Company retirement plan participants lose investment performance even in good stock market environments. That gap is a great prospecting strategy.
I made many mistakes in building my individual company retirement plan participant advice practice. One thing that I did right was to keep good prospecting activity records. I tracked the outcome of each telephone prospecting call I made. I tracked what I said and how the prospect responded. I kept a record of the end result of every prospect appointment that I made.
I soon figured out my most glaring prospecting weakness. I had to completely change the way that I prospected for individual company retirement plan advice clients.
I never lost prospects to other advisors. Fourteen years ago, there were no other advisors providing investment advice to individual company retirement plan advice participants. Instead, I lost the majority of my prospects to the “do nothing” decision. After my first meeting with them, the prospect continued to manage their individual company retirement plan account on their own.
Current company retirement plan account values are at all-time highs. I fear that another “do nothing” company retirement plan participant mindset is upon us all. Today’s rising stock market makes it difficult—but not impossible—to get a prospect to look your way for consideration. What's the right prospecting strategy to move prospecting momentum back in your favor?
Remember all the articles that you have read and seminars that you have attended on the topic of investor emotions? If it is not fear that motivates them, it’s greed. If it’s not greed, it’s fear. One emotion or the other gets prospects to talk to you. As 2013 comes to an end, it is time to prospect with greed.
Every individual company retirement plan participant currently owns a handful of set-it-and-forget company retirement plan mutual funds. These mutual funds have no logical or rational reason to populate a company retirement plan account. Even in a great stock market environment, these mutual funds have lagged the popular stock market benchmarks. These mutual funds have especially lagged other company retirement plan mutual fund menu options.
How much investment performance has the prospect’s mutual fund selections cost them during this last stock market cycle? Compare the prospect’s company retirement plan mutual fund picks versus the one you would have advised them to own over the same time period.
How much investment performance was lost? What is the dollar value of that lost investment performance? This is exactly where the prospecting process needs to begin. The prospect’s decision to buy mutual fund A instead of mutual fund B has had a real hard dollar impact on their company retirement plan account value to date. Calculate for the prospect the hard dollar cost of that decision.
Once that number is established, compare it to your annual advisory fees. I would be willing to bet that the advisory fees pale in comparison to the increased dollar value of your mutual fund picks.
A great stock market environment makes it harder to prospect for individual company retirement plan advice clients. Use the above example to get the prospect to see the error of their “no decision” company retirement plan investment strategy.
Individual investor greed is a wonderful thing. Use it to your prospecting advantage.