There is always someone willing to do it cheaper.<\/p>\n
That\u2019s why I\u2019ve never understood retirement plan providers who build their entire business around being the lowest-priced option.<\/p>\n
Price matters. I\u2019m a flat-fee ERISA attorney, so I\u2019m certainly not suggesting that providers should charge whatever they want. Clients deserve fair and transparent pricing.<\/p>\n
But there is a difference between being competitively priced and being cheap.<\/p>\n
Retirement plan administration requires knowledgeable employees, good technology, continuing education, insurance, cybersecurity, compliance resources, and enough staffing to actually service clients.<\/p>\n
All of that costs money.<\/p>\n
When a TPA continually underprices its services, something eventually has to give.<\/p>\n
Maybe employees are handling too many plans. Maybe experienced administrators are replaced with cheaper, inexperienced staff. Maybe emails take longer to answer. Maybe compliance work gets rushed. Maybe the owners simply discover that they\u2019re working twice as hard for half the profit.<\/p>\n
None of those are great outcomes.<\/p>\n
I\u2019ve also seen providers afraid to raise fees on longtime clients. A plan may have been priced appropriately ten years ago, but the workload, regulatory environment, staffing costs, and complexity of the business have changed dramatically since then.<\/p>\n
You can\u2019t run a 2026 business on 2016 pricing forever.<\/p>\n
Being the cheapest provider can certainly win business. The problem is keeping that business while providing the level of service you promised.<\/p>\n
There will always be prospects whose primary concern is price. If someone wants to leave you because another provider is $500 cheaper, they probably weren\u2019t very loyal to begin with.<\/p>\n
Compete on service. Compete on expertise. Compete on responsiveness. Compete on making the plan sponsor\u2019s life easier.<\/p>\n
Fair pricing matters.<\/p>\n
Being the cheapest isn\u2019t a competitive advantage if you can\u2019t afford to provide the service you\u2019re selling.<\/p>\n
<\/span><\/p>","protected":false},"excerpt":{"rendered":" There is always someone willing to do it cheaper. That\u2019s why I\u2019ve never understood retirement plan providers who build their entire business around being the lowest-priced option. Price matters. I\u2019m a flat-fee ERISA attorney, so I\u2019m certainly not suggesting that … Continue reading