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    With over three hundred TPA and actuarial firms on PensionPro, we are fortunate to have the opportunity to work through operational issues with our clients. Surprisingly, it appears business owners and managers today are facing similar operational challenges and business risks that existed when I was a TPA. The main issue remains to deliver high-quality customer service while minimizing human error both on the part of your employees and your Plan Sponsor clients. So, what does all that mean? We know that Plan Sponsors are responsible for reporting their employee census and critical compliance information (like business ownership and family relationships) so that compliance calculations are accurate and timely. But we often see firms that will accept this data in nearly any format, or even not require that Plan Sponsors verify critical information from year to year. How often do TPA staff members alter information after it is submitted? If compliance fails due to incorrect data, how do we separate what is or isn’t our liability? Though we all know that Plan Sponsors are ultimately responsible for keeping their plan in compliance with regulations, how do we draw a clear line about what is and isn’t our business liability? The answer lies in how you collect data.

    Engagement agreements can state what you’d like, but your business liability is established in your standard operating processes. If your methods allow staff to hand-key information or accept incomplete data from clients, not only are you likely increasing your liability beyond any fee you are collecting, but you are putting your employees in an adversarial position with the very clients that they serve. Much of the automation that you see in PensionPro is a result of situations where, as a TPA, we absorbed the cost of human error or experienced a near miss with our staff. I remember a time that I was visiting with a sole proprietor client who was maxing out his DC Plan and listened while he told me about his passion for bowling. “That’s nice,” I thought until I realized he was talking about bowling at places that he OWNED! That’s right, not one, but two bowling alleys complete with full-time employees, etc. You can imagine the panic I felt, hoping that we had adhered to our standard process always to collect a current year employer questionnaire complete with information about outside businesses owned. Thankfully we had, but many TPA’s are lax about data collection for one-man plans or not requiring annual affirmation from the Plan Sponsor about anything besides the census. On another occasion, we had landed a lucrative deal to administer plans for a payroll company. These new clients were told that they would have no responsibility for submitting census as it would be submitted to us electronically. Well, the arrangement was a big success resulting in more than 50 new clients in the first year! The payroll company downloaded the census as expected and we went to work doing compliance and delivering reports. It was going well until a client questioned the salaries we were using. It turned out that the payroll provider only downloaded nine months of pay, not the full year. We hadn’t required confirmation by the Plan Sponsor, so the corrections were on us. Lesson learned!

    So, what are Plan Sponsors responsible for? Where is the line between good customer service and excessive business risk? In my practice, it was clear to me that the incoming data, employee census and employer information were clearly the Plan Sponsor’s responsibility and applying the law to their data was mine. So, how could we require good data from our clients and make the process easy? How could we help them be accurate and submit their data in a secure environment? Well, we automated it.

    In the last quarter of 2003, we programmed an online data collection module that was the precursor to PensionPro’s PlanSponsorLink. My firm operated in a conservative part of the country, and the timing was four years before the first iPhone was released. So what chance did I have that clients would use it? Well, we launched the web collection in early 2004 for the 2003 calendar year end. Nearly 80% of our clients used the web collection the first year. This automation changed the way we did business. Now our clients were happier; their data was secure; the process was easy.

    Additionally, this automation prompted the client to give complete information, so we didn’t have to go back months later to get missing data. Sure, some complained that they couldn’t give us incomplete data (salaries with no hours, employees with no compensation but no termination date, etc.), but we helped them through the process treating it as a great customer service opportunity. The result was data submitted earlier than in the past, and it was received electronically. There was no chance of losing it in an email box, and, even more importantly, the data was in good order. Since the system had the client approve, not only the original submission but any subsequent changes discovered through our scrubbing process, the business liability line was clear. The icing on the cake: an automated upload to our compliance software so that our staff did not manipulate data after approval.

    Fast forward to 2018, and we still hear about TPA’s collecting their data through email (security alert!) and, though some use portals, the process is still very labor intensive with excessive data manipulation after submission. Using technology in your business is not the risky step that it was in 2004 and it goes a long way in minimizing business liability!