Drivers of change in the retirement plan industry

Before we dive into the numbers, let’s look at some trends shaping the retirement plan industry and, in turn, your TPA business.

• Longevity risk—Today, the average American can expect to live to be around 80 years old, compared with 68 in 1950.¹ This increased lifespan means more people will need to plan and save for a retirement that last decades, not just a few years. The retirement plan industry is now tasked with helping participants improve their retirement outcomes and reduce their longevity risk, or the potential to outlive their savings.
• Regulatory changes—You’re often called the “CPA of 401(k) plans” because, like certified public accountants (CPAs), you’re responsible for ensuring your clients comply with IRS and U.S. Department of Labor rules. And there’s no shortage of rules to follow. Legislation such as SECURE 2.0 has over 90 provisions aimed at reforming the retirement plan industry through 2033. And you’re in a unique position to help guide plan sponsors through each regulatory change.
• Industry consolidation—Mergers and acquisitions throughout the retirement plan industry have become commonplace as TPAs, recordkeepers, and financial advisory firms seek economies of scale. You may want to ask yourself, “Is it best for our company’s long-term corporate health to sell, acquire other companies, or remain independent?”  
• Automation and AI—Advancements in technology, such as automation and AI, are boosting efficiency across nearly every industry, including yours. Are you using technologies to their full advantage?
  • Automation can cut down on repetitive tasks, such as data entry and document processing, and help you manage new plan features, such as mandatory auto-enrollment.
  • AI-driven platforms, along with automation, can reduce human errors and boost productivity for your firm. 
  • AI also analyzes large data sets, which can provide insight on plan performance and participant behavior. These custom reports can be shared with plan sponsors as a value-added service.

TPA performance benchmarks

With these industry trends as your backdrop, it’s time to ask yourself important questions about the health of your business and establish a benchmark for your performance. The following industry averages provided by international research firm Business Health Pty Ltd can help get you started:

Metric #1—your profitability

On average, TPA firms reported a notional profitability of 19% over a 12-month period.² 

• Some questions to ask—What’s an acceptable return for you given the time and effort you invest, along with the personal sacrifices you make and the ownership/business risk you’re carrying?
• Tip—Try automating common administrative tasks, which can help reduce your operational costs and may lead to bottom-line improvements. Nearly 45% of workers who use automation software say it helps them complete projects faster.²

Metric #2—number of plans serviced per employee

The average number of plans serviced by a full-time equivalent employee working for a TPA over a 12-month period was 38.²

• Some questions to ask—Are your high-value employees working on high-value tasks? How can you use technology to help your employees manage their workload?
• Tip—Consider using project management software—40% of workers say it enables them to be more organized.²

Metric #3—revenue per plan

The average revenue generated per plan over a 12-month period was $4,325.² 

• Some questions to ask—Is it time to review your fees to ensure that some plans aren’t being subsidized by others? Are you being fairly compensated for all of the value you add?  
• Tip—Consider how you can deliver value-added services such as retirement-readiness assessments or financial wellness programs to help increase the revenues you receive per plan. Plus, all-digital offerings tend to be easily scalable, which can help you control costs as you grow your business.

Guiding your business strategy with key metrics

To develop and refine your business strategy, you need to consider how industry changes, such as longevity risk, advanced technology, and regulatory changes, are affecting the health of your business. Against this backdrop, identify areas where your business can add value to your existing plans, create new revenue streams, lower your overhead costs, and improve your firm’s profitability. The metrics herein can help provide benchmarks for your future performance. Keep focusing on strengthening your corporate health, so you’ll be ready to capitalize on new growth opportunities and overcome challenges as they arise.

1 Macrotrends.net, July 2024. 2 Business Health Pty Ltd, July 2025.