If you are still new, I wouldn’t bother prospecting 401ks unless it falls in your lap.  Why?  The big, profitable ones can take well over a year to land.  The small and start up plans will ensure you will starve and fail out of the business.

MPR, these are tough to prospect, and even tougher to land. My suggestion? Focus on prospecting business owners for their personal stuff, then mine them once they are clients for their business accounts. Once you have an established practice (aka “steady income”), you can devote more time to prospecting 401K’s. Right now, devote maybe one morning per week to making some calls. Much more than that, and you will starve. Why? It will take you talking to 20-30 businesses before one even agrees to an appointment. Then, it may be a startup plan (no money), and even if it’s a takeover, it may not pay a ton to move the money. AND the lead time might be 3-6 months to get it implemented (or longer).

Listen to Deekay and to Broker24.  If you want 401(k) business, go after business owners on a personal level.   If you do this, you will always have a legitimate opportunity for the 401(k) business.

The other side to this is that you can call on 401k’s and end up having a conversation with the business owner or CFO about their personal assets.

MPR if  you really want to do the 401 (k) thing your best bet is to pick a niche and just focus on plans in that size range.  Since your just starting out 2 million and under is probably the best way to go and avoid startups unless a friend requests it.  The main issue that your going to have is that there are some very experienced advisors who do this as either all or most of their business and your base knowledge won’t be enough for you to seriously compete on any plan say 5  million and bigger.  I’m not trying to bash you  I’m just being realistic unless you can respond to me and tell me what provider you could use that can clean Fidelity direct or Schwab’s clock and make a client go with you over them.  That is the size where those providers lurk and at 10 million it’s a given they will be in the picture.  You should continue to get personal money as an average 6-12 months close from cold call to ink on the paper is very common.  Also the bigger the plan the longer it will take so you can extend that by another 12 months almost automaticlly with larger plans since they have investment committees and boards to make decisions dealing with benefits.   As for favorite vendors that really depends on the wholesaler and I am sure twenty different reps could have twenty different opinions about what provider is best.  I would simply contact the internal for some well known 401 K providers and have the external take you to lunch so you can learn about their product.  Tell them you will be doing a lot of 401 K business  and want to know why you should use them.  I could tell you the lowdown on two dozen providers but you aren’t going to learn anything by that.  So you get to do what others have done before you hustle and figure it out on your own.  You can also search previous 401 K forums for specific names of vendors.

So hypothetically, if you were to try to pursue 401K business under 5 million dollars, lets say you focus on plans that have under 15 employees and over 1 million in assets, would this have as long of a close time? Does anyone have good suggestions for what works if you are cold-calling these plans? 

I think that you both are missing the point which is this "IF YOU REALLY WANT TO GO AFTER THIS BUSINESS MAKE SURE YOU HAVE RECURRING REVENUE TO SUSTAIN YOURSELF!!!  Or I will put it this way go after this business only and be prepared to not close one for 14 months and be ready to eat two meals a day.  It is truly going to take that long to learn the ins and outs  and be competent enough to close this business.  There is nothing wrong with wanting to get involved in this market as the business is very very  sticky these plans aren’t moving every year more like every five.  But if you are at a wire they are going to want to see production out the gate and that is not gonna happen with qualified retirement plans.  Ideally you want to build your book learn a lot about the different providers and then go independent because at a wirehouse the gird you are on is going to make this business not very appealing.  Also plans that are $500,000 can take as long as $6 million the timing just has to be right.  As for specific employees that is stictly gonig to be something you will need to find out on your own.   I will say that being indepedent makes a big difference in this business as a lot of wires don’t have selling agreements with al of the providers out there.

So hypothetically, if you were to try to pursue 401K business under 5 million dollars, lets say you focus on plans that have under 15 employees and over 1 million in assets, would this have as long of a close time? Does anyone have good suggestions for what works if you are cold-calling these plans? 

Or you could cold call about 500 people in the time it will take you to do the above research.  Time spent like this will get you out of the business.

[quote=Primo]Or you could cold call about 500 people in the time it will take you to do the above research.  Time spent like this will get you out of the business.[/quote]

Perhaps you are right.  If fewer brokers have the knowledge/desire/willingness to become savvy in the 401k business, there will be much less competition from competent professionals competing for plans.  Sounds good to me! 

You are right Akkula, you got me.  There is virtually no competition for desirable 401k plans (>$5mm).  This is not a well known fact.  They tell you the day you graduate from training.  I am forced to only use the simple products that require less skill to sell, you know stuff like futures and options.  OP, unless (and that is a big unless) you have a natural market (you know of 401k plans that want change) that are willing to move NOW (highly unlikely) you are increasing your chances of failure if you are new.  And this business has a very high failure rate to begin with.  BTW, just because you worked in a back office Akkula, you do not know this business.  Just like seeing your dog give birth to puppies does not make you a gynecologist.

Akula,

I would be interested to know how many 401k plans everyone telling this person not to pursue selling them have sold and gone after that aren’t already tied to other assets you already control.  This forum seems to be exclusively devoted to encouraging people to go after IRA/401k rollovers and gathering assets from individuals.  There are a million brokers doing the same thing and chasing the same assets.

I have to say, much of what Akkula says is correct.  And I don't think he is suggesting you abandon all other forms of business prospecting to go after 401K's.  The truth is, if you want 401K business to "fall in your lap", you need to be well educated on how they work.  I thought I knew how they worked, until I had a mentor show me the ropes.  With some education, you can make quite a few more plans "fall in your lap", by simply knowing which buttons to push with business owners (various fees/expenses, lack of service, lack of investment choices, etc.).  Most don't give a dink about the compliance side, until you start mentioning fiduciary liability.

Honestly, I think Akkula has some good advice, and since someone started this thread by asking for feedback, I think people should at least give his comments some merit. 

And FYI, he said "these are my OBSERVATIONS".  He made no mention of being a 401K prospecting king.

Akkula has some very good points related to the 401 (k) market.  The point that the other advisors are trying to make is that it might not be  good to have a plan and goal to focus on this business so early on.  You need to understand that you have to be bringing in other business because while it would be great to land a $50 million dollar plan charge 10 bps and have a sticky plan that won’t move for a decade you can waste a lot of time elephant hunting.  Look at this way getting that type of plan is very similary to going after an individual client with say $5-7 million  account size.  You as a new advisor will face very stiff competition for that client.  Even with a relationship and a plan to put it in managed money you will not  be a lock for that business.  Now imagine that only some of your competition is showing something where you the advisor aren’t in the picture.  Think Vanguard, Schwab, Fidelity, and T. Rowe Price.  For every advisor that gets a large plan like that they have probably made it to the finals on ten that size.  They also are very sophisticated and experienced and know several dozen providers inside out.  You need to master the ability to get smaller plans before you step up to the big leagues.  Think of yourself as a minor leaguer once you have mastered single A  you go to double A.  Right now you want to face Johan Santana in the World Series with the game on the line.  Translation you aren’t there yet so instead of frustrating yourself learn about the business, bring in smaller plans and when you think your ready take a crack at some small plans $5-10 million see how that goes and then progress from there.  Just my two cents from someone who does a lot of this business and found with a good client base in place life is much easier to focus on 401 K.

$5-7 million dollar 401k plans are probably more realistic for most advisors to target (or even smaller).  There are a lot more of them out there.  Going after plans that are over $20 million will be nearly impossible to land even for the top advisors since many of them deal directly with vendors.

I will tell you though, that plans who have advisors still seem to get better service from their vendors.  Vendors can take plans for granted unless a broker is acting as an advocate for the plan.  This is the value that brokers have...strong arming the vendors into giving more/better/additional services to the clients.  I hate to say it, but it is true. 

My point is actively prospecting for 401k plans can be all or nothing.  Knowing your trade is always a good idea.  The reason that brokers go for ira/401k rollovers is that this method will increase your odds of making it in this business.  When you are new to the business, your biggest obstacle is making it to year 5.  If you can accomplish this with 401k plans, more power to you.  But this has been tried before and the posters on this board are simply sharing their experiences.