Payroll providers TPAs and the King of Beers

I’m a beer snob and I’m proud of it. I like the taste of beer and I’m not going to waste my time, money, and calories on a mass-produced inferior product like Budweiser, Bud Light, Coors, and Miller. I would rather drink water than their beer-flavored water. Bud Light and Budweiser are produced for the masses, Sam Adams and the other microbreweries are produced for people with taste for beer.

I’m also a TPA (third party administrator) snob. I believe that plan sponsors have better outcomes when they hire better TPAs. They have less administrative issues and plan designs that are more efficient.

For the past 4 years, I have been highly critical of payroll providers that serve as TPAs. Annually, I have written an article that has been circulated by the good TPAs and financial advisors around the country.  Other than being threatened with litigation by one payroll provider TPA (which they never pursued after threatening me to change the article, which I didn’t), I have not been contacted by representatives by a [payroll provider TPA. While part of me thinks that it maybe best to ignore someone like me, the plan provider in me who wants to get better thinks it’s a good idea to engage your critics.

So a representative of a payroll provider did contact me. He might be a lower level representative, but I give him credit for making the attempt. He suggested that he would have a higher up contact me to go over the issues that I have with payroll provider TPAs in general. Despite my criticism of them in the past, I have enough of an open mind to know that I can be wrong about payroll provider TPAs. Once again, it was proven to me that my opinion is still reasonable.

The representative made the typical payroll provider TPA mistake to justify why my opinion was wrong. He claimed they are one of the largest TPAs out there. The mistake is trying to equate popularity/size (number of plans they serve as TPA) with competence. That’s like trying to equate Bud Light (the most popular beer in the United States) with taste.  We know that many times, the more popular product in the marketplace is not necessarily better (PCs vs. Apple Macs, VHS vs. Betamax). The fact that plan sponsors think that it’s a good idea to have their plans administered by their payroll provider doesn’t mean in reality that it is.

So a higher up contacts me with this payroll provider who is involved with the administrative side of the ball. While this payroll provider stated that they did new comparability/cross tested allocation, they do not do any work in the form of aggregated testing with a defined benefit plan (which is inconsistent what some of their salespeople have claimed when a TPA client of mine was trying to recruit one of their clients). In addition, when I told him of some of the glaring mistakes they have made and how fixing their plans through self-correction or voluntary compliance is a boon to my legal practice, there was no answer. I was just very underwhelmed that he had no explanation for these issues.

Again, I have an open mind and my views are not set in stone. However, the payroll provider TPA have gone out of their way not to prove my opinions are wrong. Until then, I’ll continue to mount my criticism.

This entry was posted in 401(k) Plans, Retirement Plans. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *