Starting a TPA Firm from Scratch. Need Help!

[Plan4Retirement]

I have the opportunity to start my own TPA firm and I really need some help.

I have been a pension admin for some time now and have a firm grasp of the administration side. I have been offered an opportunity to join a CPA firm and partner with them to start a TPA firm. I have done the grind and put together all the paperwork for new clients, takeover plans, safe harbor notices, etc... I have ASC coming and installing their programs and I will accompany that with Pension Pro software. So I have almost everything lined up to move forward. My question is:

#1 - Do I have to have certain credentials to be able to start my own TPA firm?

I have one more test to get my APA designation, but is there something that would stop me from being able to open my own firm?

#2 - Besides all the proper paperwork and setting up the software, is there something i could be missing that would be a road block or set back?

#3 - What advice can you give me that would help me avoid pitfalls or help me not miss something while setting up the new firm.

#4 - Would someone be willing to have a conference call with me and go over the steps they went through to start their own firm?

In a nut shell, I just need some guidance so I don't have a surprise pop up that would not allow me to open the new firm. I would really appreciate all the help i can get to start off on the right foot.

Thanks!!

[MoJo]

1) No. But, from a marketing perspective, credentials are better than no credentials.

2) Clients. You can have state of the art everything, but without clients, it's all for naught. Step one should have been to define your market and develop a marketing plan to get clients, then build the infrastructure to adequately (and efficiently) service them.

3) Don't be afraid to say "no" to clients that are going to be time sucks and not pay for the value of the services your provide.

4) n/a (to me - I let others do the hard work...)

[shERPA]

I strongly recommend you attend the NIPA BMC conference in January in Scottsdale AZ. It focuses on the business side of running our firms.

I'll reiterate MoJo's advice - nothing happens unless you can get clients. Presumably partnering with the CPA firm will be part of your marketing strategy, but selling is key. And it is a relationship business. You need to nurture relationships with advisors, CPAs, attorneys and recordkeepers. People like to do business with people they know. Don't underestimate the time and effort involved in this. Those who are good at it make it look easy, but it's not.

Good luck.

[K2retire]

I strongly recommend you attend the NIPA BMC conference in January in Scottsdale AZ. It focuses on the business side of running our firms.

I'll reiterate MoJo's advice - nothing happens unless you can get clients. Presumably partnering with the CPA firm will be part of your marketing strategy, but selling is key. And it is a relationship business. You need to nurture relationships with advisors, CPAs, attorneys and recordkeepers. People like to do business with people they know. Don't underestimate the time and effort involved in this. Those who are good at it make it look easy, but it's not.

Good luck.

And keep in mind that the type of personality it takes to sell your services is very different than the type of personality it takes to do the detailed work. Very few people can handle both well!

[david rigby]

Please see private message sent to Plan4Retirement.

[Doghouse]

Don't forget that E&O insurance!

[dan.jock]

I just started also in 2016 and this is all good advice so thx. I agree that without clients, it's hard to pay bills. My advice is to market your product with other CPA's and investment advisors who have at least some clue to what we do. Selling cold to a client directly or a wealth-management advisor who doesn't really do retirement plans is nearly impossible. I don't charge for proposals, takeovers, and I don't say no to anyone yet. I feel that is a luxury that is enjoyed when there is otherwise steady revenue.

Cheers and enjoy!

[ETA Consulting LLC]

I feel that is a luxury that is enjoyed when there is otherwise steady revenue.

Man, you read my mind. There is a big difference in high touch personal service and routine run-of-the-mill operations of large corporations. Just an observation. To my clients, their stress is my problem; regardless of who failed to do what. Welcome to entrepreneurship; you eat what you kill

Let me clarify.... This is not being crass, but merely pointing out that many clients love being in contact with someone who actually knows what they're doing and not giving them a lot of run around. We have many 'heavy-hitters' here who I'm sure provide the highest level of expertise and service. It's a combined passion of what you do and providing reliable services for a fee. It's a different game from the 9 to 5 when you're starting your own practice.

Good Luck

[MoJo]

I feel that is a luxury that is enjoyed when there is otherwise steady revenue.

Man, you read my mind. There is a big difference in high touch personal service and routine run-of-the-mill operations of large corporations. Just an observation. To my clients, their stress is my problem; regardless of who failed to do what. Welcome to entrepreneurship; you eat what you kill

Let me clarify.... This is not being crass, but merely pointing out that many clients love being in contact with someone who actually knows what they're doing and not giving them a lot of run around. We have many 'heavy-hitters' here who I'm sure provide the highest level of expertise and service. It's a combined passion of what you do and providing reliable services for a fee. It's a different game from the 9 to 5 when you're starting your own practice.

Good Luck

Yes, but. Being a high touch and responsible service provider is one thing. Taking on business you have no business taking on is another. Most businesses fail because, well, at least in part because they don't say no to business that 1) they can't serve (because of expertise, capacity, and the like); 2) the client WILL NEVER BE SATISFIED no matter how much you do for them; and 3) client's that "retaliate" by being slow pays or no pays when they just don't like what you are telling them.

A lot of that is hard to tell up front - BUT, having a plan to avoid them is better than not having a plan.

[ETA Consulting LLC]

I see your point, but I wouldn't say that this is why MOST businesses fail. As for client satisfaction, I don't believe that is the standard we should be striving to achieve. I, personally, believe that when clients' expectations are properly managed, then satisfaction is the result. So, satisfaction is not the control mechanism.

When it comes to managing clients' expectation, this is where the skill and expertise come into play. Clients will always grow to appreciate someone who is consistent in performing timely and accurate work that ultimately alleviates stress. On the contrary, clients will reject situations where billing is the only thing done in a timely fashion.

Again, I see your point. I just believe that in the service industry (which this is), if the relationship is not a win-win, then it is incumbent on the service provider to ascertain why that is and make the appropriate decision. This may result in the service provider (who actually has the luxury ), to decline to accept a case. At the same time, there may be hundreds of service providers standing in line and will do well. There's an old saying 'One man's trash is another man's treasure'. Your success, as with anything, will ultimately depend on making a decent living doing work that you enjoy. That's going to require clients (for the business owner), but also the 'wins' that are achieved and verified when clients give you positive feedback.

Ultimately, we agree. I'm sure we've seen in all. I just don't believe the game is lost merely because you missed a few baskets.

Good Luck!

[MoJo]

I see your point, but I wouldn't say that this is why MOST businesses fail. As for client satisfaction, I don't believe that is the standard we should be striving to achieve. I, personally, believe that when clients' expectations are properly managed, then satisfaction is the result. So, satisfaction is not the control mechanism.

When it comes to managing clients' expectation, this is where the skill and expertise come into play. Clients will always grow to appreciate someone who is consistent in performing timely and accurate work that ultimately alleviates stress. On the contrary, clients will reject situations where billing is the only thing done in a timely fashion.

Again, I see your point. I just believe that in the service industry (which this is), if the relationship is not a win-win, then it is incumbent on the service provider to ascertain why that is and make the appropriate decision. This may result in the service provider (who actually has the luxury ), to decline to accept a case. At the same time, there may be hundreds of service providers standing in line and will do well. There's an old saying 'One man's trash is another man's treasure'. Your success, as with anything, will ultimately depend on making a decent living doing work that you enjoy. That's going to require clients (for the business owner), but also the 'wins' that are achieved and verified when clients give you positive feedback.

Ultimately, we agree. I'm sure we've seen in all. I just don't believe the game is lost merely because you missed a few baskets.

Good Luck!

Ultimately, I do think we are on the same page. The problem is, in the interest of "sales" small businesses (and even large ones) fail to understand that it is "profit" that determines lifestyle - not revenue. A client may bring a lot of revenue to to a service provider, but if it takes 10X times the effort to obtain 2X the revenue, you are losing "bigly."

Setting expectations is key. I have been harping on giving clients "what they need" and not "what they want." You are successful if you get clients to "want" what you are telling them they "need." Then you have developed a true working relationship and have become the proverbial "trusted adviser" to them.

[ETA Consulting LLC]

"bigly."

I will never accept that as a word!!!

We do agree! Never want to tail to wag the dog. We well planned service delivery will yield profits. When you fail to manage effective and efficient processes, you end up spending hours to correct something that would've only taken minutes to do. So, you're right. I agree with everything you said; except for the group of letters 'bigly' which I refuse to accept as a word

[Tom Poje]

unless of course you are playing scrabble and need it to help your cause!

.......................
yes, “bigly” is in fact a real word, according to the Oxford English Dictionary at least. The dictionary classifies the word as an adverb, meaning “with great force” or “loudly, boastfully

[Belgarath]

Great, Tom - so now it'll be, "Every Who down in Whoville, the bigly and the small..."

I know, I know, that isn't the meaning you presented. But since you are Grinchifying this board...

[GMK]

according to the Oxford English Dictionary

If we're citing this shoe style reference book, maybe we should first check if this is a marketing word, and not a real word, coined to assuage the self-conscious concerns of persons at whom the size 13E's and larger are targeted.

I tried to find "bigly" in Webster's, but all it said was, "Wha'choo talkin' 'bout, Tom?"

[Tom Poje]

Bah. have you forgotten how bigly my heart grew one day? (Thankfully it shrunk back to its normal size and I could get back to being the Grinch.

Narrator: And what happened, then? Well, in Whoville they say-that the Grinch's small heart grew three sizes that day.

[MoJo]

I even agree we should refuse to accept that as a word. It just seemed appropriate in the context of my comment....

[QDROphile]

Someone suggested that the term is a mistaken hearing of "big league" which can be used as an adjective. Mind you, I am not trying to be an apologist or a language reparer.

[ETA Consulting LLC]

I'm at a bar drinking right now. And people must think I'm crazy because I'm laughing at my phone reading this board :-)

I stand corrected; bigly is actually a word :-)

[Tom Poje]

without researching, I assume probably more of a word for British usage.

sort of like 'homely', which has an entirely different meaning here than it does there.

best example I can think of is from Lord of the Rings (the book, no idea if it is used in the movie), the house of Elron is known as the last homely house, and that is meant to be a admirable quality. I recall listening to the radio one time - someone from Britain and he said he was visiting here, and his friends wife had served a marvelous dinner and he made the comment "Your wife is quite homely", which was, of course , misunderstood, based on the looks he said he received.

[MoJo]

"Your wife is quite homely", which was, of course , misunderstood, based on the looks he said he received.

Which would be a classic example of a "Bigly" cultural error if there ever was one.....

[chuTzPA]

I just started also in 2016 and this is all good advice so thx. I agree that without clients, it's hard to pay bills. My advice is to market your product with other CPA's and investment advisors who have at least some clue to what we do. Selling cold to a client directly or a wealth-management advisor who doesn't really do retirement plans is nearly impossible. I don't charge for proposals, takeovers, and I don't say no to anyone yet. I feel that is a luxury that is enjoyed when there is otherwise steady revenue.

Cheers and enjoy!

dan.jock - mazel tov on your new business this year, may 2017 be more profitable...

may I ask the following:

Did you start on your own or did you have ee's to take with you?

Did you see a need for a new TPA in your location, and if so what was the need?

Do you find cpa's and advisors with no relationships, or how do you get them to try out a new relationship?