How many lives should an administrator handle?

[Guest soup]

Is there an industry standard for the number of lives a pension plan analyst/administrator should handle? Or, is there any information on the web regarding work loads for analyst/administrators?

Thanks in advance.

[actuarysmith]

Sorry, couldn't resist the Tina Turner reference....................

I would imagine that the more appropriate measure of workload would be combination of the total number of plans (not participants) and associated revenues generated.

In theory, revenues should approximate the difficulty of the total client block handled. I realize that this is rather simplistic and not always indicitive. However, it should be a useful approximation.

In our firm, our more experienced administrators handle 50-80 plans - which normally equates to around $100,000.

These are just general averages.

P.S. we focus mainly on small to medium sized plans ( 5 - 250 participants).

[Guest James Osterhaus]

I'm very interested in this question. I'm responsible for around 150 plans. Never having worked for another TPA firm, I don't know how this compares to other administrators. (The other administrators in my company have similar case loads).

A little about my case load:

I have 40-60 plans which require me to do the rercord keeping on a quarterly basis. three or four where I do annual record keeping. The rest are dailey valued plans where I just perform the compliance testing. 120-130 are calendar years.

I'm very interested in how this compares to administrators in other companies.

Thank you

James

[Guest soup]

The firm I work for (I'm the Controller) - we have 5 full-time admins and 1 part-time admin. Between the 6 of them, they handle 325 cases total. Their salaries range between $45,000/year - $80,000/year. That does not include our EA or her top assistant. I'm under the impression (as are the bosses) that we are overpaying for the work that is being done, I hope that doesn't sound to rude - but I'm looking at this from a P & L perspective. From other people I've talked to, it seems that admins carry loads of anywhere between 100-180 plans. The admins at our firm are carrying about 60-70 plans each, on average.

[david rigby]

You might look at this link http://benefitslink.com/boards/

scroll down to the "Operating a Pension Consulting Firm" message board, and see if there is related discussion.

[stephen]

I agree with actuary smith's Tina Turner refernce.

"What's lives got to do with it?"

The administrator case load should be based on complexity and time spent which hopefully equates to billings.

The last firm I worked for I had roughly 50 clients (which equated to 90 allocations some semi-annual some quarterly ranging in size from 20-900 participants). The annual billings for these clients was approximately $155,000 - $160,000. During crunch (Mid January through End of May) this caseload equated to 50-60 + hours per week and 40-45 hours per week the rest of the year with no overtime pay.

[Guest UKH]

I agree with Stephen's statement that the case load should be based on complexity and time involved to complete the valuation. At our company we do not differentiate between number of plans. An administrator is rewarded for his technical expertise and ability to handle different types of plans such as new comp, age based etc.. Compensation is hence based on complexity rather than number of plans.

Hence in the administration business it is not the volume that counts but the quality that counts. One could handle 100 plus plans but I would be little concerned whether all the compliance testing is carried out correctly. We all know that no matter how careful we are things do slip out of the crack.

It also depends on each person's ability to handle such a big case load. Some are good at handling big case loads and others can easily burn off and quit. Hence you need to take into account many different issues when considering the case load. It is not a magic number one can pick out of the magician's hat.

[pmacduff]

I think you also need to look at the total client work the administrators are doing. I've worked for small companies where the administrator is doing everything for the client, from census request through the 5500, data entry, loans, distributions, phone contact, etc. Obviously if an administrator is handling the complete cycle for the client, they would have a much lower caseload than if there is more clerical and administrative support in the office and the administrator handles only actual administration & compliance work.

[Guest Bandb]

Regarding soup's reflection that he believes his company may be overpaying administrators:

There's a wide salary range among the 6 people you mentioned. Do you see a measurable difference in work output, quality or complexity from the person making $80,000 compared to the person making $45,000? If not, then you probably are overpaying at the top-end.

Or, would you be satisfied with all your administrators having the same capabilities and experience as the least-paid amongst them? If so, then you probably are overpaying.

[Guest Admin]

Our Firm does not take into effect lives or total plans handled , we calculate revenue per plan and look at salary vs total revenue for that Admin. If Admin "A" is paid $60,000 and the plans they work on brings in $300,000 in revenue it is much better than Admin "B" who is paid $40,000 and brings in revenue of $80,000.

[Jon Chambers]

We run RFPs for larger plans, generally with bundled providers. We ask what caseload the administrator typically handles. The average seems to be 10-12 plans/administrator. This is probably about 25,000 participants and about $1 billion in assets, for rough numbers.

[david rigby]

Implicit in this thread is the possible concept that an administrator should/could be compensated based on the revenues/profits generated. To what degree is this in actual use?

[Erik Read]

I've seen several structures. In a daily environment, with support staff, the average seems to run at about 50 plans maximum per service "team". In a non-daily environment, the complexity of the recordkeeping plays a roll. For instance - say your doing quarterly valuation for 200 lives with FBO accounts - one or two of those would bog down an admin in a heart beat!

On an annual basis - just admin and reporting (no recordkeeping) I used to manage 150 active plans with revenue in excess of $250k - my salary at the time was $29k.... (that's why I'm no longer working for that firm). They have since seen the light, and changed their consultants compensation to a percentage of existing billings and new plans sold.

Another way to determine the work load - have the admin's track their time spent for a month or two, be sure that you have the understanding that the information is for statisticall review, and won't count against the employee. Also - only have them track time in 15 minute increments - the 5 minute call to the wife to discuss what's for dinner - doesn't count!

I think this is a great discussion. I know in my current roll, I perform "Due Diligence" on TPA's along with the completion of RFP's for institutions, and my Q&A section on case load is about a half page long.

[Kristina]

I have to put my 2 cents worth in.

I worked as an Administrator from 1974 to 2000. (Please note, that is a capital A Administrator, just like Controller. Like a professional who performs tasks that require specific training. Oh, wait, when you are a controller, you learned all that in college and it is not necessary to keep pace with government regulations on a daily basis. So then it would be controller)

The idea of an Administrator, in the current legislative environment, being able to handle 180 plans is absurd!!!!!!!! (And, of course, offered by someone who has never done administration! ) For too long this industry has had the notion that you can hire any trained monkey to do administration. Well, look around. Talk to the firms that have had openings for months and have only found a qualified person by the time they needed another person.

It has been churn and burn for too long. It is time that TPA firms begin to realize that the Administrators you hire affect your reputation as well as your bottom line. You can treat them like professionals and reap the benefits of their labor, without taking undue advantage, or you can continue in this mode of giving them more work than they can do and have a life away from the office while paying them less than they are truly worth. I realize that most administrators are women, but we are truly not that stupid as to not be aware that your profits and your vacations and your luxury car are paid for by their efforts. Churn and burn is the way you create competition.

A TPA that truly values their Administrators will have loyal employees. Treat them like they are "the girl" (who can be replaced with any girl) and they won't be there long. Then your greatest fear of training them and then having them leave will be realized.

I did not go into competition with my prior employer. While with them, I handled everything for 116 clients. Everything from putting the stamps on the envelopes to information requests, annual valuations, prospective reviews for new law changes, document amendments, 5500s, 1099s, plan terminations and not to mention the ever popular, I need this proposal in the next 5 minutes. They referred to me as the Pension Division, in fact, I was "the girl" and I was burned out!!!! It is unfortunate, I wanted to stay with them until I retired. Now the idea of meeting a 5500 filing deadline sends chills down my spine and I thank God everyday that I don't have to.

Thanks for letting me vent and I hope it helps someone else, Owner or Administrator.

[MJ Hartman]

I am the TPA owner's worst nightmare. After 20 years with a company doing everything from admin (85 year end vals and 20-30 quarterly vals), to plan document drafting, to sales and working understaffed for 2 years (while getting my CPC through aspa) and finally being the sales contact for the brokers bringing in the business, I left and set up my own tpa shop. I saw what it took to make a profit through working admin. staff to tears, promising to get in more help (which was too little too late).

Every tpa group has their own comfort level for what an admin. can handle comfortably, enjoying what they do and being rewarded for outstanding performance. Profits come easier when staff is working together as a team.

And guess what...part of the business I've gotten in my first year is clients from my previous tpa employer who still hasn't gotten it right as to how to manage caseloads, quality and administrators.

[Bill Berke]

I have been a partner in the same TPA firm for 20 years. Prior to that I ran two small-plan TPA firms (one with 3500 clients, the other had 1000 plans). This question is always difficult because the key is how the firm operates. One rule of thumb, mentioned above, is that you need a person for every $100,000 to $125,000 of gross revenue. However, managment must evaluate the worth of each person and their job responsibilities and how the firm is actually operated. 5 minute proposals are always aggravating, expensive and time wasters. If a firm allows this (who doesn't at some level?) management must incorporate that into the staffing requirements.

We operate radically different than most TPA firms. Clients are not assigned to an administrator, rather they are worked on in the order the info comes in (first in, first out with deadlines a rare exception) and we have a clerical/computer process to control the scheduling of the work. So any one admin may not see a particular plan again for two or three years. Also, admins in our company don't talk to clients (well, hardly ever) because that is the specific responsibliity of us three partners. We also have a clerical staff for clerical functions. Larger census is inputted by the clerks, small plans are input by the admin. Only clerks photocopy and assemble final year end packages. I'm sure there are other material operating differences (we don't sell anything, nor do we get any allowances, nor do we do daily or quarterly 401(k) plans). My point to this is that there is no accurate employee standard because it all depends upon how the firm is operated.

While I used to say that an admin could handle 125 to 150 plans, that is still true only if they are all small plans , no 401(k)s, and few DB plans. I think the gross revenue measure mentioned above is the best estimate /evaluator, but that only measures a total people needed to total gross, not the specific employee breakdown.

[Erik Read]

Still a terrific topic. I may have mislead the group on the 150 cases - the TPA I worked for, had a support staff that included college interns (working for credit) that did the trust balancing, and input. I'm not sure that's still the model, but in a college town, students that need credit for an internship in the financial world, jump at just about any opportunitiy, and a spreadsheet's pretty fool proof.

I agree with the "burnout" ideal. It's very easy to do, and the majority of admins I talk to, have at one point been burned out.

This is probably one of the most stressful industries in the US, and least appreciated as I'm sure we all know.

Keep it rolling, lets see what other TPA structures are out there.