- Benefits Administration
A Look at Third-Party Administrators: Plansponsor Reveals Survey ResultsBlog Post
Highlights from Plansponsor survey of 128 third-party administrators who play a crucial role in handling the day-to-day details of retirement plans.
Third-party administrators (TPA) play a crucial role in handling the day-to-day details of retirement plans. Important tasks include managing plan documents and statements, allocating plan contributions and checking for compliance with IRS requirements. According to Plansponsor, “Some say that third-party administrator services can surpass what most record keepers offer to aid with plan design — and that this is broadening the TPA’s use in the retirement industry. [Our] survey provides a detailed snapshot of each TPA respondent, revealing, by its numbers, how it compares with peers in the overall market landscape.”
Plansponsor surveyed everyone from the small to large national firms — 128 participants responded, and they’re located in all but seven states across the U.S.
Here are more highlights from the survey:
- TPAs tend to work with approximately six to 10 partners.
- Nearly 90 percent offer distribution assistance upon a participant’s separation from the employer.
- Only about 12 percent of firms offer financial counseling.
- Close to 40 percent of participants serve a local or specific region, while 61 percent work nationally.
- The number of firms that served employer-sponsored plans established in a specific year: two in 2016, compared to 10 in 1994.
- Employer-sponsored plans are still a big chunk of business — 61 percent of firms represent more than 500 of them. Nearly 40 percent of firms represent less than that and 45 percent of those are worth $1 billion or more.
- Approximately 75 percent of participating firms are non-producing. “Nonproducing TPAs sell no investment products, focus only on compliance issues and perform none of the functions that a financial advisor would usually perform,” according to Plansponsor.
- Over 70 percent of those surveyed always use a partner provider’s defined contribution recordkeeping platforms, while 16 percent always use a proprietary platform and 11 percent switch between the two.
- Nearly 85 percent charge a fixed fee, depending on the services their clients choose. Similarly, 41 percent of all participant’s charge basis points on assets.
- Approximately 90 percent offer allocation of employer contributions and forfeitures for financial advisors or retirement plan sponsors, the most universal service Plansponsor found. The least: 19 percent offer investment selection services and 18 percent offer target-date evaluation tools.
- Employee Management
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