7 Steps to Building a TPA from the Ground Up with Cutting-Edge Technology
7 Steps to Building a TPA from the Ground Up with Cutting-Edge Technology
By King Kenney
By King Kenney
By King Kenney
By King Kenney
The commitment to ensuring savers from diverse economic backgrounds have access to effective retirement planning tools has placed the financial services sector in a state of continuous evolution. This dynamic environment, fueled by relentless legislative reforms and shifting market demands, presents the financial services industry—and TPAs in particular—with a complex suite of challenges and opportunities. For TPAs at any stage of their lifecycle, adapting to these changes is crucial. They must swiftly align with new compliance standards and evolving client expectations to maintain service quality and operational efficiency. For ambitious number crunchers keen to pitch their own tent—and longstanding offices aiming to circumnavigate the avoidable fate of Blockbuster or Borders—the confluence of timing and terms couldn't be better. Moreover, the digital revolution offers a pivotal opportunity to redefine industry norms, enhancing operational efficiency, precision, security, and client service.
The commitment to ensuring savers from diverse economic backgrounds have access to effective retirement planning tools has placed the financial services sector in a state of continuous evolution. This dynamic environment, fueled by relentless legislative reforms and shifting market demands, presents the financial services industry—and TPAs in particular—with a complex suite of challenges and opportunities. For TPAs at any stage of their lifecycle, adapting to these changes is crucial. They must swiftly align with new compliance standards and evolving client expectations to maintain service quality and operational efficiency. For ambitious number crunchers keen to pitch their own tent—and longstanding offices aiming to circumnavigate the avoidable fate of Blockbuster or Borders—the confluence of timing and terms couldn't be better. Moreover, the digital revolution offers a pivotal opportunity to redefine industry norms, enhancing operational efficiency, precision, security, and client service.
step 1: defining the vision
& objectives
step 1:
defining the vision & objectives
The first step in creating a tech-forward TPA is to establish a clear vision and set of objectives focused on optimizing productivity. Central to this vision is defining its unique value proposition and positioning itself as a long-sought alternative in an industry traditionally characterized by outmoded processes, middling customer service, and a mishmash of hard-to-use and outdated technologies. Emphasize the use of cutting-edge technologies designed to deliver optimized plans, streamlined administration, and exceptional client experiences tailored to the specific modern-day needs of TPAs’ core responsibilities.
The first step in creating a tech-forward TPA is to establish a clear vision and set of objectives focused on optimizing productivity. Central to this vision is defining its unique value proposition and positioning itself as a long-sought alternative in an industry traditionally characterized by outmoded processes, middling customer service, and a mishmash of hard-to-use and outdated technologies. Emphasize the use of cutting-edge technologies designed to deliver optimized plans, streamlined administration, and exceptional client experiences tailored to the specific modern-day needs of TPAs’ core responsibilities.
This vision should be underpinned by a set of strategic objectives designed to navigate the complexities of the financial services landscape, ensuring that the TPA not only meets but exceeds the evolving expectations of clients and regulatory bodies. It entails a holistic understanding of the industry's challenges, including the need for operational agility, data security, and personalized client services. The vision and objectives should explicitly articulate and guide the TPA's strategic decisions, technology investments, and operational priorities. Upstart TPAs should seize this moment to enter the market, positioning themselves not merely as a new option but distinctly as a tech-forward voice, communicating ways they wish to elevate the expectations of their clients and peers by proactively integrating technology into every aspect of their day-to-day operations.
This vision should be underpinned by a set of strategic objectives designed to navigate the complexities of the financial services landscape, ensuring that the TPA not only meets but exceeds the evolving expectations of clients and regulatory bodies. It entails a holistic understanding of the industry's challenges, including the need for operational agility, data security, and personalized client services. The vision and objectives should explicitly articulate and guide the TPA's strategic decisions, technology investments, and operational priorities. Upstart TPAs should seize this moment to enter the market, positioning themselves not merely as a new option but distinctly as a tech-forward voice, communicating ways they wish to elevate the expectations of their clients and peers by proactively integrating technology into every aspect of their day-to-day operations.
step 2: technology stack selection
step 2:
technology stack selection
Choosing the right technology stack is crucial for the TPA's success. According to a post-COVID Accenture Technology Trends Report, more companies than ever have embraced the idea that every business is a technology business, igniting an era of exponential transformation. Given the complex challenges TPAs face while managing billions in client assets, it is essential to assemble a suite of tools that seamlessly integrate and communicate with one another to streamline workflows. The chosen stack should employ AI, automation, advanced data analytics, machine learning algorithms, and predictive insights to unlock value inaccessible to moribund firms whose workarounds and static methods have them on a trajectory for acquisition at best, or extinction at worst.
Choosing the right technology stack is crucial for the TPA's success. According to a post-COVID Accenture Technology Trends Report, more companies than ever have embraced the idea that every business is a technology business, igniting an era of exponential transformation. Given the complex challenges TPAs face while managing billions in client assets, it is essential to assemble a suite of tools that seamlessly integrate and communicate with one another to streamline workflows. The chosen stack should employ AI, automation, advanced data analytics, machine learning algorithms, and predictive insights to unlock value inaccessible to moribund firms whose workarounds and static methods have them on a trajectory for acquisition at best, or extinction at worst.
step 3: Streamlining Operations
step 3:
Streamlining Operations
Banks and investment firms require efficient back-office operations to ensure the accurate processing of transactions, compliance with regulations, and effective risk management. Insurance companies rely on streamlined back-office functions for claims processing, policy administration, and customer support. In hospital networks, efficient operations are essential for managing patient records, billing, and processing insurance claims. Back-office efficiency is critical for pharmaceutical companies in managing clinical trials, ensuring regulatory compliance, and overseeing supply chain logistics. Large retailers need efficient back-office operations to support inventory control, supplier management, and the analysis of sales data. Automobile manufacturers depend on back-office efficiency to facilitate supply chain management, production planning, and quality control. This principle applies universally, across industries and businesses of all sorts, not excepting TPAs.
Banks and investment firms require efficient back-office operations to ensure the accurate processing of transactions, compliance with regulations, and effective risk management. Insurance companies rely on streamlined back-office functions for claims processing, policy administration, and customer support. In hospital networks, efficient operations are essential for managing patient records, billing, and processing insurance claims. Back-office efficiency is critical for pharmaceutical companies in managing clinical trials, ensuring regulatory compliance, and overseeing supply chain logistics. Large retailers need efficient back-office operations to support inventory control, supplier management, and the analysis of sales data. Automobile manufacturers depend on back-office efficiency to facilitate supply chain management, production planning, and quality control. This principle applies universally, across industries and businesses of all sorts, not excepting TPAs.
As a result, leveraging software designed to streamline plan document management, recordkeeping, and compliance tracking is essential for optimal TPA efficiency. It is widely acknowledged within the industry that legacy recordkeeping technology systems can present significant challenges, acting as impediments to achieving IT effectiveness and driving business outcomes. Automated workflows and real-time reporting features not only simplify administrative tasks but also free up valuable time for the TPA's workforce. This empowers the team to focus on strategic client interactions and plan design optimization—key components in creating a desirable workplace environment and a scalable business model.
As a result, leveraging software designed to streamline plan document management, recordkeeping, and compliance tracking is essential for optimal TPA efficiency. It is widely acknowledged within the industry that legacy recordkeeping technology systems can present significant challenges, acting as impediments to achieving IT effectiveness and driving business outcomes. Automated workflows and real-time reporting features not only simplify administrative tasks but also free up valuable time for the TPA's workforce. This empowers the team to focus on strategic client interactions and plan design optimization—key components in creating a desirable workplace environment and a scalable business model.
step 4: Enhancing Client Experience
step 4:
Enhancing Client Experience
Leading TPAs are continually working to elevate their clients' experience. The integration of advanced digital communication technologies empowers agile TPAs to deliver both seamless and customized interactions. Beyond this, automating manual, error-prone processes has become essential as the market grows more competitive and consolidates.
Leading TPAs are continually working to elevate their clients' experience. The integration of advanced digital communication technologies empowers agile TPAs to deliver both seamless and customized interactions. Beyond this, automating manual, error-prone processes has become essential as the market grows more competitive and consolidates.
Recent industry research highlights a significant demand among plan sponsors and participants for more comprehensive education regarding their retirement plans. There's an increasing scrutiny over plan design and the variety of available options. Yet, access to sought-after, advanced resources and timely, technology-driven communication remains scarce across much of the industry. To bridge this gap, TPAs can future-proof their operations with technologies that enable them to communicate updates and options with clarity, speed, and precision.
Recent industry research highlights a significant demand among plan sponsors and participants for more comprehensive education regarding their retirement plans. There's an increasing scrutiny over plan design and the variety of available options. Yet, access to sought-after, advanced resources and timely, technology-driven communication remains scarce across much of the industry. To bridge this gap, TPAs can future-proof their operations with technologies that enable them to communicate updates and options with clarity, speed, and precision.
step 5: Cultivating Talent & Expertise
step 5:
Cultivating Talent and Expertise
Securing and nurturing a team adept in the nuances of AI, data science, and the evolving landscape of retirement plan administration is not merely a logistical necessity but a strategic imperative. The endeavor begins with a discerning recruitment strategy, pinpointing individuals not only for their current competencies but also for their potential to innovate and adapt. This phase extends into a comprehensive development program designed to immerse the team in the intricacies of the technology stack and the broader vision of the organization. Note: They needn't be AI engineers or full-stack developers but stakeholders invested in gaining a clear understanding of the path forward.
Securing and nurturing a team adept in the nuances of AI, data science, and the evolving landscape of retirement plan administration is not merely a logistical necessity but a strategic imperative. The endeavor begins with a discerning recruitment strategy, pinpointing individuals not only for their current competencies but also for their potential to innovate and adapt. This phase extends into a comprehensive development program designed to immerse the team in the intricacies of the technology stack and the broader vision of the organization. Note: They needn't be AI engineers or full-stack developers but stakeholders invested in gaining a clear understanding of the path forward.
In fostering a culture of continuous learning, the TPA ensures its workforce remains at the forefront of technological advancements, equipped to leverage these tools in enhancing client services and operational efficiency. Regular training sessions, coupled with opportunities for professional growth, underscore the commitment to excellence and innovation. (This can be achieved through internal resources or a commitment to engaging only with vendors who offer comprehensive and ongoing training that meets predetermined standards.) This approach not only elevates the TPA's service offering but also cultivates a workplace environment that attracts and retains top talent, driven by the prospect of contributing to an industry-leading initiative.
In fostering a culture of continuous learning, the TPA ensures its workforce remains at the forefront of technological advancements, equipped to leverage these tools in enhancing client services and operational efficiency. Regular training sessions, coupled with opportunities for professional growth, underscore the commitment to excellence and innovation. (This can be achieved through internal resources or a commitment to engaging only with vendors who offer comprehensive and ongoing training that meets predetermined standards.) This approach not only elevates the TPA's service offering but also cultivates a workplace environment that attracts and retains top talent, driven by the prospect of contributing to an industry-leading initiative.
Step 6: Ensuring Compliance & Fortifying Security
Step 6:
Ensuring Compliance and Fortifying Security
In the digital age, a TPA's integrity hinges on its ability to navigate the complexities of regulatory compliance and data security with unwavering diligence. This demands the implementation of sophisticated compliance monitoring systems and robust data protection protocols. By embedding state-of-the-art encryption and cybersecurity measures, the TPA fortifies its defenses against emerging threats, safeguarding sensitive personally identifiable information (PII) and maintaining continuous trust.
In the digital age, a TPA's integrity hinges on its ability to navigate the complexities of regulatory compliance and data security with unwavering diligence. This demands the implementation of sophisticated compliance monitoring systems and robust data protection protocols. By embedding state-of-the-art encryption and cybersecurity measures, the TPA fortifies its defenses against emerging threats, safeguarding sensitive personally identifiable information (PII) and maintaining continuous trust.
The commitment to compliance extends beyond mere adherence to regulations; it involves a proactive stance on anticipating legislative changes and integrating them seamlessly into the operational framework. This proactive approach ensures the TPA—and any procured vendors—not only meets current standards (i.e., SOC 2 Type II) but is also well-prepared for future shifts in the regulatory landscape. Regular audits, both internal and external, serve as critical checkpoints in this ongoing process, providing transparency and accountability that can confidently be shared with discriminating plan sponsors.
The commitment to compliance extends beyond mere adherence to regulations; it involves a proactive stance on anticipating legislative changes and integrating them seamlessly into the operational framework. This proactive approach ensures the TPA—and any procured vendors—not only meets current standards (i.e., SOC 2 Type II) but is also well-prepared for future shifts in the regulatory landscape. Regular audits, both internal and external, serve as critical checkpoints in this ongoing process, providing transparency and accountability that can confidently be shared with discriminating plan sponsors.
Step 7: Strategic Marketing & Business Development
Step 7:
Strategic Marketing & Business Development
Articulating the value proposition of a tech-forward TPA necessitates a marketing strategy that resonates with the needs and aspirations of plan sponsors and participants. This strategy pivots on showcasing the seamless integration of technology in delivering personalized services, optimizing operations, and elevating client experiences. Through targeted marketing initiatives, educational outreach, and thought leadership, the TPA positions itself as a vanguard of innovation in retirement planning.
Utilizing digital platforms for outreach and engagement amplifies the TPA’s visibility, enabling it to connect with a broader audience and foster meaningful interactions. Social media, email campaigns, experiential content media (e.g., webinars, podcasts), user-generated content (UGC) from evangelists, and the like serve as conduits for demonstrating the TPA's expertise and commitment to empowering clients with knowledge and tools for informed decision-making. In cultivating a compelling narrative of innovation and excellence, the TPA not only attracts potential clients but also sets a benchmark for the industry, encouraging a shift toward more tech-savvy, client-centric retirement plan administration.
Articulating the value proposition of a tech-forward TPA necessitates a marketing strategy that resonates with the needs and aspirations of plan sponsors and participants. This strategy pivots on showcasing the seamless integration of technology in delivering personalized services, optimizing operations, and elevating client experiences. Through targeted marketing initiatives, educational outreach, and thought leadership, the TPA positions itself as a vanguard of innovation in retirement planning.
Utilizing digital platforms for outreach and engagement amplifies the TPA’s visibility, enabling it to connect with a broader audience and foster meaningful interactions. Social media, email campaigns, experiential content media (e.g., webinars, podcasts), user-generated content (UGC) from evangelists, and the like serve as conduits for demonstrating the TPA's expertise and commitment to empowering clients with knowledge and tools for informed decision-making. In cultivating a compelling narrative of innovation and excellence, the TPA not only attracts potential clients but also sets a benchmark for the industry, encouraging a shift toward more tech-savvy, client-centric retirement plan administration.
conclusion
For newbies or tenured pros, establishing a tech-forward TPA is a multifaceted endeavor that extends beyond the initial selection of technology and streamlining of operations. It encompasses a holistic approach that aims to redefine the future of the industry. This blueprint for innovation, underscored by a commitment to excellence, timely communication, error-free service, and ethical practices, positions the TPA not merely as a participant in the evolution of the retirement services industry but as a leader shaping its future. Through strategic foresight, unwavering dedication to security, and a deep understanding of client needs, the tech-forward TPA is poised to redefine the standards of retirement plan administration—rather than merely abiding by them—delivering unparalleled value to clients and charting a new course for the industry.
For newbies or tenured pros, establishing a tech-forward TPA is a multifaceted endeavor that extends beyond the initial selection of technology and streamlining of operations. It encompasses a holistic approach that aims to redefine the future of the industry. This blueprint for innovation, underscored by a commitment to excellence, timely communication, error-free service, and ethical practices, positions the TPA not merely as a participant in the evolution of the retirement services industry but as a leader shaping its future. Through strategic foresight, unwavering dedication to security, and a deep understanding of client needs, the tech-forward TPA is poised to redefine the standards of retirement plan administration—rather than merely abiding by them—delivering unparalleled value to clients and charting a new course for the industry.
King Kenney is a multi-hyphenate writer, VP of Marketing & Growth at Stax•ai, and marketing professor at the University of Virginia.