Remember when getting a client's census 401(k) files meant stacks of spreadsheets, endless emails, and that sinking feeling when you discovered missing fields? If you're nodding along, you're not alone. For third-party administration (TPA) firms handling retirement plans, digital transformation is often powered by modern, integrated retirement plan software, which can be the difference between drowning in paperwork and actually helping your clients build secure futures.

In 2025, we're well past the "should we go digital?" question. The conversation has shifted to "how strategic is our digital approach?" It's no longer about if you're using technology, but whether you're leveraging it to drive real results for your firm and clients.

Let's explore three challenges that are probably keeping you up at night, and how smart automation can be the remedy to turn those headaches into opportunities.

Challenge 1: Your Clients Want Netflix, But You're Still Offering VHS

Today's clients don't just want digital access. Everyone has that. Now, your clients expect easy-to-use, intuitive experiences that make their lives easier. They're comparing your portal not to your competitors, but to the sleek interfaces they use daily with their banking apps, shopping sites, and streaming services.

The Real Problem

If you're stuck with outdated systems, you're probably familiar with these scenarios:

• Plan participants are frustrated because they can't easily check their balances on their phones

• Plan sponsors wasting time navigating confusing interfaces

• Paper documents being shuffled back and forth for simple tasks

• Clients expecting personalized, mobile-friendly experiences but getting clunky, one-size-fits-all solutions instead

And let's face it, when clients need to wait days for information that should be available instantly, it’s both an inconvenience and a disconnect between their expectations and your service delivery. That's a dangerous gap that can cause clients to seek help elsewhere.

The Smart Solution

Bringing your client experience into the modern era isn't as much about looking shiny as it is about creating genuine efficiency. By implementing workflow automation and modernizing your tech stack, you can:

• Provide 24/7 access to account information, putting clients in control

• Create mobile-friendly interfaces that clients can use wherever they are

• Automate routine communications, freeing your team from repetitive tasks

• Offer self-service capabilities for common requests

Still need convincing? Forrester research from 2024 reveals that customer-obsessed organizations that prioritize customer needs and satisfaction experience 41% faster revenue growth, 49% faster profit growth, and 51% better customer retention compared to their competitors. That's not just happier clients, that's clients who stick around and refer you to others.

Challenge 2: The Cost of Burying Your Team in Busy Work When They Should Be Building Relationships

There's no question that manual processes are time-consuming, and time is money, after all. But they can also be considered resource drainers that keep your best people stuck doing low-value work.

The Hidden Costs You Might Not See

Beyond obvious inefficiencies, manual workflows create compounding problems, including:

• Scalability Roadblocks: As your client base grows, manual processes create bottlenecks that slow everything down, including your revenue potential. That new group of 401(k) plans you just won? Now your team is working nights and weekends just to keep up.

• Data Blind Spots: When your data is dirty or trapped in spreadsheets or legacy 401(k) administration software, for example, you're missing insights that could help you make smarter decisions. You're likely sitting on a goldmine of information but can't access or use it effectively.

• Talent Drain: Younger professionals simply aren't interested in using outdated systems. When your experienced staff eventually retire, you'll struggle to replace them if you're still relying on processes from the last decade (or potentially even the past few years).

Compliance Vulnerabilities: Manual data handling increases your exposure to security breaches and makes it harder to maintain audit-ready records. In an increasingly regulated industry, this is a risk you can't afford.

The Smart Solution

It's important to stress that strategic automation isn't about replacing people. It's much more about scaling what they can do. With automation, you can:

• Reduce plan processing times and free up your team to focus on client relationships

• Create standardized workflows that ensure consistency regardless of who's handling the work

• Establish digital audit trails that make compliance easier to monitor and maintain

By automating routine tasks, you're saving time, improving accuracy, enhancing security, and allowing your team to focus on work that requires human expertise and (perhaps more importantly) relationship building.

Challenge 3: Compliance Complexity That Never Stops Growing

If there's one constant in the retirement industry, it's change. Keeping up with evolving regulations is like trying to hit a moving target while blindfolded.

Beyond the Basics

Navigating compliance can be complicated and increasingly risky. Examples include:

• Regulatory Whiplash: From SECURE 2.0 to ongoing changes for regulations like Employee Retirement Income Security Act (ERISA), Internal Revenue Service (IRS), and Department of Labor (DOL), the pace of change requires constant adaptation, and manual processes make it nearly impossible to implement changes quickly and accurately.

• Higher Audit Standards: Regulatory bodies are conducting more frequent and rigorous audits, with higher expectations for data security and accuracy. Paper trails and disconnected or legacy systems can't meet these demands.

• Multi-Jurisdictional Maze: Many TPAs serve clients across different jurisdictions, each with its own regulatory requirements, and tracking these manually is a recipe for costly errors.

The Smart Solution

Automating compliance tasks can lower risk and turn compliance from a hassle into a competitive edge. Here are a few ways to do it:

• Implement modern TPA software solutions that provide automated regulatory updates and detailed audit trails

• Use technology that standardizes documentation and ensures consistency

• Establish real-time compliance monitoring that catches issues before they become problems

• Create in-depth data encryption and access controls to address security concerns

With automated compliance systems, you'll spend less time worrying about what might go wrong and more time confidently growing your business.

Next Steps Toward TPA Modernization

The journey toward a more efficient, client-centric, and compliant TPA firm begins with digital transformation, which offers a modern, efficient way for TPAs to scale operations and enhance client experiences. The firms poised to thrive are those actively exploring how technology can solve persistent challenges and that understand the adoption of automation and artificial intelligence (AI) is the first step towards future-proofing their firm. 

Beyond technology, true transformation means TPAs must also focus on:

• Streamlining Workflows: Fix broken processes first. Hunt down bottlenecks, redundancies, and manual steps that could be automated through API payroll integration.

• Empowering Your Team: New tools need skilled staff. Invest in practical training and create a culture that embraces change as an opportunity to work smarter.

• Ensuring Data You Can Trust: Bad data leads to mistakes. Implement clear rules for data accuracy, consistency, and security so you can rely on your insights.

• Partnering Strategically: Work with tech vendors who understand retirement plan complexities. Collaborate with industry peers too, because sharing best practices helps everyone.

• Committing to Continuous Improvement: Digital transformation is ongoing. Regularly optimize processes, stay curious about emerging tech, and adapt to maintain your competitive edge.

To learn more about transforming your operations and the retirement software technologies shaping the future of TPAs, explore the Stax.ai TPA Resource Library for information and insights.