I\u2019ve been practicing ERISA law for a long time, and one thing that continues to amaze me is when a plan sponsor discovers a mistake that the plan provider should have caught.<\/p>\n
The plan sponsor shouldn\u2019t be your quality-control department.<\/p>\n
Whether you\u2019re a TPA, recordkeeper, payroll provider, adviser, or another service provider, the client is paying you because this is what you do for a living. They shouldn\u2019t have to discover that an employee entered the plan late, that a contribution was calculated incorrectly, or that information didn\u2019t properly transfer between payroll and the recordkeeper.<\/p>\n
Mistakes happen. I make mistakes. Everyone does. The issue isn\u2019t whether a provider will ever make a mistake. The issue is whether the provider has procedures designed to catch mistakes before the client does.<\/p>\n
Too many providers rely on the plan sponsor to review reports without understanding that most sponsors don\u2019t know what they\u2019re supposed to be looking for. That\u2019s why they hired you.<\/p>\n
Quality control costs money. It requires experienced employees, proper procedures, checks and balances, and sometimes another set of eyes. That\u2019s not wasted overhead. It\u2019s part of providing the service you\u2019re being paid to provide.<\/p>\n
I\u2019ve seen providers lose clients over errors that weren\u2019t necessarily catastrophic. The real problem was that the client discovered the mistake first. Once that happens, the sponsor starts wondering what other mistakes haven\u2019t been discovered.<\/p>\n
That\u2019s when confidence disappears.<\/p>\n
Plan providers sell expertise. They sell service. Most importantly, they sell the comfort that someone knowledgeable is watching the plan.<\/p>\n
If your client has to constantly check your work to make sure you\u2019re doing your job correctly, you\u2019re no longer providing that comfort.<\/p>\n
You\u2019re giving them another job.<\/p>\n
And eventually, they may find another provider.<\/p>\n
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