Institutional retirement services firms that partner with local and regional TPA firms have long used preferred provider programs to attract and build loyalty among the most attractive TPAs. Do TPAs care? Which program components do TPAs value most—and least?
New Brightwork research shows that TPAs in fact do care: two-thirds of TPAs feel that an effective preferred provider program from their institutional partners is important. But they attach vastly different weights to different components of these programs. The winners are “having an assigned account manager” and “offering enhanced business referrals.”
Preferred Provider Program Components
Base: work on TPA interface model and feel an effective preferred provider program is at least somewhat important (66%)
How important is it to you that a preferred provider program includes ...?
By contrast, invitations to regional conferences and a seat on the provider partner’s advisory board are much less important.
Compared to just three years ago business referrals are an increasingly valuable component of a preferred provider program. But receiving higher compensation under a provider’s revenue sharing formula for achieving higher volumes of business with that provider is declining in importance. Higher standards of fee transparency appear to be taking their toll on what for some providers is an expensive component of their preferred TPA partner program.
Preferred Provider Program Components Trend
Base: work on TPA interface model and feel an effective preferred provider program is at least somewhat important (66%)
How important is it to you that a preferred provider program includes ...?
About the Research
These findings are based on telephone interviews with a representative crosssection of 250 owners or senior executives of TPA firms which administer 401(k) plans. Completed in September, 2012, this is Brightwork’s fourth TPA study since 2004.
About Brightwork Partners, LLC
Delivering both multi-client and custom studies, Brightwork is a research-based consulting firm with a special focus on investment, product and distribution issues in the retirement services industry; www.brightworkpartners.com.
For more information: Merl W. Baker or Ronald L. Bush, 203.487.2000; mbaker@brightworkpartners.com, rbush@brightworkpartners.com