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I have been the marketing partner in our TPA firm for 25 years. I don't believe "retail" marketing ploys work in a professional service business. And I don't believe discounting fees is the way to start a relationship. Here is what I believe works: knock on doors set appointments to meet advisors offer to assist them in their education of retirement plans offer to assist them in their meetings with potential clients tell them you will not charge to complete proposals promise that you will do your best to not embarrass them in front of their clients commit to offer the best work you can tell them if mistakes are made you will do what is necessary to correct

One can rant and rail against companies that make the client determine the HCEs but my experience has been those clients mostly bring it upon themselves. I have always worked for TPA firms that were full service and tended to pride themselves on being technically very sound. We were almost never the cheapest player in the field. Starting some time in the '90s those kinds of TPAs really started to shrink and leave the field or went out of business it seemed. The reason was simple many of the plain plans that just wanted a simple 401(k) plan wanted it to be cheap also. Along came companies that offered very cheap services. Some did it by only offering a very small set of prototype plans with very limited plan provisions. They got the costs down by being able to train fairly low paid people how to use a simple flow chart. If the client has a plan type A then this is how distributions work. No one worked on a client. Instead you had distribution clerks and contribution clerks.... all of them worked for a fraction of what a person like me would be paid. Another group did this by pretty much subsidizing the TPA work with the assets management fees they were getting on the investments. Anther group did it by making the client do the "hard" work. The client was forced to fill out long questionnaires that basically meant they were determining who was an HCE, who could be excluded from coverage and so forth. There were in fact some that pretty much did all of the above. And they were cheaper then us often times by a good amount. So we lost client after client to these low cost providers. On a regular basis the year after they left we could get panicked calls from the former client saying their ADP test either failed/passed when it had never done that before. They wanted to know had we done it wrong in the past or the new person doing it wrong now. We could justify our work. We even won some testing business back but not very often. I got laid off twice during this time period to TPA firms losing their business to these types of competitors. So in many ways I don't have tons of sympathy for those clients. They got the service they paid for by going cheap. This is part of the reason I now only work on ESOPs. So far no one has figured out how to do the above to this part of the business. The margin are higher then 401(k) TPA work. I so happen to find ESOPs more interesting then 401(k) plans also. I also found I could get a job with as little as sending one resume out when laid off if I knew ESOPs as it is a much rarer skill then 401(k)s. So that is my rambling story but to repeat my main point. My guess is ADP doesn't charge the client much for the service and the client thought they were being smart by saving so much money. Now they are learning they got what they paid for-- sorry if this comes across as a little bitter. I don't think I am but I am tired of seeing people thinking someone could do the work I was doing for 30% less and the quality wouldn't go down.

A few pithy sayings to remember: - Price is what you pay. Value is what you get. - If you really do put a small value upon yourself, rest assured that the world will not raise your price. - Your clients will remember your quality of service long after they have forgotten your price. - Low Price, Prompt Service, High Quality. Pick 2 because you can’t have all three.

The MAIN issue, in my mind, is that the sponsor gets a huge manual that explains how to code employees who meet certain criteria as HCEs. This, effectively, puts the onus on the client to learn IRC Section 414(q) inside out and then code their employees properly. There is, apparently, no due diligence when the client does not. It can be easily argued that when working in the service industry, you must actually provide the service with skill and care. Then, again, we do live in a Marketing era; so more of these things are governed by appearance rather than competence. My favorite quote in business was from W. Edwards Deming, "Don't confuse activity with achievement." This speaks directly to ShERPA's comment. You can produce 1000 pages of reports, but they are worthless (beautiful, but worthless) if they are not accurate. Many of us have studied hard to learn how to accurately test a plan for non-discrimination. In many environments today, the actual knowledge is undermined while the value is placed in the ability to operate a computer. It scares the heck out of me, but then again has compelled me to start my own practice. Sorry for the vent, but this is something that has been eating away at me for at least 15 years now. Good Luck!

And, of course, when you do it correctly you will be the bad guy.