Two-Firm Partnership Bridges Plan Size Gap

401KWIRE.COM
May 5, 2006

Web-based 401(k) provider Decimal on Friday announced the formation of a partnership with TPA consortium Alliance Benefit Group. The arrangement offers advantages for both organizations, serving as a kind of mutual referral service that routes clients to a provider positioned to deal with their particular needs.

San Francisco-based Decimal specializes in plans with under 100 employees, and currently provides services for over 1800 small firms nationwide. ABG, headquartered in Peoria, Illinois, provides services for over 3300 plans through its network of independently owned and operated offices in numerous cities across the country.

"When we come across clients who don't meet our model, we want to be able to have a trusted partner to refer them to," said Decimal CEO Chad Parks. He added that Decimal and ABG have similar approaches to pricing and back-end operations, but that clients of ABG, being larger, tend to have more complex needs.

New clients who are referred to one company by the other will not maintain a relationship with the referring company, he said. Small plans that sign with Decimal and subsequently grow significantly may choose to remain on board. "It would be a matter of whether or not each client feels we're able to meet their needs in terms of the complexity of their plan," he said.

By increasing ABG's penetration into its target market, the agreement has the potential to further the group's expansion plans: in an interview with the 401kWire two weeks ago, ABG president John Blossom said ABG intends to grow its own network over the next year. ABG representatives could not immediately be reached to offer their comments on the new partnership.

Parks said he hopes this type of solution will catch on in the industry as more firms wrestle with how to address the proliferating small plan market. "Maybe they're really looking at trying to solve the problems the [small plan sponsor] has posed to them without just turning them away, and that's a void we may be able to fill," he said.