PEPs - the new frontier or just a bunch of noise?

Just looking for discussion.

Noise.

Mostly noise.

Copy/Paste of my answer from a similar question earlier today

  19 hours ago, Gilmore said:

Is anyone (TPAs I mean) concerned that after PEPs are up and running it won't matter what we call ourselves, or do you think a small TPA firm will still be relevant?  Just curious.  Keeps me up at night sometimes.

Short answer:  No, Im not concerned.  

The same question was asked when payroll providers started using admin (if you can even call it that) as a loss leader to capture the payroll service

The same question was asked before and after the DOL slammed the door on the fingers of the Open MEP providers

The same question was asked when some bigger national players started gobbling up every mid size service provider they get their hands on

These services will be a good fit to some plans, but nowhere near a majority.  

My clients are with me because of the service I provide, not because I'm $10 cheaper than the other cookie cutter providers.  If a client is only looking at cost, they wouldn't sign with me in the first place.  We are not the most expensive, but we aren't on the low end either.   One of the biggest complaints I hear from people coming from the big national TPAs or payroll providers is that the service aspect just was not there.  It was hard to get a call back, their rep kept changing, they were not flexible enough, "we dont do that" was a common answer, and so on.  That is not how we work.  Most of my clients have my cell phone number, but very few "abuse it".  My clients know that if there is an issue that needs solving it will get solved.  They want and expect a premium service, and for that they need a premium service provider.

If you are a small shop that does mostly very simple admin, that may be different. 

Disagree.  Short-term noise.  Long-term, could become much more common.

13 hours ago, david rigby said:

Disagree.  Short-term noise.  Long-term, could become much more common.

I'm not so sure.  We've explored the possibility of being a PPP, developing a PEP - and looked at it using all possible combinations (outsourcing the 3(16), PPP, etc.) and just don't see the economies in it.  What we are seeing as the demand is mostly from advisors who want to simplify their book of business - but not combine it with others.  In other words, they want a platform where they can scale their services as a 3(38) with a 3(16) somewhere in the mix.  We can do that without a PEP - and have been doing so for some time.  We're enhancing those capabilities (adding the 3(16) piece) and handling the demand that way.  The system (we use Omni) just doesn't allow for combinations very well, and the development of the infrastructure around the rk platform is extensive - destroying the economies.  Besides, if you are an 80 person plan filing the 5500-SF, why would you combine and now have to pay for an annual audit - that probably would be more expensive because of the multiple employers where data will have to be collected and controls evaluated?

There will be a few that "specialize" in this area, but I don't think it will go mainstream....

On 7/28/2020 at 3:16 PM, JustMe said:

Just looking for discussion.

LOUD noise by the same people who think they can just capture all the money and provide mediocre service.  I don't see this as a threat at all.

On 7/28/2020 at 6:29 PM, RatherBeGolfing said:

Most of my clients have my cell phone number, but very few "abuse it". 

? I would never give clients my cell phone. Really?  You need to have boundaries between work and personal life.  I like what the owner of a previous TPA  I worked in told us once, "It's just a job. You're not performing brain surgery."   Believe me, nothing they call you about on your cell phone will matter in 5 years.  

9 hours ago, Riley Britton said:

? I would never give clients my cell phone. Really?  You need to have boundaries between work and personal life.  

It really isn't a problem at all for me.  Most clients like the reassurance that they can reach me after hours if needed, but very few actually use it unless it is truly an emergency.  Keep in mind that I am not saying that other should do this, just that it works for me in my situation. 

It depends on how your business is structured, what your responsibilities are, and the type of clients you have.  I am fortunate enough to be able to say that we pick our clients as much as the clients pick us.  To use a @Larry Starr-ism, we are not a TPA.  We are the retirement plan consulting department of a larger consulting firm.  There are clients who are retirement plan clients only, an there are clients who have multiple engagements with our firm.  Many of these clients want more than a provider to perform a task, they want a trusted adviser to help them with many parts of their business.

I also travel and do more problem solving / "firefighting" and business development than I do day to day admin, so being reachable outside of banking hours comes with the job.

10 hours ago, Riley Britton said:

"It's just a job. You're not performing brain surgery."   Believe me, nothing they call you about on your cell phone will matter in 5 years.  

Maybe its just me, but I have never looked at it this way (doesn't mean it is wrong for others though).  In my opinion, when you treat something as "just a job", that means you are replaceable at a moments notice with someone else to just do the job.   When you have clients who have been with you for 20-30 years, that call 5 years ago could absolutely matter.