In making the case for retirement plan sponsors to choose a Third Party Administrator (TPA) vs Bundled service from a provider in a whitepaper entitled: Superior Administration: Why Quality TPAs Outperform Bundled, authors Jason Brown and Jason R. Oesterlei make some sweeping statements.
Year-end compliance work accuracy is of utmost importance and is highly dependent on the correctness of the data involved. The process entails a plan sponsor providing the participant data that are used to perform all the necessary compliance testing and government reporting. However, the devil is in the details in regard to verifying the accuracy of the information. Often, bundled administration departments work under the auspice that the census data provided is accurate and processes the compliance testing without formal review. If the census data is inaccurate, the compliance testing would also be incorrect, which creates the potential situation of “garbage in, garbage out” for the plan testing and reporting results.
While it may be presumptuous to assume that bundled service providers do not fact-check underlying details (I have trouble accepting this at face value), the authors do provide a few basic points that favor the unbundled solution. One of the more compelling arguments is the point of separation of roles and responsibilities and change management.
There are numerous advantages in working with a TPA that go significantly above and beyond just looking at a spreadsheet. Furthermore, this best-in-class approach of “unbundling” allows for the selection of the best component providers of recordkeeping, administration and advisory services. If one part of the whole happens not to work, you can replace the piece without having to start over. Well-run businesses appreciate the ability to be nimble in selecting service providers.
Choosing service providers is a major undertaking for a plan sponsor. In choosing between a Third Party Administrator (TPA) vs Bundled service, the sponsor should seek to define their own style and resources. Managing service providers is part of a plan sponsor fiduciary role in most cases. If you have the will and resources to manage multiple vendors, than that is an option. If not, it’s advisable that you choose accordingly. Unfortunately there is no one-size-fits-all solution for plan management to date.
Mr. Kelly is an expert in online marketing, search engine optimization, content development and content distribution. He has consulted some of the top brokerages, media companies and financial exchanges on online marketing and content management including: The New York Board of Trade, Chicago Board Options Exchange, International Business Times, Briefing.com, Bloomberg and Bridge Information Systems and 401kTV.
He continues to be a regular market analyst and writer for ForexTV.com. He holds a Series 3 and Series 34 CFTC registration and formerly was a Commodities Trading Advisor (CTA). Tim is also an expert and specialist in Ichimoku technical analysis. He was also a licensed Property & Casualty; Life, Accident & Health Insurance Producer in New York State.
In addition to writing about the financial markets, Mr. Kelly writes extensively about online marketing and content marketing.
Mr. Kelly attended Boston College where he studied English Literature and Economics, and also attended the University of Siena, Italy where he studied studio art.
Mr. Kelly has been a decades-long community volunteer in his hometown of Long Island where he established the community assistance foundation, Kelly's Heroes. He has also been a coach of Youth Lacrosse for over 10 years. Prior to volunteering in youth sports, Mr. Kelly was involved in the Inner City Scholarship program administered by the Archdiocese of New York.
Before creating ForexTV, Mr, Kelly was Sr. VP Global Marketing for Bridge Information Systems, the world’s second largest financial market data vendor. Prior to Bridge, Mr. Kelly was a team leader of Media at Bloomberg Financial Markets, where he created Bloomberg Personal Magazine with an initial circulation of over 7 million copies monthly.