A few years back, I had this great third party administration (TPA) client. They were my first client that paid me a monthly retainer and at one point, it was $2,000 a month. For some people, that’s not a lot, but for a solo practitioner who has just started out, it was. This TPA had some great ideas for the business, but always had this attention deficit disorder thing going on and would procrastinate so long that things weren’t launched in the marketplace to make money.
At one point, I bailed them out of a mess in restating plan documents. It was $45,000 worth of work and they owed me $20,000. They also owed me for work on their multiple employer plans, since there was always work, I let it slide. When my house was decimated by Hurricane Sandy, the owner of this TPA promised he’d pay what he owed me especially when I needed that money. Eventually, business for him wasn’t good, so my retainer went by the wayside. I would broach the subject of my outstanding invoices and he would blow me off.
One day, another client who actually used this TPA for a multiple employer plan was rather succinct to me and woke me up by telling me the truth: “clients who don’t pay aren’t clients”. It woke me up from coma and I had to hire a collection attorney to get the money owed to me, the TPA has played tricks by claiming that they aren’t the same company anymore and won’t bother responding to the lawsuit.
The point here is that your time as a retirement plan provider is rather limited. They often say that 20% of your clients take up 80% of your time, but make sure they are paying clients because clients who don’t pay you aren’t clients, they’re just leeches looking for free work.