It Takes Three To Tango
I recently received an email from a client informing me that they are moving from in-house payroll to a payroll service provider and she wanted to know what was needed on our end. I explained that while the payroll provider technically doesn’t impact any of the advisory work we do on the retirement plan, the interaction between the payroll provider and the 401(k) recordkeeper is very important. When those two entities don’t work well together, the whole relationship can be soured.
The payroll landscape has seen tremendous development in recent years going beyond basic payroll functions to include more HR and benefit capabilities. I will not pretend to grasp how all of the health care regulations impact the need for accurate reporting, etc. but my understanding is that it’s really important. Throw in multi-state tax compliance requirements, etc. and you’ve got some serious business on your hands.
While I cannot speak specifically to those issues, I do know a thing or two about the role regulatory compliance plays in the qualified plan space and I can tell you that a good payroll provider can make a big difference in your overall experience. Employee start date, birth date, home address, contact information (mobile phone & email, etc.), hours worked, compensation and a number of critical bits of information can make fiduciary compliance much easier when leveraged properly through the payroll or “HCM” system. Accurate data input is a vital first step but getting your payroll system to communicate with your recordkeeper is also important if you are looking for efficiency.
You + Payroll Provider + Recordkeeper = Tango!
Like most areas of business and life, technology is revolutionizing the payroll industry. We see all sorts of systems and we hear all sorts of complaints from clients about their payroll providers. Interestingly, we frequently hear from a client that a particular provider is horrible only to talk to another client who uses the same system but their experience is totally positive. The same can be said for recordkeepers.
Nobody can promise perfection in service delivery because whenever there is human involvement, things will eventually go wrong. Great technology and sound procedures go a long way but working with a team of people committed to serving their clients is, in my opinion, the most important ingredient. You play a key role as well.
When you are beginning a new relationship with any sort of service provider, take your time with implementation. Listen carefully during the sales process and when you are going through implementation, make sure you ask specifically about the capabilities that made you choose the provider. All technology platforms are intricate these days. That’s what makes them so awesome and infuriating at the same time!
If you are willing to learn the intricacies of the new system on the front end, chances are your long term experience will be a better one. Ask good questions. Be patient with the implementation person because they aren’t the ones who made all those promises during the sales process. At the same time, do not settle for a cursory answer to a technical question. After all, they did agree to take the job of Chief Promise Fulfiller.
If you’re having a problem with a current provider, think back to what made you choose them in the first place and give them a chance to make good on their initial commitment. If you determine that they are either incapable or unwilling to meet your needs, approach your next provider selection process deliberately so that you can hopefully avoid experiencing the same frustrations in the future.