Free Erisa
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I’ve never done much in the way of business prospecting. Don’t know why not, because I pass about 200 of them on my way to the office every morning. Anyway, I was looking through our 401k marketing “toolbox” and ran across the link to freeerisa.com. I logged on and signed in and immediately found over 100 businesses in my zip code. Some big, some small. Found the local Thrivent turned indy lady down the road from me. She needs to save more money.
Have any of you had any experiences prospecting businesses using freeerisa.com or the Lord Abbett 5500 reports? Other than the Jones approach of walking in and handing them a business card, what have you done that has been successful? I realize the info is a couple of years old at best, so are there other sites that have more recent info? Any way to find out on some of the smaller plans who the provider is?Good post. I would like the read peoples responses to this post. I love 401K business.
Miss J
I use it. I only prospect exisisting 401K’s over 750K. It allows you to cut through a lot of noise.
Personally, I like the Lord Abbett service. You have to call them for access.
MJ, how have you gotten most of your 401K business? And don’t tell me it’s because you’re hot. That would just be unfair to us men.
Free Erisa gives you some good useful information. Plan size, # of participants, who the plan is with, and who the decision maker is. From there it's just like any other part of the job, call or go visit the decision maker and introduce yourself and see if he has time to sit down and visit about the 401(k). I've used it to target the insurance based plans in my area.
Freeerisa is the baiss for targeted cold calling on pension plans 401(k) etc. Just find plans in old group annuity contracts where the advisor is making unreasonable commission and call the HR director and ask them"Mr. White did you know that your current advisor made $25,000 on your retirement plan last year." Pause what kind of services are they providing to justify that fee! If the advisor hasn’t disclosed their commission structure unless they manage the owners personal money they will be in the hot seat. Note this strategy is designed for advisors that actually understand this business because if you get in a meeting and know nothnig the incumbent advisor will point out that their specialist status allows them the ability to charge their fee.
So, for instance, I found a company in my zip code with about 500 participants that have a plan through Fidelity. I know it's not an annuity based plan, but it's worth $31 million. They paid $15,000 in fees. So, you'd try to find the decision maker on the plan and ask if they got $15,000 worth of service from Fidelity? I know it's not that simple, but is that the basic approach?
Next question, would a new player to this arena have a shot at a plan like that?Not sure about Lord Abbett but FreeErisa is about as good as it gets for public documents. I’ve used 401(k) Exchange which has their “Prospect Goldmine” database. FreeErisa tends to be updated faster than 401kEx for 5500s although 401kEx. actually does survey the businesses and obtains customer scoring of their plan and provider. 401kEx also has some other useful tools although the interface to the 5500 database and their tools can suck.
I probably would not pay for any service providing 5500 data alone - there isn’t anything there that you can’t really find on FreeErisa.
[quote=Spaceman Spiff]
So, for instance, I found a company in my zip code with about 500 participants that have a plan through Fidelity. I know it's not an annuity based plan, but it's worth $31 million. They paid $15,000 in fees. So, you'd try to find the decision maker on the plan and ask if they got $15,000 worth of service from Fidelity? I know it's not that simple, but is that the basic approach?
Next question, would a new player to this arena have a shot at a plan like that? [/quote] Spiff - unlikely at Jones. Platforms available just won't work. Fidelity generally sends a team out to do educational seminars at the site every quarter. Sometimes more often. Believe me, I tried to get some of these plans while I was at Jones. Also, think about how little that is. The cheapest plan that you could likely provide them would charge .15 bps, which would cost them $46,500. That is, unless things have changed. However, I think you have the right approach. You should be able to find the plan administrator on the 5500, and try and get in touch with that person.It’s OK. I figured out a few minutes after I made that post that the company I was looking at with the huge 401K is actually based in CA. There’s a company in my zip with the same name. It’s only a $50K account. Maybe I’ll start there and work my way up.
Spiff I don’t know for sure what capabilities Jones gives it’s advisors in the retirement plan space but here is my opinion on a mid size plan like the thirty one million one you looked at: First off Fidelity is the 800 lb gorilla in the QRP space but they can be beat. However with that size plan you are really going to have to team up with a specialist that will act as the named fiduciary. If you have a personal relationship with the CEO, CFO etc. that will help. But you still will need to understand 404C, what it means to ge a fiduciary, how to handle an investment committee etc. There is a lot to this I would recommend you mine your existing book of business owners and see how many of them have heard about New Comparabilty. NC is a type of profit sharing that is very advantageous for certain professional groups where the senior partners age is significatnly higher than the other employees. For business owners that are willing to put money toward employees retirement accounts it can signifcantly help them out as well. Also find a good local TPA (Third Party Administrator) to team up with. Just make sure they are not a producing TPA, that means they will also act as a broker on plans and are your competiton. Lastly on the fees they pay Fidelity you could use the approach of you paid X to Fidelity was it worth it. However this technique really works best with plans in old insurance contracts that a health benefits broker sold years ago and isn’t competitive. Low hanging fruit in my experience would be any John Hanc***, ING, Hartford, Transamerica, Principal, etc. plan five years in that is around one million to three million in assets. You can almost certainly save the participants a lot of soft dollar fees by benchmarking the plan. Word of caution though the sales cycle for this business is longer with the current economic conditions. What was once a six to twelve month sales cycle is now probably a twelve to twenty month cycle. Good luck though it is very sticky business.
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