Partners Tony Franchimone and Larry Deatherage of Prudential Securities in San Diego sell corporate 401(k) and 403(b) plans to employers across the country. But landing retirement plans is only part of the goal of the Deatherage-Franchimone Retirement Planning Group.
The four-broker team also wants to attract individuals. They use an “extremely soft-sell” approach to reach future retirees by holding periodic seminars and meetings within those companies, Franchimone says.
“We've had some success in bridging the gap from participants in plans, so when they retire it's a natural progression for them to flow those assets [to us],” Franchimone says. “The relationship stays with us.”
The team has about 1,500 individual clients and 55 plan sponsors on the books. In mid-2001, the group had about $300 million in assets under management and was generating roughly $1.5 million in annual revenue.
Their business model is extremely labor-intensive, including the constant mailings and phone calls it takes to introduce the services to corporate human resources managers and chief financial officers in charge of retirement plans. So Franchimone and Deatherage, along with reps Larry Palme and James Pafundi, rely on registered assistant Shawnna Summers and four hourly staffers to maintain databases and make prospecting calls.
“We have several people making calls to plan sponsors to ask them if they've done due diligence on their plans in the past year,” Franchimone says.
Once the group wins a corporate retirement plan account, Franchimone and his team start updating their database of employees at the firm who are nearing age 55. “We stay in front of them for the next few years so when they hit 59 or 60, the decision has already been made, and it's an automatic progression to move those assets out of the 401(k) plan and into our fee-based plan,” he says.
The team maintains its visibility by offering educational seminars. They do about five to 10 a month. Generally, that includes one seminar a quarter for each large company client, while smaller clients receive education on an as-needed basis. Topics range from estate planning and college planning to women and investing. Franchimone says the group's prospect pool is large — roughly 25,000 employees work for companies with retirement plans from the team. On average, about 25 people attend each session.
“It's a long process,” Franchimone says. “We're building those relationships over the course of weeks, months, years.”
When someone shows interest in following through with financial planning, Franchimone offers a free retirement plan. And although that prospective client could easily walk away with the plan or take it down the street to another firm, Franchimone says a personal bond usually develops some time during that planning process.
“We know we're not getting 100% of the business, but we're getting more than our fair share,” he says.
The group's average client brings in about $100,000, which is typically invested in mutual funds after the distribution is made. For an account in the $500,000 range, professional money managers are used. But no matter the size of their accounts, retirees share a characteristic that makes them desirable as clients: They are open-minded, Franchimone says.
“They're open to listening and hearing what is out there and available,” he says. Getting them to move is a little more difficult. “A lot of them are slow to actually take the bull by the horns and act on advice, but that's why it's so important to be constantly out there in front of them.”
For younger brokers considering the retirement market specialization, Franchimone offers this nugget of advice: “Be extremely well-educated in this business,” he says. “And I don't mean just knowing where to stick a mutual fund ticket. You've gotta know what the rollover issues are and what the tax ramifications are when you take money out of retirement plans.”
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