Big 401k Plan

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runswithbulls's picture
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Joined: 2006-10-02

I know it is a very long shot, but a personal friend/client owns a very large company with a very large 401k plan...between $30-40 Million. 
Has anyone had experience in getting their hand in a plan that large?  I know there are a few hands in the pot so to speak, but before I approach anyone on this, I thought I'd get some of your thoughts on this first.
By the way, my main goal with this client is to make him a referral gold mine and to do "lunch and learns" for his over 600 employees.

troll's picture
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Joined: 2004-11-29

Have you considered asking your friend instead of us? If you're gonna run with the bulls, you'd better act like a bull.

vbrainy's picture
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Joined: 2006-07-26

ummm.  It is not that large of a plan. 40 million and 600 people?  That is about $66,000 in each account.
Well, anyway, 401k are usually a VERY LONG lead time item.  But, you pick a good wholesaler and they do all the work for you.  You usually get an upfront check and trails.  They pay like an A share.
Good luck.

runswithbulls's picture
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Joined: 2006-10-02

Bobby, I expected nothing less from you.  Seeing how 401k plans are not my primary business, I thought it would be wise to see what others might do in this arena before I opened my mouth to the client.
I do know however, that you would have no valuable information to contribute since this has nothing to do with annuities.

om_nupe's picture
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Joined: 2005-12-16

I have to agree with part of Bobby's comment (can't believe I'm saying this) Ask your friend, what it is he is looking for in a plan. This will give you a leg up because I guarantee your competitors are selling their plans without knowing how to customize it for their clients. Also find out what differentiates yourself from your competitors and go at it from that angle. Many advisors sell on products opposed to themselves as stated above. You can win it, keep the faith and become a problem solver.

vbrainy's picture
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Joined: 2006-07-26

runswithbulls wrote:
Bobby, I expected nothing less from you.  Seeing how 401k plans are not my primary business, I thought it would be wise to see what others might do in this arena before I opened my mouth to the client.
I do know however, that you would have no valuable information to contribute since this has nothing to do with annuities.

oh ho young one.  Most 401k plans are actually annuities.

troll's picture
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Joined: 2004-11-29

runswithbulls wrote:
Bobby, I expected nothing less from you.  Seeing how 401k plans are not my primary business, I thought it would be wise to see what others might do in this arena before I opened my mouth to the client.
I do know however, that you would have no valuable information to contribute since this has nothing to do with annuities.

Last time I checked, YOU were the vagina that came to us and asked us to help you figure out how to do something that you have no business doing. Did you expect this response, runswithbunnies?

blarmston's picture
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Joined: 2005-02-26

Bulls,
Contact your retirement specialist in your area. Position them as the expert in 401K planning for your firm... Arrange a meeting with the prospect and take them along. You sit back as the specialist does their thing, hopefully you close the business, and the best thing is that you keep all the gross...
If the prospect asks, your value is in providing the services 'over and above' the 401K side- the individual meetings with EE's, the lunch and learns, etc, etc...

bondo's picture
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Joined: 2007-04-15

What do you mean by  "a few hands in the pot"?
If you don't think you can close it I can take it off your hands.

troll's picture
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Joined: 2004-11-29

VBrainy is partially correct. Most, or many, SMALL 401k plans are annuity wraps. I've seen a few large ones that are, but it would be very unusual to see a plan of the size youare talking, in an annuity.
If that IS the case, its a no brainer, because the participants are paying M&E charges, along with the MF ER's. These are the easiest programs I've taken from comppetitors, because half the time, the plan sponsor isnt even aware.
The best ways you can differentiate yourself  to the sponsor of this plan:
1. As has been stated before, employee education. I took a $2mm plan away from a competitor last year on a cold call, because the other guy sold them the plan 8 years ago and hasnt been heard from since.
2. When showing your proposals, ask the right questions, do the research and come up with proposals from 2-3 different providers. Ask the plan sponsor to set aside a morning for you to come in and sit on the same side of the table with him, while the 2-3 providers come in and present to the both of you. The effect is obvious, no need to state it.

younggunz's picture
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Joined: 2006-01-16

I'm actually in the same situation.  One of my clients who is in upper management told me that the rumor is that there looking for a new plan.
They have about 3,000 employees participating so ya it is big, but I have the number of the human resource person in charge of the plan and who would be in charge of looking for a new sponsor and presenting it to the board.
I have NEVER done a huge 401k plan like this so I have no idea how to approach it.  They have the option of about 20 mutual funds and they are at fidelity.
Any advice guys?

blarmston's picture
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Joined: 2005-02-26

If you workl for a wire, bring in a Retirement Plan expert. Or partner with some wholesaler from say Hartford or Hancock that knows 401Ks inside and out....
Or ask your manager and they can help you.

doberman's picture
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Joined: 2005-02-22

First, call the HR person and confirm if the rumor is true. Even if it isn't, ask for the opportunity to compete for the plan, anyway.
Next, get a copy of their plan, currently offered by Fidelity. Sit down with someone (who would know), and ask why the consideration of a new sponsor. The person (in the know) might be the HR person or the Board or simply Management. Why are they looking around? Make sure that the presentation of the proposed plan is in front of the Board and/or Management! (If the HR person is the only one making the decision on the plan, don't go to too much trouble.)
Now, lets assume that they provide you a list of plan requirements that you can't possibly fulfill. In fact, there's no way you'll ever get this plan. (For example, they want a plan that only costs $500/ year.) Do you give up? Do you walk away? NO!!!!!!!!!!!!!!!!!!!!!!
What you have here, my friend, is the best of all possible situations. You have the opportunity to sell yourself and your firm, to a group of obviously very well-qualified prospects. So what if you don't get the plan? How many individual accounts might you get from the Board / Management, as a result of your excellent presentation?
Need help on your presentation? Check with your B/D's retirement resource person to locate the most polished, most skilled presenter. Hell, pay for their plane ticket down, if need be, to put your presentation in the best possible light.
I don't care if the company's main concern is the expense of their plan. Even if the most polished presenter represents a plan that is 3 times the cost of the company's current plan, bring him/her on down anyway.
Remember, if you can't get the plan, then concentrate on getting individual accounts. And the best way to do it, is to give a "knock-out" presentation. Then when you leave that presentation, the Board / Management will have the impression that you and your firm are first class. Be prepared to field calls from some of the members of the Board / Management about reviewing their personal investments.
Good Luck!
 
 
 
 

younggunz's picture
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Joined: 2006-01-16

wow doberman thanks so much for your response you have been really helpful.How do I get a copy of the plan.  I found them on free erisa.com and they have 3 plans it looks like.  2 plans with mutual fund options and on tax sheltered annuity plan. I have never called on 401 k business what would you guys say when I get the HR person on the phone.  They can't know that I know that they want a new sponsor ( via the clients request that he stay anonymous).I have there direct ext.  What would my opening line be to close for the appt.

doberman's picture
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Joined: 2005-02-22

To get a copy of the plan? Simple, just ask the HR person for it.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
But first, (based on your previous post) since you don't want them to know (that you know) they're looking around. How to get around that? Simple again, call the HR department and ask for the person who handles the retirement plan for the company. When connected, introduce yourself, tell them that you and your B/D specialize in providing retirement plans for companies of their size. Also, tell them that you're aware that they have their current plan through Fidelity, that you love competing against Fidelity, and that you would love the opportunity to compete and offer a plan better than the one they have now.
Typical HR response: "Well, we won't be looking at any other plans until (some future date)." You: "That works out just great, since it would take some time to study your current plan, to find out what services and benefits you and your employees are looking for, and then to match those requirements with one of the 1,000 plans we currently offer, for the best fit. Would next Tuesday at <?:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />10 AM be convenient to drop-by and pick-up a copy of the plan?" 
When you drop-by, set-up a future appointment to go over the details of the plan. Even better, offer a luncheon appointment to the company contact person and have your firm's retirement specialist accompany you to the lunch. Why? Well, if you've never handled company retirement plans, you'll want someone with you to ask all the right questions and lead you in the right direction. What? Your B/D won't spring for the plane ticket for your specialist to accompany you? Buy it yourself! What about a wholesaler accompanying you instead and saving you the price of a ticket? Well, you could go that way...but, I would recommend having someone unbiased. A wholesaler may try to steer the luncheon toward their particular plans. And wouldn't that look suspicious, since you're supposedly only just gathering info right now, for later consideration. The luncheon should come-off as being agenda-free.
Tell the company contact person that it may take a few more lunches/meetings in order to gather all the information you require to make the appropriate recommendation - and it will.
Remember, the chances of you getting this plan are slimmer than a sober Paris Hilton on a Saturday night. So, your presentation needs to appeal to the "moneyed" Management and Board of Directors. Show them that you're a first class FC, who only represents high quality companies, and who knows their stuff.
You won't get the company plan, but you will get their individual accounts.
By the way, if you haven't figured it out yet; calling companies to "compete for their retirement plan" is a great marketing tool to eventually get in front of qualified prospects. Slow going maybe, but worth it.
Good luck!

FreeLunch's picture
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Joined: 2007-06-16

Sometimes it can be as easy (with smaller plans (20-50 people)) as changing a "broker of record" for a retirement plan, as you would with an annuity.
Then periodically do investment seminars for the employees, get their seperate accounts & family accounts, sell insurance, etc..etc.. etc.
Plus you will know when someone is retiring, and there is a perfect rollover prospect.
 

troll's picture
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Joined: 2004-11-29

FreeLunch wrote:
Sometimes it can be as easy (with smaller plans (20-50 people)) as changing a "broker of record" for a retirement plan, as you would with an annuity.
Then periodically do investment seminars for the employees, get their seperate accounts & family accounts, sell insurance, etc..etc.. etc.
Plus you will know when someone is retiring, and there is a perfect rollover prospect.
 

Get back on the phone and let the grownups talk, piker.

FreeLunch's picture
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Joined: 2007-06-16

(Yawn)

Broker24's picture
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Joined: 2006-10-12

blarmston wrote: If you workl for a wire, bring in a Retirement Plan
expert. Or partner with some wholesaler from say Hartford or Hancock
that knows 401Ks inside and out....
Or ask your manager and they can help you.

With Hartford or Hancock, you're looking at group annuities. Nice
platforms, but expensive. Typically, plans (not including mega size plans)
that have real good features, nice websites, lots of MFD options, have to
be group annuities. It's the only way you can pay for that level of service.
It's not that they are bad, but once you wrap in all the fees, it's pretty
damn expensive. These are the easiest plans to steal from someone
because of the costs (which usually were not fully disclosed to the
decision makers).

On the flip-side, if you go bare-bones, you get bare bones service (basic
website and 800 number) and few MFD options - and usually the crappy
funds from whatever families you're using. That's why so many Fidelity
plans suck - you always end up with the worst of Fidelity's funds to
choose from.

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