The German chemical company, BASF, once advertised its value as the ability to improve upon the products created by others.

“At BASF, we don’t make the cooler, we make it cooler. We don’t make the jeans, we make them bluer,” one of the company’s TV commercials famously stated. “At BASF, we don’t make a lot of the products you buy. We make a lot of the products you buy better.”

The retirement plans marketplace has its own BASF that improves upon the work of others: Third Party Administrators or TPAs. Increasingly, financial advisors are partnering with local TPA firms to help sell, design, administer and support defined contribution retirement plans as well as defined benefit plans. Some say it’s a marriage made in heaven.

Together, financial advisors and TPAs typically deliver a more comprehensive package of services to retirement plan sponsors. These services are becoming increasingly essential in an environment where the designs for retirement plans and the regulations that govern them are becoming ever more complex.

Advisors typically hold up their end of the bargain by delivering services as objectively evaluating plan needs, providing information about investment choices, helping educate plan participants, assisting with plan design and helping select the plan provider.

So just how does a TPA make a retirement plan better? TPAs can help guide plan sponsors on regulatory and administrative issues and consult on retirement plan designs, services and features. In evaluating a TPA, ask about their business model and the various services they provide not only to the plan, but to you as advisor.

Common plan administrative duties that any TPA should be able to perform include: designing and amending plan documents, providing plan audit support, monitoring IRS nondiscrimination testing and contribution limits, preparing Form 5500, allocating employer contributions and forfeitures, calculating participant vesting percentages, and preparing loan paperwork.

In addition to administrative duties, ask how the TPA can help assess the needs of the business owner to minimize plan expenses and maximize successful retirement outcomes. TPAs are a valued expert in your corner to help a client through the transition process. TPAs are local experts who can help maximize your time and ensure that all parties are performing according to contractual and client needs. 

Once a TPA firm is selected, it pays to build a relationship over time. Like many good marriages, the relationship starts with getting to know each other better and learning more about common interests. In the advisor-TPA marriage, those interests revolve around the clients and the relationship often starts with assistance from a TPA in analyzing the plan sponsor’s needs.

One of the most important aspects of a successful retirement plan is its design, which can be created to achieve any number of goals. The right retirement plan design can help employees prepare to retire on time, help the business owner save more, increase tax benefits to the business, reward key employees, give a boost to older employees or achieve a combination of goals.

Understanding what options are available and how they work can be complex and, admittedly, more than a little esoteric. That’s where an assist from a TPA is especially valuable.

A TPA can help advisors and plan sponsors view how a specific retirement plan design will work, provide options and a cost-value analysis, and provide a hypothetical projection on performance. The insights and analysis can help advisors and their clients make the right choice based on goals, budget and regulatory requirements.

For instance, if the owner of a small business is deferring $18,000 (the maximum) to a salary deferral 401(k) plan but wants to significantly boost her retirement savings, a TPA might recommend adding a cross-tested design. This design may allow the client’s business to enhance contributions on her behalf, minimize contributions for non-owner employees and allow for the maximum total contribution of $54,000 for her. In addition, if the business owner is age 50 or older, she can also contribute an additional $6,000, bringing the total amount of contributions by the owner and the business to $60,000. If the small business is a partnership, the inclusion of a cash balance plan may enable contributions of up to $59,000 for select partners and officers.

But what happens after the plan is in place? Many small, and even medium-sized, employers lack a dedicated, in-house specialist to administer retirement plans. Working with a local TPA fills the need to have a retirement expert on hand, adding value to your client relationship.

Then there is the ever-changing regulatory environment. As we’ve seen in the past year, government rules and regulations often shift like the sand on a wind-swept beach. What is an advisor to do when those sands create a new dune to climb or maneuver around?

An effective TPA can help an advisor stay up to speed on regulatory changes. More important, a TPA can help advisors understand the implications of new rules and regulations and, in turn, what they mean to sponsors and participants.

That’s critical as 84 percent of sponsors say they value advisors who are proactive, MassMutual’s Winning Combination study shows. The study also indicated that one area where employers thought advisors could improve is offering information on new developments in retirement plans.

What the research ultimately tells us is that it’s far better if an advisor informs a client about a new regulation and what it means than if the client has to reach out to the advisor about something that has just been introduced.  Few sponsors—especially small businesses—have the time or resources to keep up with the latest regulatory or legislative developments. Serving as their eyes, ears and interpreter is a great way for advisors to solidify their value and the best TPAs can help.

Advisors who are newer to the retirement plans marketplace can also learn more about marketing from TPAs, who often partner for prospecting and finals presentations. Working with a local TPA naturally extends an advisor’s contact network for referrals and presents opportunities to jointly market services and host local seminars.

More advisors are relying on support from TPAs, especially in the small-business market. While a TPA firm won’t make or build a retirement plan, partnering with a TPA firm can help make your retirement plan service and support better.

E. Thomas Foster Jr. is national practice leader for retirement plans and Lynn Roy is head of third party administrator relationships for Massachusetts Mutual Life Insurance Co. (MassMutual).