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15 Minutes Could Save Your Client’s Retirement Plan

Here is a client marketing idea for insurance professionals who want to expand their existing client investment advisory relationships.  

This idea can improve your client’s retirement plan investment performance. At the same time, it will expand the amount of client household assets that you manage.

I don’t want to run you afoul of insurance regulators or your broker/dealer compliance department. But I suggest that you consider a client marketing niche that you may not have thought of before.

I have 30 years of experience providing investment advice to individual investors. In the past 14 years, I have developed an investment advisory niche providing investment advice to individual company retirement plan participants.

This advice is intended for insurance professionals who can act as an investment advisor representative within their existing broker/dealer relationship. This content is also a great fit for insurance professionals who have set up their own registered investment advisory firm.  

Let me start with a question. In your previous client marketing experience, what is the largest current pool of client assets?  

My guess is that your answer would be the client’s company retirement plan account.  The same would be true of the client’s spouse. Investment advisors of all kinds are often frustrated by the fact that these company retirement plan accounts are thought to be “off limits” in the existing client-advisor relationship.
Company retirement-plan accounts are the largest dollar-value accounts that most individual investors will ever have. Individual company retirement plan accounts can grow into well over $1 million in value over a working lifetime.

I would like you to be aware that your clients’ company retirement plan accounts are in desperate need of your knowledge and experience.

The 401(k), 403(b) and 457(b) company retirement plans in which your clients participate offer you the ability to gather tens of millions of dollars of new assets to manage for an annual advisory fee.
Why do stock brokers, investment advisors, banks and insurance professionals all compete for the same after-tax investment dollars of the same clients?

From the E*Trade talking baby to the two guys on the State Farm Discount Double Check commercial, the individual investors who are your existing clients have a non-stop list of investment management alternatives. Even the gekko at GEICO wants some of your client’s attention.

All these investment advisory firms have millions of advertising dollars to compete for the same pool of client assets. It makes more sense for the future growth of your investment advisory business to build a niche with your existing clients’ asset base where there is little to no competition.

No investment advisory firm is calling your existing client base about the hundreds of thousands of dollars in their company retirement plan account. The same goes for their spouse.

Your existing clients need an independent, third-party source of investment advice regarding their menu of investment options on their company retirement plan account.

I doubt that there is an experienced and qualified investment advisor in your local market who has the experience and qualification to provide that advice. I would make that statement regarding broker/dealer affiliated advisor or registered investment advisors.

With every great sales idea comes an equally challenging compliance question. Here is the question to ask your compliance department: Can I provide investment advice to individual company retirement plan participants on company retirement plan assets that my firm does not custody?

In my registered investment advisor world, I know that answer. Providing investment advice on any client asset base, regardless of location, is the same. I provide fiduciary investment advice to all my clients regardless of where their assets are located.

Investment advisor representatives and registered investment advisors all fall into the same category. That is why you need to give serious consideration to developing a company retirement plan investment advice niche service to your existing client base.

Building that niche advisory business could be done a number of ways. I would advise you to pursue the least complicated client marketing strategy possible. Your clients have never connected your relationship with them to their company retirement plan account. Don’t confuse them now.

On the next round of client service phone calls, instruct your client service representative to mention your new free review of all their household company retirement plan accounts.

For that review, the client needs to provide your office with two sets of copies. First, you need a copy of the complete menu of options in the client’s company retirement plan account. Second, you need a copy of the client’s most recent quarterly company retirement plan account statement.

Your client service representative needs to be able to provide the client with a good explanation for asking the client for this information. Again, the less complicated approach is the best. I explain the reason I ask my clients for this information the following way:

“Mr. and Mrs. Client, I need this information for two reasons. First, I want to analyze the complete menu of options available to you on your company retirement plan account menu. There are changes in company retirement plan menu options every year. It is likely that you have not kept up to date with those changes.
“Second, I want to offer you an investment management game plan before the next great stock market decline or dramatic rise in interest rates. Preservation of your recent stock and bond market gains is our primary concern. I want to show you how I may be able to help you put that plan in place in your company retirement plan account.”

Your client service representative is not asking the client to change the existing broker of record on the entire company retirement plan. Your offer is to the individual client. You want to be able to provide the client with investment advice on an ongoing basis.   

Once your client provides a copy of the menu of their company retirement plan options, you will need a report analyzing those options and providing the basis for your recommendations. This report should provide historical rankings and current recommendations that you can then tailor easily to your client’s specific needs.

I use The Sherman Sheet “Custom Report” service. The Sherman Sheet provides a ranking and analysis of the mutual funds for thousands of retirement plans nationwide, updated weekly, and is the best source I know for complete coverage of all your client plans.

My approach is to point out the gap – usually the very wide gap – between the performance achieved in the participant’s retirement plan account, and the performance that could be achieved with your tactical advice.
Since individual company retirement plan participants almost always own the wrong mutual funds from their company retirement plan menu, that investment performance gap has probably cost the individual company retirement plan participant a great deal of money. This gap may even make the difference between a retirement in comfort and a retirement in fear – or no retirement at all.

My analysis, aided by The Sherman Sheet reports, clearly explains the benefits of my investment advice to the individual company retirement plan participant, and lays a very good foundation for establishing a new relationship with an old client.

Ric Lager is founder and president of Lager & Co., a registered investment advisory firm based in Golden Valley, Minn. He was the co-creator of the “No More Pies” investment series for financial advisors and author of “Forget the Pie: Recipe for a Healthier 401(k).” Ric may be contacted at [email protected] .

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