One of my least favorite sayings is : “if it ain’t broken, don’t fix it.” I detest it because it suggests complacency of something that is mediocre. It kind of reminds me of when New York City Mayor Ed Koch was running an ill-fated campaign for a fourth term in 1989 and Governor Mario Cuomo said Koch was as comfortable to the voters as an “old jalopy.” It doesn’t sound like such a ringing endorsement.
One favorite saying of mine is: “change for the sake of change.” That means that sometimes people change just for the sake of change, regardless of whether it makes sense or not.
What does it have to do with retirement plans? I guess like Karnik the Magnificent, I’ll open up the envelope and if it ain’t broken, don’t fix it or change for the sake of change are two trains of thought for a financial advisor who gets a new plan sponsor client as it relates to the retention of the plan’s third party administrator (TPA).
Too often, a plan’s new financial advisor just changes the TPA for the sake of change or for the sake of getting them paid easier. Any change of TPA has to be what’s best for the client such as paying a more reasonable fee or replacing an ineffective TPA. However, I’ve seen too many TPA changes that are done just for change’s sake and that gives short shrift to the needs of the plan sponsor, especially when the new TPA is a payroll provider.
Again, I hate the if it ain’t broken, don’t fix it. I’ll spare my dislike to reiterate something that I have said repeatedly since I started my own law practice: good TPAs are hard to come by. If the TPA is doing a good job at a great price, keep them. There have been too many horror stories of plan sponsors changing TPAs to save a few nickels or to get the advisor easier access to their pay.
So if you’re a financial advisor, the retention or replacement of the TPA is what’s best for the client and not you. When you put your needs behind the client’s, you tend to a better job.