Providing a TPA quote when you are already the TPA

[Santo Gold]

Our firm works with many different financial advisors and performs only tpa services (no investment/insurance product sales). We are also approved/recommended tpa's for several larger fund families. Recently, we received an email from one of the mutual fund families requesting that we provide a fee quote on a plan that we already handle the admin for. An outside financial rep got in touch with the client and will be proposing new funds, options, etc, and the fund house contacted us requesting that we provide this rep with a quote.

Can anyone offer their advice on how to proceed? To do nothing would jeopardize our tpa role in the plan, and yet to offer a quote would seem to be going behind the back of the current financial guy who brought us in. Our fee quote would likely be less than what they are currently paying since the new investment structure and platform would reduce the services that we provide.

Any thoughts are greatly appreciated.

[david rigby]

Talk to your client!

[Santo Gold]

We've already done that, and the clients response was:

1. They are happy with us

2. They are suprised we knew about this

3. They are not real "serious" about doing anything right now, but if they like what they hear, they will give the current financial guy an opportunity before making any final decisions.

I informed her that we will make a proposal with the new person.

I was just looking for thoughts on how to handle the situation with the current advisor. He brought us in on this case, as well as several others. I feel like a cheating spouse if I bid on this with someone we do not even really know, which would take the business away from the current advisor. The client did request that we not say anything to the current advisor just yet. I understand that business is business, and maybe we should quote and leave it at that. It just seems that if this progresses to the point where they do look to make the switch, current advisor will eventually learn about our involvement and sour future business with him.

[Erik Read]

The rock or the hardplace.... it's a tough one.

You should review the business that the advisor has referred in, and see if the fees generated over the course of the relationship are worth losing. If not, you may decline to quote with the new guy for fear of losing the referral business over a single client.

On the other hand, maybe the new advisor would bring you more business if he likes the quote and work you do? Also, word of mouth from your client may be detrimental to referrals.

So - the rock or the hardplace.

In my prior life on the "advisors" side, when the client was the advisor, and not the plan, we could NOT suggest nor, refer the plan to any other advisors. The flip side to that was that we lost business because the advisor couldn't keep the client happy.

Good luck.

[WDIK]

3. They are not real "serious" about doing anything right now, but if they like what they hear, they will give the current financial guy an opportunity before making any final decisions.

If they are genuine in their assertion that they will give the current financial guy an opportunity, I would explain your ethical dilemma and encourage them to speak to the financial guy up front. If they are not willing to do so, how can you be sure that they won't (or already aren't) speak(ing) to another TPA to see if they like what they hear?