The Department of Labor has created a $3 trillion opportunity this year for everyone in the financial services industry. As of July 2011, all 401(k) plans will be required to disclose fees. If you know anything about 401(k) plans, you know it won’t be pretty. Here’s a timeline to help you prepare:
- July 16, 2011: Disclosure to plan sponsors (employers) required
- Oct. 31, 2011: Disclosure to plan participants (employees) required
- First quarter 2012: All employer and employee statements will include both disclosed and undisclosed fees
So how can you capitalize on this massive opportunity?
The first tool I’d like to share with you is what I consider one of the coolest and – also free – financial services tools in the industry: BrightScope. Think of it as Morningstar for the 401(k) industry. It allows you to search for any 401(k) plan in the United States and stack it up against the best options in the industry by comparing internal fees, investment options, and company generosity, among other features. It also tells you how many additional years that client will need to work and his or her lost retirement savings by not being in the “best” plan.
Another tool is to actually know which companies allow in-service distributions for those clients stuck in these inferior 401k plans. Having an extensive list of these companies can be a huge benefit because it’s hard to help someone who can’t move their account. If you’d like a copy of this list, just e-mail me for 200 of the largest companies in the United States that allow in-service distributions.