Instruc(k)tions #002: 401(k) Plans Are A Pain In The @#%
April 20, 2023
Read time: 3 minutes
401(k) plans are a pain in the neck to deal with.
· High Fees
· Client Confusion
· Little compensation
· Extraordinary time suck
· Complex and complicated rules
There is an option to alleviate this pain.
The Third Party Administrator (TPA). A trusted partner whose existence is dependent on working with 401(k) plans daily. An extension of your practice to help you stand out from the competition.
Envision your positive future with a TPA by your side.
You and your client get transparent costs in line with expectations. Start up costs commonly range from $250 to $2,500. Annual costs are typically based on the size and complexity of the plan.
Keep in mind Secure 2.0 created additional tax credits to soften costs as well; you can read about it here https://www.401kinabox.com/blog/secure-20-tax-credits-for-new-retirement-plans
A Third Party Administrator provides an avenue to a structured client experience. There are processes to learning about the client’s business, goals, and vision for the retirement plan. Starting with an anticipated future state allows the TPA to not only understand the client, but for the client to comprehend the potential structure of the plan and the role the TPA plays.
If you, as an advisor, are writing a 401(k) for the compensation pay out, you will be disappointed.
The advisor should view the 401(k) as a lead generator. If the business has 20 employees, you just won 20 warm leads. Remember, the employee him/herself may not be the lead, but the spouse, other family member, or friend might provide the opportunity.
How many times a day do you hear someone say, “I’m busy,” or, “things are busy,” or, “I couldn’t get to this, I am so busy?”
Be smart with your time and outsource. As an advisor you need to know a lot about a lot. Take the 401(k) details off your plate and outsource the work to a good Third Party Administrator.
With a solid TPA partner, you will have access to an expert with years of experience to answer all your client’s questions.
TPAs will make the process easy and simple for you and your client. A TPA firm is typically a small business just like your client. They will have dozens of employees (not hundreds) with names, email addresses and direct phone numbers.
The TPA can deal with the complications and complexities of the plan, not you.
The next time a retirement plan opportunity lands on your desk, use a TPA to avoid the potential pain in the you know what.
Whenever you’re ready, there are 2 ways I can help you:
1. For tips on Retirement Plans follow me on LinkedIn: @drewtirney
2. Free client/prospect consulting to add new business to your book: drew@401kinabox.com
Grow your Retirement Plan business by allowing us to be your expert support.
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