When it comes to managing retirement funds, the role of Third-Party Administrators (TPAs) and proper retirement plan design is often undervalued by financial advisors. In the same way that the beer industry in the United States experienced a seismic shift 45 years ago, advisors should embrace change to meet evolving demand and avoid the mistakes of yesteryears.
JD Supra equates this to the beer industry’s evolution where mass-marketed, low-quality products ruled the market. Schlitz, a popular American beer brand at the time, lost its popularity due to its decision to cut corners to meet growing demand, tampering with its brewing and fermentation process and adversely affecting the quality.
The lessons for the financial advisors here are twofold. First, recognize the value of quality service provision, epitomised by TPAs and sound retirement plan design. Second, avoid taking shortcuts in the bid to meet growing client demand.
That said, it’s vital to note that the benefits of TPAs are profound. Not only do they provide valuable services such as plan implementation and compliance checks, but they also have the experience and technical capability to handle complex issues that invariably emerge in the course of managing retirement plans. In a nutshell, they possess the expertise needed in delivering consistently high-quality service.
Moreover, a well-designed retirement plan is a crucial asset for both advisors and their clients. A retirement plan designed with a clear understanding of the client’s financial goals and risk tolerance, as well as a thorough knowledge of investment options and regulatory requirements, can significantly help minify risks and maximise returns for the retiree’s investment.
In conclusion, just as Schlitz learned the hard way many years ago, cutting corners to meet demand does not always result in success. Likewise, financial advisors need to ensure they fully commit to leveraging the skills and experience that TPAs bring to the table, as well as invest time and resources in their retirement plan design for sustained client satisfaction.