For the advisor who is not in the employer-sponsored retirement plan space and wants to be, or the advisor who wants to grow their existing retirement plan client base, this is the perfect time. With new and proposed changes in the industry, advisors dedicated to providing custom retirement plan services will find plenty of opportunity to develop and increase their book of business.
What successful advisors know…
Many plans are too busy running their business to be aware of their responsibilities, what they should expect from their service providers or how well their plan is designed, operating and performing. Several employer-sponsored retirement plans still employ the “set it and forget it” methodology, which creates significant opportunity for you to offer a fresh perspective and to help them in a way that no one ever has before.
With so many changes taking place in the industry (including increased scrutiny that business owners are facing to fulfill their fiduciary responsibilities), there’s a growing demand for guidance to plan sponsors, specifically in the sub-$10 million space, where administering a retirement plan is often only one of the plan sponsors many responsibilities. Effective opportunity-management can lead to a comprehensive retirement plan review that may generate significant commotion among plan trustees, often creating interest in the possibility of changing advisors.
What plan sponsors want…
Plan sponsors want value-add partners who take the time to learn about their business, their retirement plan, the retirement readiness of their employees and someone who brings a fresh perspective to improve their situation. Increasingly, plan sponsors are willing to make a change when an advisor goes above and beyond. To achieve this, successful retirement plan advisors take a consultative approach with their clients and customize their services to deliver solutions that work best for that particular situation. These advisors either understand the full spectrum of retirement plan issues, including ERISA law and plan design, to deliver comprehensive retirement plan guidance or they partner with a benefit consulting firm to handle the sometimes complex administration component while they offer their investment expertise.
Profile of a successful retirement plan advisor…
Successful retirement plan advisors have built a reputation on how they approach working with clients. They’re winning more business because they take a service-oriented approach to each situation and make the decision maker(s) an active part of the process to ensure they’re a critical component to improving their retirement plan and the retirement readiness of their employees.
How successful advisors deliver…
1). Game Changing Discovery
Every conversation either contributes to, or detracts from, winning the business and the initial consultation is the most important. This is your first opportunity to learn about your client’s needs, goals and objectives to gain an understanding of what the plan sponsor wants to accomplish and what’s most important to them, so you can maximize the value of your products and services. Twenty to thirty minutes of thoughtful conversation can provide you all the information you need to develop, and later communicate, a custom solution that meets the specific needs of your soon-to-be new client. Through this process, you’ll encourage a comfortable dialogue where the client will gladly share the details of their plan, disclose their priorities, concerns and decision-making factors and timeline for potential conversion.
2). Preparing for Discovery
Research the organization and the people with whom you’ve scheduled your initial consultation to evidence your sincere commitment to their organization and their people versus just another sale. If an existing plan; pull their Form 5500 to become aware of the profile of the plan relative to assets and participation rates. If prospecting calls developed a deeper relationship, request additional plan information, such as the Summary Plan Description for review in advance of the meeting. Preparing for the meeting ensures that you don’t waste time asking questions to which you should already have the answer. Rather, demonstrate to the prospective client that you are professional and prepared by confirming plan data versus asking for it.
3). Conducting the Discovery
The initial consultation is not the time to overwhelm the potential client with what you can do for them, but rather an opportunity to ask questions to learn more about them so you can customize a solution. Understanding that opportunities to uncover previously unknown issues can be both investment and administration related, lead with open-ended questions such as:
- What can you tell me about your retirement plan? What else should I know?
- What do you like most about your existing plan(s)? Why?
- What would you improve if you could? How did you select your (provider or advisor)?
- Would you recommend your (provider or advisor) to a friend? Why or Why not?
In most situations, a more targeted approach may be necessary to uncover areas in need of improvement, known or unknown. For example:
- Tell me about your participant education and communication program? How often are these sessions conducted? Are they effective? Why or why not?
- Do you have an updated Education Policy Statement (EPS)?
- Can you tell me about your investment selection and monitoring process? Do you have an updated Investment Policy Statement (IPS)?
- Are you aware of your fiduciary responsibilities/liability? How are you meeting them (what are you doing)?
- Who is helping you understanding your responsibilities and how best to meet them?
- Is your plan design maximizing the benefits to the organization? Your employees? You? When did you last review your plan design?
- Are you aware of the TOTAL COST to operate your plan annually?
- Is your fidelity bond current?
- Is your plan’s operation based on the definitions and requirements written in your Plan Document?
- Have you distributed a Summary Annual Report (SAR) to all plan participants annually?
- Are all eligible employees been identified and given the opportunity to make an elective deferral election?
- Have the 401(k) nondiscrimination tests (ADP, ACP, and Top-Heavy) been performed counting all eligible employees?
4). Closing the Discovery
Once you believe you have a full understanding of the needs of their plan, further demonstrate your comprehension, and care, by summarizing the key points they’ve shared. Ask whether or not there’s anything you’ve missed or if anything further comes to mind that hasn’t been covered during your time together. Close the conversation by recommending that you complete a comprehensive review of their retirement plan to benchmark it against the objectives identified during your conversation and request the key documents needed, understanding that the more information provided, the more comprehensive and valuable the analysis:
Plan Document
- Investment Menu (Summary of Accounts)
- Prior Year Compliance testing package
- Prior Year 5500
- Copy of service provider invoices/fee schedule
- Investment Policy Statement
- Education and Communication Policy
- 408(b)(2) Notice
Assume agreement that you will conduct the analysis and develop a custom solution for their consideration specifically addressing areas of concern and then schedule the date of your return to present your recommended solution(s).
How to stay on track…
By consistently executing this approach, you will differentiate yourself by offering the services of a professional employer sponsored retirement plan advisor who provides comprehensive retirement plan services versus those who simply focus on funds and fees. The results will be an increase in your contribution to the retirement plan industry, improvement in the retirement readiness of participants and the growth of your client base.
As you consult with your clients and work to earn their business, you’ll need retirement plan administration support and sales tools at your fingertips to further differentiate yourself from your competitors.
Ken Weaver is Director of Sales & Client Relations for Benefit Consultants Group (BCG), a nationally known retirement plan provider located in Cherry Hill, New Jersey. Visit www.bcgbenefits.com, or call 800-524-401k, option 3 to enroll in AdvisorEdge, a free advisor sales and service support program and learn more about 401(k) X-ray, a no cost comprehensive retirement plan review, which includes fund benchmarking.
SEE ALSO:
- Two-thirds want 401(k) Investment Advice, only 12 Percent Get It
- Only Half of U.S. Singles are Saving for Retirement
- National Black Chamber of Commerce Opposes DOL Fiduciary Rule
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
