Third-party administrators (TPAs) are the most important plan provider that a 401(k) plan has and the biggest problem is those plan sponsors and many of their advisors don’t know that. That’s a huge problem because it can only hurt a TPA that is good at what they do.
A good TPA goes a long way in minimizing financial risks to a 401(k) plan sponsor, as well as maximizing employer contributions/tax deductions. TPAs need to do a better job in marketing themselves, as well as expressing why they shouldn’t be replaced for 5 dollars less. TPAs are not a convenience store that all sell the same products or a McDonalds where the fries and burgers taste all alike. A good TPA is all about putting plan sponsors out of harm’s way at a cost-effective price. That’s it and TPAs need to a better job of expressing that.