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Practice Management > Building Your Business

401(k) PLANS: Growth After the Sale

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So much work goes into winning corporate 401(k) plans that when the plan is finally converted, most advisors have no strategy for providing the service and communication that is essential to a well-run program. Servicing the plan effectively is essential to maintaining a long-term relationship with the plan sponsor. In addition to a long and successful business relationship, excellent service and communication with the participants can result in ancillary business. If you can provide consistent service, the employees as well as the owners will seek your help with their personal financial needs. You will find that you don’t need to solicit the personal business–it’s more like a dividend from doing an outstanding job with the 401(k). In fact, I make it a practice to avoid soliciting outside business in my communication campaign with my 401(k) plan sponsors and participants. Here’s how I have been successful in growing my business after the plan is converted.

Start by getting the key players’ names, phone numbers, and e-mail addresses on one quick reference sheet. Much of the time you are simply directing plan sponsors and plan participants to the proper place to accomplish their task. Here are the main telephone numbers you’ll need to keep handy:

The help line The 800 number participants call to get account information.

Account manager Solving any issue involving plan administration will require working with an account manager.

Implementation manager During the initial phases of plan setup, takeover, and blackout, most 401(k) vendors assign a manager to work with the plan sponsor during the crucial first months of the plan.

Internet address Even though the Internet address will be given out in the enrollment kit, you will constantly need to give it out to participants who no longer have their kits. Also make sure you understand the process for getting a new user ID and PIN for using the Web site.

The Takeover Process

This is where your job as a communicator begins. First, learn the timing of the takeover process and clearly communicate it to the sponsor and participants. You don’t have to be an expert on the complicated task of account transfer and reconciliation during the blackout period, but you must know the following dates and times:

When the old carrier is notified

When money is transferred to the new carrier

When the blackout period begins and ends

What happens to participant balances during the blackout

Next, hold a group meeting with participants to review your company and the new plan, and to explain the general flow of the takeover. Finally, plan an enrollment meeting to cover specifics such as fund selection and asset allocation.


The enrollment process means anything from a single group meeting to several days of one-on-one meetings with each participant. For smaller companies with fewer than 100 employees we offer a one-on-one enrollment meeting. This has proven to be very effective and allows you to personalize your service with each participant. Here’s how it works. The company sets aside a day or two for the meeting, and each employee is scheduled for a 15- minute private meeting with you (often in an empty office or conference room). At that meeting you can review a specific asset allocation, suggest suitable funds, and help the participant determine a comfortable deferral percentage. Many 401(k) plan vendors offer to have one of their reps do the meeting for you, but do it yourself. As a financial professional your strong suit should be communicating with people on the subject of investments and giving investment advice. This is the best time to establish your identity with the plan sponsor and participants and develop a strong rapport. Some reps will spend days getting ready for an enrollment meeting. The preparation is important but doesn’t necessarily have to take a tremendous amount of time if you know how to prepare. Start by reviewing the enrollment kit. Look through it and make sure you understand the materials in it.

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.


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