Purchasers need to stay in their lane

I’ve written blog posts about the problems that I see when a plan provider I know gets purchased. From experience, any purchase comes along with a lot of change. The problem is most of the time, it’s not good.


Some larger providers purchase another plan provider and it actually may cause a huge headache for the purchaser, that they never anticipated.


For example, a large third-party administrator (TPA) might decide to purchase a registered investment advisory firm. In business, it might make sense for companies to expand their business by adding a separate line that is closely connected with their primary business. It’s why M&M Mars bought Wrigley. The problem that the TPA doesn’t understand is that transaction may get many advisors who brought their business, very wary. The last thing an advisor wants is to bring in business to a provider that might be a competitor. In the history of retirement plans, there have been TPAs that were producing (meaning they had an affiliated advisory company) that stole business from advisors who referred them their clients. When you’re a plan provider, you have to be paranoid because of the competition out there.


Large plan providers, venturing out to acquire a business in related areas of the retirement plan business need to understand the costs of such a purchase, offending a huge base of those that refer them business.

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