Q&A with FuturePlan’s Aaron McIsaac

In today’s competitive retirement plan landscape, advisors are continually seeking ways to enhance their services, streamline operations, and grow their client base.

Partnering with a third-party administrator (TPA) is one way to gain a strategic advantage, allowing advisors to focus on building relationships and expanding their business while the TPA handles the complexities of plan administration.

In a recent interview with 401(k) Specialist, Aaron McIsaac, CPFA and Head of Sales at national TPA FuturePlan by Ascensus, shared his perspective on how leveraging a TPA can help retirement plan advisors deliver exceptional value to their clients and drive business growth.

401(k) Specialist: Aaron, tell us about your experience in the retirement industry and your road to the position as Head of Sales at the nation’s largest third-party administrator FuturePlan by Ascensus?

Aaron McIsaac: I started my career in healthcare as a Human Resources Generalist, which gave me a lot of exposure to areas in which most plan sponsors deal. This included an introduction to qualified retirement plans as the health system operated numerous defined benefit and defined contribution plans. I ventured into the retirement plan industry as a consultant in an employee benefits consulting firm a few years later. It is there where I found that assisting financial advisors by improving the experience and outcomes for their clients helped me to make a positive impact on numerous organizations and their employees. Working with advisors as a consultative partner enabled me to help their prospective clients, and steered me toward a path within the sales organization, where I could continue to drive growth and build strong relationships. My experience as a sales consultant for more than a decade provided the vision and skillset to not only recruit successful teams, but to also serve as a mentor within these organizations.

FuturePlan allows me to pursue my passion of working in a competitive environment, while empowering our associates to achieve our noble purpose of helping more savers save more. Having worked in different roles in this industry, I can attest that FuturePlan is a Category of One provider with unique and unparalleled service offerings. Advisors rely on us to have the capabilities and experience to serve their clients. We are true partners who are consistently working to deliver value as an extension of their business.

401(k) Specialist: For those advisors who are not familiar with Third Party Administrators (TPAs), can you explain what a TPA does and the different types available for advisors considering working with one?

McIsaac: The easiest way to describe a TPA is that they are an independent organization that manages the day-to-day aspects of a retirement plan. They typically focus on the regulatory compliance, plan design, and administration aspects of the plan.

The TPA market has evolved a lot, but there are typically three types of firms. The most important factor to consider as you evaluate firms is the level of consultative support provided.

• Traditional TPA:
  • Traditional firms focus on plan design, administration, and compliance services.

• • They rarely branch out from single employer defined contribution plans as this approach allows them to provide high-quality, reliable services within their area of expertise.

• Consultative TPA:
  • Consultative firms provide plan design, administration, and compliance services like traditional firms, but often have expanded capabilities. These firms often provide additional support to plan sponsors with multiple employer and group plan arrangements, defined benefit, and non-qualified plans, as well as 3(16) fiduciary services.

• • This expanded approach allows them to provide advisors and sponsors the ability to service all their unique needs.

• Discount TPA:
  • As the name suggests, discount firms tend to leverage a low price point as their primary differentiator. Consequently, there isn’t a strong emphasis on consultative service.

• • These firms rely heavily on automation and standardization to keep costs low, which can limit the personalized, high-touch service that clients might receive from other types of firms.

401(k) Specialist: How are some of the overarching retirement industry changes in recent years, such as the SECURE Act and SECURE 2.0, as well as market consolidation, affecting the workplace retirement plan landscape, and how do they impact working with a TPA?

McIsaac: The SECURE Act and ongoing market consolidation are reshaping the retirement plan industry by creating both new opportunities and challenges. As these shifts occur, the role of a TPA has become increasingly vital. TPAs provide specialized expertise in compliance, plan design, and administration, helping to navigate the complexities brought about by legislative changes and mergers in the industry.

A study by Empower dated December 31, 2022, underscores the value of working with a TPA. According to their data, participants in plans that use a TPA save 10% more than those in bundled plans. Additionally, plans utilizing a TPA show an average account balance 17% higher than those that don’t. This data demonstrates that a TPA not only enhances the efficiency of plan management, but also has a tangible impact on participant outcomes.

401(k) Specialist: What can a consultative partner specifically do to help advisors grow their business, particularly as it relates to working with multiple recordkeepers?

McIsaac: The reason I have represented consultative firms throughout my career is because they offer the most value to advisors and their clients. They can create meaningful partnerships advisors can rely on and incorporate into their practice as an extension of their team.

To diversify your practice and offer customized solutions, you may work with multiple recordkeepers that provide different features and services. However, working with multiple recordkeepers can also pose some challenges, such as managing different processes, systems, and contacts for each plan.

Many consultative TPA firms will assign you a dedicated contact who will handle all your plans, regardless of the recordkeeper. This creates consistency and convenience for you, as you always have the same channel of communication and the same level of service for all your plans.

Working with the same consultative TPA can also help you build a long-term relationship and establish trust, which can create capacity within your practice.

As a comprehensive service provider, in-house services and expertise are critical. Many service providers say they have the expertise to simplify the complexities of retirement plan administration but so often those services are outsourced. Having all the resources under one roof can help advisors bring the right expertise to their clients efficiently so they can focus on growing their practices.

401(k) Specialist: There are a lot of TPAs out there. What factors should advisors be thinking about to help them find the right fit?

McIsaac: I would recommend you start with your broker-dealer or RIA to see if they’ve already vetted TPA firms. Then interview a few firms from their recommendations to ensure they can meet your needs and contribute to helping grow your practice.

The following chart provides an idea of considerations that are important to evaluate:

401(k) Specialist: What are some of the additional solutions a Consultative TPA can provide that advisors may find beneficial?

McIsaac: In-house expertise is incredibly valuable for advisors—and this can include knowledge on a variety of aspects of plan administration. Client retention is key for advisors. You work hard to win new business so ensuring those plans are compliant and running smoothly is not something you need to manage alone.

A dedicated plan corrections team can help consult on plan document corrections, missed 5500 filings, and other administrative oversights. Having this expertise in-house is a significant value to you and your clients, and our team at FuturePlan is making a real impact. For example, we continue to see many missed 5500 filings due to owner-only plans exceeding $250K of assets in a prior year or because the business hired someone else who recently became eligible for the plan.

Similarly, 3(16) fiduciary services are another area that recordkeepers and TPAs often say they provide. However, I think it’s important to partner with a firm with deep industry experience in this area. Our 3(16) fiduciary services team has been an industry innovator offering these services for more than a decade, which has led to an impressive 97% client retention rate for these types of plans.

I’d also add that cash balance plans are continuing to grow in the industry, at a rate more than 2x the rate of 401(k) plans. These plans are ideal for helping business owners reduce taxable income and save more for retirement. Your TPA partner should be able to bring plan experts to the table to help you unlock the value of these plans and other solutions that can drive revenue for you and provide value for your clients.

I am really proud to be a part of a firm that has considerable market share in this space. We’ve created proprietary training programs for advisors to help them learn more about cash balance plans and more importantly how to position them. This program is paired with other practice management webinars, thought leadership content and prospecting tools to help you bring new value to your clients.

Finally, we know how valuable Pooled Employer Plans, or PEPs, have become in the market by offering business owners the ability to start a retirement plan while offloading some of the expense, fiduciary liability, and time it takes to manage a plan to a trusted expert. FuturePlan is seeing a lot of traction with our MEP/PEP center of excellence so far this year, and we look forward to the additional value we can provide to advisors and business owners alike.

401(k) Specialist: Any final thoughts to share?

McIsaac: At FuturePlan we are a Category of One provider, with proven strength and scale in technology, innovation, and service quality. We believe in the value of partnering as no two retirement plans are the same.

As you consider whether or not working with a TPA will help you grow your practice—let’s connect. Find your local representative to learn more about how to partner.