Add Value and Keep the Competition Out with a 6-Step 401k Service Process
In an increasingly regulated and competitive 401k industry, advisors are always looking for ways to bring more value to plan sponsor clients.
By differentiating your services and demonstrating processes and procedures that your competition might not have covered, you can stand out from the competition and bullet-proof your existing book of business.
Below, I’ve listed six areas where 401k advisors can change, modify, or enhance your current process to be more competitive and offer more value.
ONE: Define Goals and Objectives
In order to gauge the success of the plan, and for you as an advisor to offer real value, it’s important that plan sponsors articulate their main objectives. This will help you understand the financial commitment the company is willing to make, how to best structure the plan design, and how focused and engaged they’ll be in the management of the plan.
TWO: Identify and Formalize Fiduciary Roles
Next, help plan sponsors identify those individuals who have fiduciary responsibilities and liability – and help them understand what exactly that means.
There are a number of ways to offer value in this area, such as providing sample documents for setting up a formal investment committee, fiduciary acknowledgment letters, and basic fiduciary training.
THREE: Stress the Importance of an IPS
Plan investment selection and monitoring is an area where most advisors have a pretty good process in place, but is still an area where shortfalls exist and where advisors can add tremendous value.
If a plan does not have an investment policy statement (IPS) or some written roadmap for the management of the plan investments – they should.
Finding an outdated or un-executed IPS is not uncommon. A simple agenda item at the annual plan review to pull, review, and update the IPS is easy enough to offer, but is often overlooked.
FOUR: Benchmark your own Fees
Ensuring fees and services are reasonable and necessary is a key fiduciary duty under ERISA. The ability to demonstrate reasonableness extends to any provider paid from plan assets (including you, as the advisor).
When we ask the question in our training programs, we typically find that more than one-third of advisors have never benchmarked their own fees for their existing clients.
The Fee Benchmarker. Enough said.
FIVE: Build an Effective Employee Communications Program
Because employees are the main beneficiary of a successful employee benefit plan, building an effective participant communication program is essential (and a great way to add tremendous value).
Leverage the resources of service providers, customize the program for the specific needs of the plan, and track the success and effectiveness of the communications program by running a baseline participant success report.
Investment Horizons or Perspective Partners both offer great plan-level reports identifying over-concentration, diversification, retirement readiness percentages, etc.
SIX: Head off Operational Compliance Shortfalls
Finally, on the plan administration side, providing a simple operational compliance checklist can head off a lot of common 401k administration shortfalls.
The IRS website has a checklist and I’m sure there are many others.
So there it is. Six things you can do to provide tremendous value to your plan sponsors clients.
I actually hope you’re already doing these things because guess what?
Years ago when I first created this list, these things were only being done by the top advisors in the 401k industry. Not so anymore. Now this is the standard, minimum set of issues you should address with you 401k clients.
If you want to compete in the 401k industry and grow a successful and compliant 401k business, find ways to integrate these items into your practice.
To learn more about these six issues including the regulations, best practices, and resources surrounding each, check out the PPC Program offered by fi360 – A Broadridge Company.