When people retire, they often move their defined contribution assetsin 401(k)s and 403(b)s and the like–into a rollover individual retirement account or some program other than that of the current retirement plan provider.

Frequently, these assets “come up for grabs.” That is, unless the agent or rep has established a prior connection with the individual plan participant, those assets will likely leave the agent and original plan provider forever.

Therefore, it can be crucial for agents and plan providers to learn how to get access to the participants–at the worksite and before the money moves. This can be key to capturing or retaining defined contribution assets.

For the sake of departing employees, such access can also be crucial because early contacts with the agent can give workers the information and advice they need to make informed decisions about where to put their retirement money.

Here are just a few of the benefits of being proactive in this way:

–The agent can catch the employee’s attention early and at the appropriate time to plan for retirement.

–In the mind of the employee, there is often the “implied endorsement” of the employer.

–If the agent’s firm is the current defined contribution plan provider, there is a clear opportunity to build upon and enhance an already-established client relationship.

Lets take a closer look at the factors that influence decisions at the worksite–first from the consumer’s perspective and then from the employer’s.

Most consumers roll over, or plan to roll over, assets from their retirement plan when they retire, placing those assets with a different investment management company than the current plan provider.

For the producer, this generates an opportunity to serve a need–and also to capture these assets. Thats because consumers get little assistance with planning for asset and income management during the period after they retire.

Thus, at the very point when retirement assets have reached their peak levels, consumers are not getting the advice they need.

From the consumers viewpoint, their current retirement plan providers are largely “invisible,” having made little attempt to build an ongoing relationship with them during the savings period.

As for the employers, many do provide some form of retirement planning education. But this is typically done with a one-sided focus–on helping employees accumulate assets for retirement, not to manage them during retirement. There is very little employer help with post-retirement issues.

Employers say they would welcome more participation from the retirement plan providers or other financial services firms to provide this help at the worksite, as long as there is a pre-existing relationship with their firm. However, theres a caveat: Do not sell when you provide information at the worksite; that should come later.

So, what to do?

Agents who already work with a retirement plan provider will have an advantage in gaining access to a given employer. But it is also possible, though certainly more difficult, for reps or firms who have no type of existing relationship to penetrate a worksite.

Several tactics can be considered to help gain entry:

–Market an individual retirement counseling practice and/or retirement distribution planning seminars to employers;

–Work with a retirement plan administrator who already has such a relationship;

–Build upon current relationships in those instances where you provide other employee benefit programs to employers; or,

–Develop a strategic alliance with a provider of products or services to the target company, and offer individual retirement counseling.

A final thought: Research done by our firm has shown that building a client relationship at the worksite–prior to the rollover decision–can lead to the successful capture of substantial assets. In general, it will be advantageous to gain entry to the worksite through an established relationship, or find a way to connect with one.

In a number of instances, employers want to provide one thing, but employees we have contacted tell us they want something else.

Such “disconnects” can provide opportunities for those companies or agents who can step in to fill these gaps at the worksite. Quite often, filling a gap provides a service for both the employee and employer. The accompanying chart illustrates the concernsand the opportunities.

James R. Sholder is a principal with The Diversified Services Group Inc.,Wayne, Pa. His e-mail: Jims@DSG-CandR.com.


Reproduced from National Underwriter Life & Health/Financial Services Edition, June 29, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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