The best third party administration (TPA) salesman I ever knew wasn’t happy with the typical GMC SUVs that he had leased in the past, so he wanted something more. After talking with the head of the company who he was very friendly with, this salesman got talked into purchasing a Porsche and the TPA was obviously going to pay for it as a business expense because of the business miles he put on it.
I thought he was being silly to purchase such a vehicle and it looked too extravagant for a TPA salesman who wasn’t an owner of the TPA. The reason I thought it was too extravagant in the belief that many potential 401(k) plan sponsor clients may think the TPA is charging too much in fees.
If a plan provider takes you a tour of their grandiose offices or somehow takes you to dinner or takes you to a baseball game (beware of accepting gifts that are more than de minimis), just realize that you’re paying that if you’re their client.
That’s not to suggest that plan providers should be working out a closet especially if they’re a large provider of many retirement plans, but it’s always something to consider when you’re paying fees.
