Companies considering retaining a broker versus TPA (third party administrator) to manage their employee retirement benefits have an important decision to make. Many HR departments experience uncertainty or confusion when assessing the options; others are reluctant to take action, fearing a wrong decision.
However, making the choice between a broker and TPA is similar to taking action in other areas of HR operations. You start by laying out the details of your business needs and objectives, and then determine which solution is the right fit. The process will give you insight on which is best for your company, at which point you can transition your employee retirement plan forward.
A TPA consults with you to decide upon the best retirement investment vehicles available for your company’s specific needs, while also performing certain administrative tasks in accordance with a contract. The TPA is a registered investment advisor that helps you determine the advantages of different plan details as employer matching, IRA rollovers, employee deferrals and profit sharing. This person or organization isn’t a provider, but is rather a manager of a company’s plan to ensure it aligns with business objectives.
An insurance broker assists businesses with sorting through the vast array of employee retirement plans available, based on budget, size, objectives and other considerations. The broker facilitates the relationship between the company and a retirement plan vendor, but doesn’t actually provide any plan-related services or advisement. The task of selecting the right fit is somewhat challenging for companies to take on themselves, whether because they don’t have the time or aren’t knowledgeable in the field. Therefore, a broker is retained for the job.
If you’re looking for a close relationship with your employee retirement benefits provider, a TPA might be the better option. These organizations typically assign a specialist to your account, and this person serves as the point of contact for your entire company. The agent will have a comprehensive overview of your plan, accounts and other details; HR staff, employees and others have a direct line of communication to discuss questions and have concerns addressed by a credentialed investment advisor.
Companies may opt for an employee retirement plan broker when they’re looking for a person to help them find the right plan to fit their budget and business goals. A broker might be a good fit if you’re quite knowledgeable about retirement plans and benefits options you want, but you don’t have the connections to determine what vendors offer them. Once the broker points you in the right direction, they’re no longer involved with the process. Your relationship is with the provider.
The choice between a TPA and an employee retirement benefits broker isn’t an easy one, but hopefully some of these considerations can help steer you to the right choice. Paypro offers an array of solutions to assist your company with administering a plan that coincides with your objectives, taking the burden off HR’s shoulders. Our specialists assist with daily issues, conduct periodic assessments and serve as an extension of your HR staff.