I am wedded to my wife and that’s it. I am a huge fan of Aerosmith, the New York Mets, Howard Stern, Manchester United, Seinfeld, Dallas, and Survivor. I am willing to give everything up except for Howard Stern and my wife (not necessarily in that order).
There are too many plan providers, whether they are third party administration (TPA) firms, financial advisors or ERISA attorneys that are too wedded to a specific platform or provider. I am a big fan of choice and I would recommend avoiding plan providers that limit choice because they are wedded to a specific platform, Fund Company, or other retirement plan provider.
For TPA firms, I would avoid firms that seem to be dedicated to one platform, whether that platform is unbundled or a TPA alliance. There is a TPA I love, but when it comes to daily valued 401(k) platform, they live and die by one daily provider. The provider is a great if you are an advisor, but if you are a broker, this TPA can only work with you if your broker-dealer has agreements with every mutual fund that you put in a client’s fund lineup.
The same goes for a broker or financial advisor that also only wants to work with one specific platform or one specific TPA or fund company. What may be good for the broker or financial advisor may not be good for the client. Working in the TPA world, I remember how advisors would come to us with all their plans, regardless of type or size. That’s a mistake because in a TPA world like any business, they serve a specific segment of the market. A platform and TPA that works for a $100,000 401(k) plan won’t work for a $100 million plan.
The same goes for my brethren of ERISA attorneys, with many parking their clients with one TPA or one specific financial advisor. Unlike the Siths in Revenge of the Sith, I don’t believe in absolutes and I am willing to working with any provider that my clients feels comfortable with. When a client asks for a referral of TPAs and advisor, I always use 2-3 names because one advisor may not be a good fit with a specific retirement plan client. Choice is a good thing and it calms plan sponsors who may think there is some nefarious arrangement between providers.
A plan sponsor doesn’t need unlimited choices in choosing plan providers, but they should never be told that they have to use one specific provider over another. Plan providers owe their allegiance to the client, not to another plan provider or financial product.