Renee Conner, CEO, PensionPro
If you are a seasoned TPA, this month’s PensionPro will certainly elicit some nostalgia. ABG Retirement Plan Services is a dynamic firm that has been in business for fifty years! Just think about that for a minute. For an industry that typically equates its birth with the passage of ERISA in 1974, ABG, started in 1968, pre-dates that. If you know your retirement industry history, a lot has happened since then and ABG has navigated through it all.
Like any other, the pension industry has gone through business phases or eras. Throughout the 70’s, 80’s and 90’s, as sweeping tax laws turned our carefully designed plans upside down, our focus was mostly about our products; technical plan design and compliance. Expertise was a real commodity for Plan Sponsors who were trying to navigate often very turbulent waters. Though changes to our industry laws occur and will continue to do so, the existence of common, less complicated designs and years of congressional stagnation have slowed the pace of change.
Then we moved to the marketing era. As the 401(k) world exploded ($5.3 trillion and counting), marketing became king. Bells and whistles on investment platforms, providing enrollment assistance, and helping financial advisors win business became the norm. Simpler plan designs like safe harbor plans paved the way for less experienced firms to join the competition. To continue to grow, we learned to be marketers, trying to differentiate ourselves from other TPA’s by providing services not only to plan sponsors but to our referral sources as well. Business wasn’t always won on the basis of who knew the most or who had the most experience, it was won on quality presentation and the ability to convey complicated topics in a simplified way.
Fast forward again, the marketing era gives way to the relationship era. With most of the investment platform offerings becoming undistinguishable, winning the relationships of wholesalers, CPA’s and investment advisors became the goal. Many (most) TPA’s don’t market directly to plan sponsors. Instead, they compete for the relationships of referral sources. While these referral sources expect and respect technical expertise, their goal is the smooth and timely delivery of service. That’s right; they are looking for well-run organizations where their relationships are not at risk. So those that standardized their back offices were continuing to grow.
So, what’s next? Clearly, it is the era of technology. All the phases that came before are still very relevant. We must be technically competent, market to differentiate ourselves and maintain our referral relationships. However, the focus of Plan Sponsors, referral sources and even the DOL is shifting. Issues like data security, system redundancy, and process efficiency have moved to the forefront. In 2016, the ERISA Advisory Council, which advises the Secretary of Labor on matters related to welfare and pension benefit plans, issued a report entitled “Cybersecurity Considerations for Benefit Plans.” In the report, the EAC outlines procedures to protect plan fiduciaries from cyber risks like data retention and destruction and, yes, “Third Party Risk Management.” More and more we are asked to provide our SOC audit, not just to our TPA clients, but to their clients and referral sources. (Click here to see the full report.) For those of you who invest in your firm’s technology, it’s time to go back to the marketing era and brag about it to your clients. It’s a powerful differentiator. For those who have yet to embrace technology, don’t get left behind. The technology era is here to stay.
In every era, ABG Retirement Plan Services has grown and expanded their business. Here’s wishing you a Happy 50th anniversary and many, many more!