The Future of Retirement Plan Administration: Why TPAs Will Lead the Technological Revolution

Title: The Future of Retirement Plan Administration: Why TPAs Will Lead the Technological Revolution

If you’ve been in the financial industry for any length of time, you know that change is the only constant. While Bundled Recordkeepers have had their share of success in the retirement plan market, the tide is shifting. In the not-so-distant future, Third Party Administrators (TPAs) are set to become the front-runners in leveraging new technology to provide superior service to clients.

FYI- This article is a forward look into an upcoming topic that will be discussed in detail on this week's episode of Retireholics. Watch the show live at www.retireholics.com/live Thursday August 1st at 4:30pm (PT)

Let me break it down for you my 401k peeps! The change will center around new technology that will be more affordable than ever and more available than ever to the smaller firms like TPAs. Gone are the days where only the large Fortune 500 companies can build and benefit from software and technology.

The Tech Revolution in Retirement Planning

We’re on the brink of a technological revolution in retirement plan administration. From machine learning to blockchain, from data analytics to artificial intelligence, the landscape is evolving at lightning speed. This shit is changing by the week. In this environment, TPAs are uniquely positioned to take advantage of these advancements.

I will use a surfing analogy.....Large Recordkeepers are like big, heavy 10ft longboards—steady and reliable but hard to turn and change direction on a wave. They’re encumbered by complex systems and bureaucratic processes, which makes adopting new technology a cumbersome task.? Forward thinking TPAs, on the other hand, are more like agile like a high performance 5'10 shortboard, ready to slash and carve and turn on a dime. They have the flexibility and nimbleness to pivot quickly and integrate the latest technological advancements.

The Plug-and-Play Advantage

One of the key advantages for TPAs in this technological evolution is the accessibility of third-party apps and software solutions. Unlike Bundled Providers, who often rely on in-house development, TPAs can quickly adopt and integrate these cutting-edge technologies. This "plug-and-play" capability allows TPAs to stay at the forefront of innovation without the need for extensive internal development. By snapping on the latest software solutions, TPAs can offer enhanced services, streamline processes, and provide clients with state-of-the-art retirement planning tools—giving them a significant edge over the slower-moving Bundled Providers.

Basically, what I mean here is that TPAs will not have to build this shit, they simply can shop for it and pick the best of the best of the technology and add to their existing business model.

The Future Landscape of TPAs vs. Bundled Providers

In the future, the competitive edge will go to those who can adapt rapidly and offer personalized solutions. TPAs are poised to be the leaders in this new era because they can incorporate cutting-edge technology into their operations more swiftly than their Bundled counterparts.

1. Automation and Efficiency:

• TPAs are already leveraging automation to streamline administrative tasks, reduce errors, and increase efficiency. As technology continues to evolve, they’ll be the first to implement AI-driven processes that can predict trends, optimize plan designs, and enhance compliance accuracy.
• Bundled Providers will struggle with the same rigidity that has always been their Achilles' heel, leaving them a step behind in adopting these innovations.

2. Personalization Through Technology:

• TPAs can offer more personalized solutions using advanced data analytics. This allows them to tailor retirement plans to the specific needs of individual businesses and their employees, providing an unparalleled level of service.
• Bundled Providers, constrained by a one-size-fits-all approach, will find it challenging to match this level of customization.

3. Security and Trust:

• A compliance only TPA can utilize the security measures and the technology of the large Recordkeeper but with an additional layer of human oversight and review.? Creating a more secure solution for Plan Sponsors.
• Technology at the TPA level can also be a second layer of protection that would not exist in a Bundled offering.

Financial Advisors: The Time to Act is Now

For Financial Advisors, this technological shift is not just an opportunity—it’s a call to action. Advisors who align themselves with forward-thinking TPAs will be better positioned to offer innovative solutions to their clients, ensuring they stay ahead of the curve and their own business models evolve with the times.

Consider this: Your clients are looking for partners who can provide the most advanced, efficient, and secure retirement solutions available. By partnering with TPAs who are on the cutting edge of technology, you not only meet these demands but exceed them.

The Predictive Outcome: TPAs Will Win the Market Share Game

As we look to the future, it’s clear that TPAs will capture more market share from Bundled Providers. Their ability to adapt quickly and leverage new technology will make them the preferred choice for businesses seeking dynamic and responsive retirement plan administration.

The writing is on the wall: those who recognize this trend and act on it will thrive. TPAs will lead the charge in transforming the industry, and Financial Advisors who align themselves with this new wave will be positioned as leaders in innovation and service.

We will continue this conversation in detail on this week's episode of Retireholics where we are joined by two special guests Daniel Hest of Strongpoint Partners and Richard Banziger a TPA expert and industry vet. Tune in on Thursday August 1st at 4:30pm (PT) at www.retireholics.com/live