401(k) PLANS: Growth After the Sale

Ongoing Communication

So you’ve done the enrollment meeting(s), the plan has come out of blackout, and all the initial calls have been made about the funds the employees selected and their account balances. You’re finished, right? Wrong. Here is where your superior service begins and where you separate yourself from your competition.

Develop a database of all company employees. Ask the plan administrator for a spreadsheet of every participant, to include name, address, home phone number, date of birth, and spouse’s name. Then load it into a database using your contact management software of choice.

Let me share some advice about using a team. You can’t expect your sales assistant to write spreadsheets or stuff hundreds of letters, and for most of us it is just too time-consuming to do it ourselves. I have used an assistant/intern I hired from a local college for these tasks for years. Hire a sophomore or junior with a marketing or finance major and you should have good results. They will work hard in exchange for the experience and for the exposure to the profession. In our office there are always several part-timers from the same local college. I’m on my fourth intern and have always had great workers.

Now for the ongoing communication campaign. Follow-up meetings should involve two things: 1) time with the plan sponsor or administrator to review service and investments; and 2) a group meeting with all the employees.

In my experience, fiduciaries are more concerned with administration and participants with fund value and performance. Be prepared to give a 15- to 20-minute presentation to employees on the market and funds. Keep it simple. Your honesty and credibility are paramount. Tell them what you know, address their concerns, and don’t make market predictions.

Letter Campaign

Once you’ve got the database set up (your intern should do this, too) it’s a snap to quickly write a letter or find a piece of research suitable for sending to your 401(k) plan participants. I average about two letters a month. They fall into the following categories:

Market updates These are short notes summarizing something from research or an article. The goal is to provide simple, concise facts about the state or direction of the markets or economy. I often use reports written by one of our analysts in a humorous “Dear Mom and Dad” format. Clients like those the best.

Handholding In a market such as the last two years, the need for these letters should need no explanation. We sent almost one a week after September 11. Remember, since you may be the only source of financial advice for many participants, your attention will be appreciated.

Holiday letters These have nothing to do with investments, are fun to write, and actually will have a very positive impact on your rapport with the participants and the plan sponsor. They could be a humorous holiday diet letter at Thanksgiving, something patriotic for the 4th of July, or a reflective note for New Year’s Day.

Birthday Greetings Most contact management programs will flag everyone with a birthday coming up. It takes about 10 minutes for my intern to run the program and print the letters for my signature.

Updates These are either letters or reports letting participants know about changes such as elective deferral limits, tax rates (just the basics), catch-up provisions, and so forth. Occasionally if there is something compelling but unrelated to the markets or the plan, you can send that, too. For example, we wrote about 529 plans when the tax laws affecting them changed last year. Stick with advice and information that benefits participants; avoid anything to do with product.

Once you have the database in place and a trained assistant it is fairly easy to conduct this campaign. By constantly staying in front of the participants and expressing your willingness to help you will have some very satisfied customers. In time you will find that you’ve become a trusted source of advice whom sponsors and participants will turn to when they need help on other financial matters.