CEO Amanda Iverson explains: “In the retirement plan industry in particular, there are so many complex rules and regulations, it takes a long time for someone to become an expert or to even feel comfortable, especially on the TPA side, with all the compliance and consulting work.”

That puts the emphasis on hiring more experienced people. At JULY Business Services, “We recently found ourselves hiring people that have more experience,” relates COO Blake Willis. “We found that our biggest need is people with more experience, not junior administrators. Sure, you need both, but I would say that recently we’ve been more focused and spent more time and energy than in years past hiring higher-level, experienced people than we did in prior years.”

The Role of Technology

Iverson recognizes the challenges of hiring more experienced staff, noting that the compensation requirements of experienced team members have increased dramatically. “So the challenge is, as businesses, are we going to just increase our fees and hope our revenue is high enough to cover the increases and then continue to do things the same as we always have?” she asks. “Rather than just adding more people, as an industry we have to look at the way we’re doing things and consider what innovation or changes we can make. For example, how can we utilize technology differently—determining where we can create technology solutions to do those tasks that our team members don’t love doing, that don’t create a value-add, or that technology can do for us more efficiently.”

Chad Johansen, a partner and sales director at California-based Plan Design Consultants, agrees, warning that the industry can’t afford to become complacent again. At PDC, he says, “We are not believers that any time you run into a growth or staffing issue, the only thing to do is throw bodies at it. You need to have quality people doing the work. That can never change. But you also need to look
at ways within technology to create efficiencies for your team. You need to embrace the way you communicate with clients. You need to require clients to submit data electronically.

You need to have proper cloud storage systems. You need to have good CRMs that allow your team to service clients quicker, more accurately and efficiently. For years, the TPA community has refused to invest in technology because they looked at it as an additional cost, rather than an investment in efficiency and growing the business.”

In addition to search firms and investing in technology, TPA execs identified several other factors that are helping them mitigate the staffing crisis, including outsourcing and an emphasis on workforce retention and corporate culture.


To address their need for experienced, credentialled employees, today more independent TPAs are turning to outsourcing firms for help. “The culture has shifted dramatically in the last two years, with the number of firms that are outsourcing—using an outside company to do the stuff that can be done by someone who doesn’t need to be client facing,” one industry exec observes.

At Infosys, one of the largest providers of outsourcing solutions, the focus is on business operation outsourcing that reduces cost and optimize productivity, says Martha King, the firm’s Chief Client Officer, Executive Vice President, and head of Infosys’ Retirement Services Center of Excellence. “Our clients look to us to provide staffing of back-office and contact center functions that are generally repeatable, specialized, and lower risk to the business in lower- cost geographies—both on-shore and off-shore,” King explains.

“The retirement services industry is complex in and of itself, and with no industry standard for quality controls, and every TPA has its own approach,” King says, adding that TPAs struggle to find a partner that both understands the industry and has the strategic agility and technical expertise to help them find custom solutions that align with their culture, their expectations, and their mission.

After 2 years of successfully utilizing a firm in Bangladesh for back-office work, Waco, Texas- based TPA/recordkeeper JULY Business Services (founded in 1989 as Texas Pension Consultants) created a company there to provide administrative help. “Our strategy in the beginning was to utilize those employees to just supplement and enhance our staffing,” recalls JULY President/CEO John Humphrey. “As a record keeper/TPA, we always felt like we never had enough staff. We had a lot of peak periods in the business that were really challenging to manage.”

For the first 4 years, JULY spent a lot of time training their employees in Bangladesh to support the firm’s back office processes. They used ASPPA training materials, starting with the RPF-1 and RPF-2 certificate programs and ASPPA’s other training programs, in some cases earning the QKA credential.

“Working with the folks in Bangladesh really provided a boost to our staffing and helped to serve clients better,” Humphrey recalls. “It allowed us to have employees here in the U.S. more focused on our clients and less focused on the ‘heads down’ work”— like handling year-end compliance testing and contribution allocations work, Form 5500 preparation and distribution adjudication.

Spurred by a client’s request for help building a team, JULY began offering their Bangladesh-based solution as a service. “Basically we hire employees in Bangladesh for TPAs,” Humphrey explains. “We provide them with training, and then we teach the TPAs how to work with them to augment or supplement their staffing here in the U.S.”

“People certainly want to work for an organization where they can bring their whole selves to work every day, not just a personal persona."
- Tony Petrucelli, Ascensus

Ten years later, the number of TPA clients using JULY’s Bangladesh solution stands at 41 and counting, with a current total of about 150 employees in Bangladesh. “We’ve grown from about 18 to 41 TPAs in the last 18 months,” reports Partner/ COO Blake Willis. “There was a
lot more growth quicker than we expected.”

Humphrey sees an important benefit to outsourcing that often goes unrecognized. “A lot of times, I think TPAs will come into this thinking, ‘Either I need more staff, or I have an emergency situation, or I lost some someone, or I want to reduce some costs.’ But I think the thing that people miss a lot of times is the benefit that this provides to their clients. If you can elevate employees’ responsibilities, that’s where innovation happens. That’s where better client service happens. I think it really frees up people who have experience here in the U.S. to think differently about how to serve their clients and add value to that client relationship.”

Many TPA owners and execs remain opposed to overseas outsourcing, a dynamic of which Humphrey is well aware. “I know that some TPAs may think that this is about cutting U.S. staff. But our experience has been that having the outsourcing solution floats all boats,” he says. “It improves servicing for clients, and it helps elevate jobs for employees here in the U.S.—they’re taking on new responsibilities and contributing more to process and service innovation. If anything, it’s really about growing larger over time because you’re more scalable, you’re a healthier organization, and you’re a better workplace for your employees.”


In his 8 years at Ascensus, Petrucelli has pursued a robust, two-part talent acquisition operation, supplementing the firm’s traditional recruiting efforts with an in-house strategic sourcing team that functions like a search
firm. “A successful talent acquisition structure means nothing without a strong employee value proposition to attract talent,” he believes.

“What’s your employment message?” he adds. “Why do people want to work there? What makes you unique?” Of course, with the Great Resignation and the pressure of having more jobs than there are people, compensation does come into play, Petrucelli acknowledges—but it’s not everything. “People certainly want to work for an organization where they can bring their whole selves to work every day, not just a professional persona,” he believes—“a place where they share similar values and have the opportunity to grow professionally.”

Corporate culture doesn’t just help with recruiting by becoming an employer of choice, of course—it’s also a prime driver of employee retention. At Pinnacle, “our culture is part of our strategy to retain our great clients, partners and team members,” says Iverson. “I believe a big part of why our team is staying is because of our commitment to the Pinnacle culture. We strive to have a culture of accountability that includes team collaboration, a transparency of expectations, an emphasis on training and professional development, a mentoring program, and an extensive compensation and benefits package. It’s not just one thing—all of those things contribute to who Pinnacle is and create our culture. And I think that because of that culture, team members have been staying and our employee retention continues to be high.”

At successful TPA firms, paying for ASPPA certification also plays a role in retention. At TriStar, says Edwards, “We require that new hires start sitting for the ASPPA exams immediately. Within a couple weeks they’re already doing RPF and then moving on to QKA.” TriStar pays for all the continuing education once an employee passes the exams, and for the employee’s ASPPA membership.

In talking to other TPA firms about the benefits they offer, Edwards is seeing a shift in that direction. “There are firms that have not done that in the past, but are now shifting to paying for more than they used to,” she says.

Johansen attributes Plan Design Consultants’ very low turnover to the firm’s growth and continual reinvestment in their employees. “We’re focused on finding career- oriented folks, and not just people looking to do a job. I think if you’re willing to jump from company to company for a pay bump, then you are not necessarily looking for a career. You’re looking for an income,” he asserts. “I believe as business owners, we have to be clear about what we’re trying to do with our workforce. Are we trying to help people build a comfortable life with their family and have a good work-life balance? Or are we trying to only do a job for clients? If we’re only trying to do a job for clients, then we’re going to lose employees as they find something that’s slightly better at a different firm.”

After losing three good sales consultants within a short period of time, Johansen recalls, he learned an important lesson. “What I learned in hiring and then losing those folks is that when we teach them this great skill set, growing them, nurturing them, and they may get recruited by our recordkeeper partners, who can offer them much larger paychecks.” To counter that, Johansen believes, “you really have to make sure the culture fits and the people are happy—and you continue to keep a pulse on their happiness and the work that they’re doing so that when that knock does come, they feel like they’re already in the right place.”


What do the industry insiders we spoke with think the future holds?

Looking at the nationwide labor market, Petrucelli sees a rough ride ahead. “This time next year, I think it’s going be a different story; 2023 is going to be a rough year,” he says. “If the economy continues to decline, it’s not going to be the Great Resignation anymore.”

Petrucelli sees the labor market eventually tightening as layoffs are becoming more commonplace. “The only reason it’s not contracting faster is because the labor participation
rate is at a 45-year low. If this trend continues, there will be fewer jobs and even fewer people to fill them.”

Recruiter Brady views retirement industry salaries over time as a big pendulum that is suspended right now at the high-salary side of the spectrum. “But you know, coming out of the Great Recession, that pendulum was on the other end of the spectrum for 7, 8 or 9 years. It was brutal,” he points out. “So now we’re on the other side, and that pendulum is just kind of hung up.”

“I don’t know how salaries could go backwards,” Brady observes. “How could you ask your people to take less money? You could, of course, but I don’t see that happening. But I think at some point the madness has to stop— at a point where everyone eventually finds themselves at an equilibrium. It’ll stabilize and salaries will go back to the traditional 8% raises to leave one company for another. And eventually we’ll have another recession, or something will happen, and hiring will slow down.”

Read Full Article

Recent Articles

Deep Thought on Administration: Acrosyn

November 1, 2023

This column discusses the importance of not talking down to your clients, but rather using words they understand when describing there plans and option.

Anonymous Now: The IRS' Anonymous Review Process

August 14, 2023

Before approaching the IRS with an error that may lead to plan disqualification, consider approaching them anonymously.

The Challenges of Going Solo(k)

August 2, 2023

For the self-employed and small business owners with a solo 401(k) plan, important rules need to be carefully considered in the coming years. It's why we asked the experts for their thoughts.

Request a Consultation

Ready to find out more?

The TriStar team is ready to help you begin your journey on the road to retirement. We will help you navigate the route for a smooth ride to and through retirement.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.