Financial Advisor Support


Three ways financial advisors can add value when working with plan sponsors

Retirement plan sponsors are consistently looking for financial advisors that can help them run their plan and add value on an ongoing going basis. And for good reason! The advisor’s role in a 401(k) plan is an incredibly important one. Acting as a guide, advisors can help plan sponsors maintain the health of their 401(k) plan.

Advisors that are adding value and making the plan sponsor’s life easier have a greater chance of retaining the plan on their books, growing their business through ancillary business (like participant IRAs, 529s, and other personal accounts), and gaining referrals. So you may be wondering, “How can I help plan sponsors run a retirement plan and add real value?” We’re here you to tell you that it’s possible. Here’s how.

How financial advisors can add value when working with retirement plan sponsors

· Industry expertise

ERISA—the law which governs 401(k) plans—is a process law. The best way to stay in compliance with the law is to have a solid understanding of the process required, but rigorous retirement rules and regulations can cause confusion among 401(k) plan sponsors. They likely aren’t experts in the industry, after all! Advisors can bring value to plan sponsors by providing guidance on ERISA regulations and ensuring the 401(k) plan remains complaint.

· Participant education

Plan sponsors want an advisor that is willing to engage with participants—not only to get them to enroll in the plan but also to advance their financial literacy. Simply enrolling in a 401(k) plan at the default amount (if automatic enrollment is in play) won’t necessarily put participants on the road to retirement readiness, so providing education is an important step in encouraging participants to stay engaged with their retirement goals.

Financial education and distribution planning is also a great way to gain participant trust. So whether you make yourself available in the office, send regular emails, or host group meetings throughout the year, the effort will be recognized. And you may even be rewarded with referrals and ancillary account business!

· Plan review

It’s essential to review more than one investment option when starting a new 401(k) plan, but again, most plan sponsors lack the industry expertise required to make well-informed decisions. Financial advisors can again show added value by evaluating the market, keeping up with industry changes and trends, and transparently discussing plan fees—including your own compensation.

Additionally, reviewing the plan’s performance with the plan sponsor annually will go a long way in showing the sponsor you really have their best interest at heart. Gauge how well the eligible employees of the plan are saving and offer proactive solutions to increase plan participation among eligible employees.

So how can you showcase all the value you offer to plan sponsors upfront? Having a one-sheeter or print out you can easily distribute may help plan sponsors clearly see the benefit of bringing you on board right off the bat. And one of the biggest benefits of having a value statement is that it allows you to set expectations with the plan sponsor and be assured there are no miscommunications on who is responsible for what. This goes a long way in building solid, lasting relationships and being valued by plan sponsors and plan participants alike.

How to write a value proposition statement as a financial advisor

As a financial advisor of a 401(k) plan, you’re constantly performing a multitude of services. You plan needs assessments and investment strategies, provide participant counseling and fiduciary consultations, analyze the cost/benefit of a plan, and evaluate plan performance. Simply put—you do a lot.

It can be difficult for advisors to easily show potential clients how valuable the services they offer can be, which is where the coveted value proposition statement comes in. But what is a value proposition statement, how do you write one, and how can it help?

Writing a successful value proposition statement as an advisor

In a nutshell, a value proposition statement explains the benefits you will deliver to your clients, and it’s important because it plays a fundamental role in cultivating a positive first impression. Likely, there are many advisors in your area that a perspective client could choose to work with. You need a clear, concise summary of benefits that tells the client why they should choose to work with you.

And when it comes to providing a value proposition statement for new or existing clients with a 401(k) plan, you’ll want to generate awareness of the contributions you make and how your efforts affect the overall health of their 401(k) plan. Having this information documented and presented in a meeting with the client or plan sponsor is extremely valuable because it can tell them a lot about your business and your work as a financial advisor in a short period of time.

Information financial advisors should include in a value proposition statement

As mentioned, value proposition statements give you a chance to sell yourself and your services—fill the perspective client in on why you might be the best fit for their individual needs. There are a variety of things the new client will want to know about you right off the bat, including:

· How you are unique and different from other advisors

Use your value proposition statement to set yourself apart from the pack right away. This can go beyond the value proposition statement itself and can be demonstrated in how you present the value proposition statement to the client. Think outside the box, be sure to elaborate on any major key points, and provide examples when possible/necessary.

· What you are going to do for them and their 401(k) plan

Articulate your value to the plan and provide detailed steps you are going to take to keep their plan healthy. Doing so will ensure everyone is on the same page with the role each of you plays in the administration of the plan and overall plan strategy. Clients will also appreciate transparency upfront, furthering their trust.

· That you care about their own retirement readiness

Value proposition statements provide you with a great opportunity to outline the ways you’ll properly care for their plan investments and overall retirement readiness. Whether that be through partnering with a 3(38) service to delegate fiduciary responsibilities, monitoring the performance yourself, or providing feedback directly to the plan sponsor, it’s important to show perspective clients that you want to provide excellent outcomes both for them and any other plan participants.

If you don’t already have a value proposition statement created, starting from scratch can seem like a daunting task. Luckily, there are a variety of tools online that can help you create a new value proposition statement if you don’t have one already or help you generate new ideas to strengthen the one you already have. Either way, value proposition statements go a long way to showing your worth to any perspective client that walks through your door.

Four benefits financial advisors can offer small businesses

There’s been a lot of recent talk about financial literacy, and a lot of the conversation revolves around retirement plan participants and their too-low contributions. But where do small businesses fall on the financial literacy spectrum? Recent studies show that small businesses and small business owners may need just as much help.

In fact, studies show that 60 percent of small business owners have not consulted with a financial advisor, and even more alarming—30 percent of small business owners haven’t calculated how much money they’ll need to live comfortably in retirement [1]. Most small business owners understand how an advisor can help them reach their goals, but many don’t believe they have the time or resources to meet with one. They’re already pulled in multiple directions on a daily basis as it is, but demonstrating just how valuable your services as an advisor can be may help them justify setting aside time to meet with you.

How financial advisors can benefit small business owners

· Time-saving

Small business owners constantly feel torn in different directions, so show them how you can save them time by helping them manage their current retirement plan and other finances. They’ll want to be able to continue growing their business, so ensure them that your services will help them save valuable time they normally spend on managing their financial services. With you on their side, they’ll be able to instead designate that time to building their brand and growing their business.

· Technology advancements

Make yourself the client’s go-to source for financial technologies that can help their business or make their financial processes more efficient. Small business owners are constantly looking for process improvements that can save them time and money, and positioning yourself as the go-to source for up-and-coming technological advancements is a great way to add value as an advisor.

· Value proposition statement

Showing the small business owner upfront what you are going to do for them and how it will help them will help you gain their trust and respect. To get started, create your own value proposition statement—and be sure to include all the ways you’ll add value to both their retirement plan and their business as a whole.

· Personalized advice

Customize the advice you give small business owners to fit their individual needs and goals. They’re looking for advice that not only maximizes their current finances and retirement plan assets, but also puts them in the best position to be retirement ready when that time comes. By tailoring advice to their specific situation, you prove that you care about their overall financial well-being and retirement goals.

The opportunity for financial advisors to crack into the small business marketplace is large; you just need to find the proper ways to do it. Following these tips may help you grow your business by opening the door to conversations with small business owners—giving you the chance to show them exactly how valuable you can be to them as a financial advisor.

Why advisors should provide financial education to plan participants

Employers play a significant role in helping American workers of all ages realize their retirement dreams, but it can be tough for small businesses to offer the level of financial education needed to get employees to properly contribute to a retirement savings plan. After all, they’re mechanics, dentists, and retailers—not investment experts.

The need for education is clear for retirement plan participants, with 80 percent of U.S. adults reporting they would benefit from some form of professional financial advice or education [2]. But if the employers aren’t equipped to provide such education/advice, then who is?

Well, if you’re a financial advisor, you might be just the person for the task.

Providing financial education to retirement plan participants

One of the major cornerstones retirement plan sponsors are looking for is retirement education for their plan participants, and you’re in a perfect position to provide the information plan sponsors are looking for. They want their employees to not only know the benefits of participating in the plan, but they also want to feel comfortable and secure that the plan is helping their employees prepare for retirement.

As an advisor, there are critical things you can do to support the plan sponsor’s fiduciary position and provide valuable information to participants.

· Offer enrollment meetings

Enrollment meetings provide a great opportunity to discuss the characteristics of the retirement plan with plan participants. Go over the investment options and give insight on which investment option may be the right fit for participants. Allow time for attendees to ask questions, and provide your contact information so participants can easily reach you should they need further guidance.

· Provide fund portfolio profiles

Fund portfolio profiles offer an easy-to-digest, high-level overview of the retirement plan’s investment choices and are a great resource for plan participants. Provide a small packet or one-sheeter with the most important and relevant information to help participants make an educated decision on which portfolio is the best fit for their individual retirement goals.

· Meet annually one-on-one with participants

Annual one-on-one meetings with plan participants give financial advisors the opportunity to discuss retirement goals and verify the participant is on track to meet those goals. It also gives you valuable facetime with participants in the plan and opens up the possibility to grow your business through other ancillary services you offer.

Offering participant education to your retirement plan clients is just one way to easily set yourself apart from other financial advisors who as aren’t willing to go above and beyond the call of duty. Not only will your current clients be impressed and satisfied, they will most likely talk to their network—potentially increasing your referral business. It becomes clear, then, that providing participant education is beneficial for all those who are involved and is essential to putting American workers on the path to retirement readiness.

How is being a 3(38) investment manager valuable as a financial advisor?

Adding a 3(38) investment management service is a popular approach in the retirement plan industry due to the rigorous regulations and responsibilities regarding fiduciary duties. But financial advisors have one big concern when it comes to outsourcing 3(38) responsibilities: how to answer client questions like, “If you’re outsourcing the fund selection to an investment manager, what do you do?”

You do a lot. You customize plan design, provide participant services and education, evaluate the success of the plan, and much more. As a seasoned financial professional, there are a number of services you perform that your client may not be aware that you do. But the aforementioned conversation can be tricky to navigate because many plan sponsors don’t understand their own fiduciary responsibilities and many assume the advisor is the fiduciary—not them. You’ll want to clear up any confusion the plan sponsor may have, explain the benefits of using a 3(38) investment management service, and clearly detail why it would be a great addition to the other services you’re providing the plan sponsor or client.

How adding a 3(38) investment management service to a 401(k) plan benefits the plan sponsor

Adding a 3(38) investment management service to a 401(k) plan is hugely beneficial to plan sponsors, but they may not realize it because many are still confused about where fiduciary responsibilities truly lie. For the plan sponsor, utilizing a 3(38) investment management service will:

  • Transfer fiduciary responsibility away from the plan sponsor for the plan investment selection and monitoring, as well as the investment policy decisions

  • Offer a diversified selection of professionally managed portfolios

  • Save valuable time so plan sponsors can focus on growing and managing their business

  • Provide participants with access to investment professionals who are monitoring participant accounts and decisions

Why financial advisors should offer 3(38) investment management services

Plan sponsors aren’t the only ones who can benefit from having a 3(38) investment management service on their side. Financial advisors who choose to offer a 3(38) investment manager in addition to their services will also benefit. How? For starters, it:

  • Provides time to perform client management services such as plan design, benchmarking, and plan performance

  • Increases the amount of resources you can put into participant education and retirement savings outcomes

  • Frees up more time for you to spend answering client questions and checking in on them

By making your existing and prospective clients aware of the contributions you make to the overall health of their 401(k) plan, you increase your chances of closing new business, as well as retaining your current book of business. If you have any questions about 3(38) investment management services or how to find a 3(38) that works for you, contact us today at 800.236.7400, option 1.