From the December 2003 issue of Investment Advisor • Subscribe!

December 1, 2003

Getting Past Square One

When Mike Matson of Matson Financial Advisors in Danbury, Connecticut, decided to add retirement plans to his practice, he found that his background in planning for individuals' retirements stood him in good stead. It was a natural progression to go into retirement plans, he says, because "if we were making recommendations for medical, dental, and disability, and then it came time to look at the retirement plan," his clients already trusted him.

While the retirement plan field is wide open--there are some 683,000 retirement plans at small businesses (defined by Principal Financial as those with $5 million or less in plan assets and employing 250 or fewer people)--there's the matter of how to get educated on the subject and how to get started.

Matson took the direct approach: He went to the plan providers themselves. "We went to different vendors," he remembers, "and asked them to explain how their programs worked and why their product was better than their competitors'." Then, he adds, they went to those competitors and asked them the same questions. Matson cautions that when an advisor is not "completely in the game yet and [just] a prospect," it's hard to get providers' attention. Providers want to work with large companies and large aggregations of assets.

Robert Travis, VP of investments at Smith Barney in Shrewsbury, New Jersey, says most companies that offer retirement plans also sponsor meetings for reps who are interested in learning about the qualified plan market. The average advisor, he says, doesn't have a good understanding of plans because of their complexity, and the fact that the rules keep changing. His conclusion: You need specialized training. While there's nothing equivalent to a Series 7 in retirement plan certification, he says, there are courses offered--sometimes within your own B/D. Many companies offer courses that carry the designation of "plan specialist."

That will get you to the first level, says Travis. You reach the second level by working the market, doing proposals and presentations. "It's street learning," he warns, but it's also where "you learn the most."

Doing presentations with an expert from a plan company is a great way to learn, he suggests. Most advisors will bring along a specialist to make the presentation to the clients. You can vastly increase your knowledge about the plan just by sitting through the presentation, he argues. Eventually, you will get to the point of doing it on your own.

Travis also recommends using a "cheat sheet" of plan designs--a table summarizing the plans you're learning about, laid out so you have something to refer to if a client has questions. Even with his years of experience, Travis has one that he keeps on his wall and even gives to clients, he says, so that they can understand a bit better when trying to compare one plan with another.

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