The small market means big business for 401k advisors, and a new platform hopes to capitalize on the truism.
On Tuesday, Principal launched Principal Flex for retirement plans under $1 million, “which consists of two streamlined retirement packages developed to help small- and medium-sized businesses (SMBs) and tax-exempt organizations offer flexible retirement benefits to employees.”
SMBs, which have 500 or fewer employees, “are the backbone of the U.S. economy—making up 99.9 percent of all U.S. businesses,” according to the company.
Of those with fewer than 100 employees, 47 percent do not have a retirement plan—a benefit generally expected by employees.
Principal adds that with 69 percent of small U.S. businesses planning to hire in 2018, there’s a high demand for qualified workers.
And U.S. unemployment is hovering around 4 percent—a 17-year low—making the need for competitive benefits packages critical to the continued success and growth of small businesses.
The two plan packages, Principal Flex and Principal Flex – Open, feature advisor benefits including:
- Ballpark baseline cost with fewer required inputs
- Investment options to fit their SMB client strategy
- An expense collection option that better helps clients budget for plan costs
- Quick plan evaluation capabilities with transparent cost structure
- Compensation flexibility to help fit the needs of financial professionals
“Principal serves more than 37,000 SMB clients with nearly 1.3 million participants,” Kevin Morris, vice president and chief marketing officer of Retirement and Income Solutions, said in a statement. “We’ve generated a wealth of data-driven insights from these clients and talked with advisors – and that allows us to uniquely understand the challenges SMB owners face and how to provide them effective products.”
Depending on the respective Principal Flex package selected, advisors can leverage several advantages for employer clients including offsetting administrative costs, tax saving strategies and paperwork reduction.
Principal Flex packages also offer participant services and additional customizable plan features typically enjoyed by larger organizations.
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.
