How will you work with my financial advisor?

A 401(k) plan may have three providers: a record-keeper, a financial advisor, and a 401(k) TPA. Generally, each of these providers is independent, and it is usually possible to replace one of the three while keeping the other two. These unbundled arrangements work best when the record-keeper, financial advisor, and the TPA communicate regularly and work well together.

Some 401(k) TPAs work independently of the financial advisor. The financial advisor generally hears about any issues or problems from the plan sponsor instead of the TPA. In an extreme example, the plan sponsor may have to referee disagreements between the TPA and the financial advisor. Why would this happen?

• The TPA defines his or her role extremely narrowly as completing certain tasks instead of a client’s overall satisfaction with the 401(k) plan.
• The TPA does not respect the value that the financial advisor brings to the table or the financial advisor’s relationship with the plan sponsor.
• The TPA is a producing TPA and is not equipped to deal with financial advisors, because it is not a key part of his or her business model.

Other 401(k) TPAs routinely collaborate with financial advisors for the benefit of the plan sponsor. These TPAs respect the value of the financial advisor and keep the financial advisor in the loop by including the financial advisor on emails sent to the client and doing joint meetings and phone calls as appropriate. In some cases, the TPA and financial advisor will proactively collaborate to solve problems and bring proposals to the clients. Of course, for a really great relationship it takes more than the TPA – the financial advisor has to see the value that the 401(k) TPA can bring to the 401(k) plan and be willing to work with TPA in a constructive way.

Nova 401(k) Associates is committed to working with financial advisors so that we can jointly provide the best service to our mutual clients. Our client management system automatically copies financial advisors on emails sent to their clients. We provide financial advisors a web portal to view client records. Our account managers are trained to proactively involve financial advisors when issues arise.