A new and unique third party administrator (TPA) organization launched Monday, one meant to compete with—and act as an alternative to—large, national firms resulting from recent industry consolidation.
Called The Cerrado Group, it consists of nine independent firms, all part of a study group with a 20-year history. Its uniqueness stems from its structure, a nonprofit 501(c)(6) trade association in which principals retain ownership of their individual firms yet benefit from its members’ relationships, scale, and collective knowledge.
“We offer broad geographical coverage and the same suite of services as the large, national firms,” says Ann Slotwinski, Executive Director of The Cerrado Group. “We also have extremely high cybersecurity standards, which is a selling point, and—importantly—the nine owners didn’t have to sell their firms to be a part of it.”
A 37-year veteran of John Hancock with 26 years specifically in TPA services, Slotwinski grew increasingly concerned near the end of her Hancock tenure about the local TPA’s future and how it would remain relevant when compared with “these behemoths.”
“The focus of the group is on improving processes, gaining efficiencies, and sharing with each other how it’s done,” she adds. “And we’re a lot nimbler than the big corporations.”
The collective resources and knowledge are impressive, and reflected in the group’s metrics, including:
- $18.3 billion of assets under administration
- 9,236 retirement plans
- 323,000 participants
- $2 billion of brokerage account assets
- 134 employees with designations
- Average client retention of over eight years
- They work with every recordkeeper and are product agnostic
“It’s the opposite of what’s been happening in the TPA industry,” Patrick Shelton, Chief Believer! with St. Louis-based Benefit Plans Plus, a member firm, says. “We feel that, because of consolidation, a lot of the value in the industry, technically, service-wise and in particular for TPAs, geographically, it’s been taken away. We’re bringing it back.”
Noting the group’s deep experience, he mentions multiple TPA advisory councils on which he and the other members sit, including recordkeepers like Fidelity, John Hancock, Empower Retirement, and American Funds.
‘Strong and diverse’
That deep experience has deep roots, a reason for the name.
“We didn’t want it to have the word plan, administration, qualified, retirement, or anything that would make it sound like a TPA,” Slotwinski says with a laugh. “Not that there’s anything wrong with that, but we wanted to stand out.”
Cerrado is a Portuguese word that describes a large biosystem spread across Brazil, which is incredibly diverse. It contains 5% of the world’s plants and animals, many that are indigenous and only found in the area.
So what does that have to do with TPAs?
“We’re powerful, with the amount of assets, the number of plans, and our deep knowledge,” she explains. “Clearly, we’re unique, and no one else has done it. Lastly, we’re diverse. I wanted a name that people would think, ‘What is that? Why is it called that?’”
Brazil’s Cerrado ecosystem is also under threat, another parallel Shelton sees with the retirement plan industry and TPAs specifically, spurring the group to do social good.
“Each firm is donating roughly $1,000, so we can contribute $10,000 to the World Wildlife Fund, so we wanted a socially redeeming story around it, as well.”
Noting that the group’s cooperation over the past six months in anticipation of the launch was nothing short of amazing, especially under the COVID conditions, he concluded by again emphasizing the members’ level of trust and their history.
“The trees in the Cerrado have roots that extend 30 feet underground. That’s how we view our TPAs. We are so deeply embedded in the industry, but we’re invisible, like the best-kept secret out there.”