What is the Value of a Collaborative Advisory Team?


advisory team

Early in the development of our TPA practice, I felt it was important that we build a team to serve our clients.  That team approach still exists today, and has proved to be very beneficial not only in serving our clients well, but also in promoting collaboration among the team members themselves.

That same team approach is essential among the advisors selected by employers sponsoring a retirement plan.  A typical team will consist of the financial advisor, the employer’s accountant, an administrative committee, firm administrator, or other relevant individual(s) within the employer’s organization.  It may even include the ERISA attorney and the plan’s trustee(s).

Teamwork and collaboration among these individuals has many benefits to the employer and plan participants.

The accountants tend to have the most up-to-date information on changes that are happening within the organization in terms of growth or financial challenges, as well as upcoming changes in ownership or in the tax structure (i.e. an S-Corp conversion, etc.)  These changes can have a material impact on retirement planning, sometimes warranting a plan amendment.

The financial advisors tend to have the most direct contact with the plan participants.  As the ultimate beneficiaries of the plan their opinions and capabilities are a very important component in the design of the plan provisions and most significantly, the plans designated investment arrangement (i.e. participant directed investments vs. trustee directed, etc.).

The ERISA attorney (or document provider) is at the forefront of memorializing the collaborative decisions made among the team, as well as keeping the plan documentation in compliance.  Plan’s that include an ADP or ACP safe harbor provision are precluded from amending most provisions within the safe harbor plan year, so advance planning is required.  The ERISA attorney is an essential component in situations involving more complex entity structures involving common ownership or affiliation, as well as investment arrangements permitting non-traditional investments.

Finally, the TPA is measuring, testing and determining optimum contribution allocations, usually carrying out the wishes set forth by the other team members, and ensuring that the terms of the plan document are followed.  Additionally, a good TPA will look forward to the following plan year, alerting others to potential testing constraints or redesign opportunities.

The TPAs role, then, requires collaboration and communication with each of these other team members.  The last thing we would want to see is a well laid plan set forth by an accountant, only to learn from the TPA that it’s too late to invoke some of the changes, or that the testing doesn’t permit the desired contribution that had been used in the annual tax planning stage.

Circular 230 brought about specific consent requirements for the sharing of certain information by the TPA with others, including the advisory team.  As a best practice, permit your TPA to share information with these valuable team members.  At a minimum the accountant should be copied on communications surrounding the annual contribution allocation determinations and the related funding status.  Ensuring the company’s payable to the plan ties with the plan’s receivable from the company, which will require coordination between the CPA and TPA.

Every company is unique, and in order to best meet your specific needs, your plan will be unique as well.  Is your advisory team collaborating with you and with each other?  Let them know the value you place on this, and hold them accountable for doing so.

TJ Orr

T.J. Orr is a principal with Pinnacle Plan Design, LLC

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