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The Growing Opportunities for Advisors in the Retirement-Plan Business

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As a state or federal registered investment advisor, have you ever thought about building a business niche advising individual company retirement-plan participants on the menu of available options in their company retirement plans?

Never heard of such a thing before? 

I get that same response from both RIAs and brokers who have never taken the time to explore their existing clients individual company retirement-plan accounts.

After the wild ride of the stock markets so far in 2011, I think it is safe to say that you would find a high level of interest from your existing client base in a level of investment- advice product regarding their company retirement-plan accounts.

Remember, that in this day and age, many of your existing clients have working spouses.  Both spouses are participants in a company retirement plan.  You likely have two pools of company retirement plan assets in the same household that are in need of investment advice.

Company retirement-plan accounts are in many cases the largest dollar-value accounts that most individual investors will ever have. They desperately need help making better investment decisions on these retirement plan accounts during their working lifetime.

Whether individual investors work for the government, a small business or a Fortune 100 company, their individual company retirement plan account can grow into well over $1 million in value over their working lifetime.

The 401(k), 403(b) and 457(b) company retirement plans are all opportunities for investment advisors with the right knowledge and training to gather tens of millions of dollars of new assets to manage for a fee.

The vast majority of advisors that I have spoken with, taught online or met through my seminar have never had a meaningful conversation with their best clients on how they could improve the risk management and investment performance in the clients’ company retirement-plan accounts.

Just this week the Department of Labor issued final regulations designed to improve the access to investment advice for millions more of individual company retirement-plan participants.

Now even company retirement-plan “brokers of record” can provide investment advice to the individual company retirement-plan participants on the menu of investment options in their company retirement plans.

See the DOL announcement here.

I have been providing investment advice to individual company retirement-plan participants for over 11 years.  In that time, I have built an individual company retirement-plan participant advisory client base at every company retirement plan sponsor imaginable.

Doctors, lawyers and Fortune 100 company executives need retirement-plan investment advice. Non-profit hospital, state university, and small business owners have the same needs.  I even have retirement plan advice clients who work at major financial-services firms.

The investment advice niche that I speak of is very much “out of the box” from what most experience investment advisors are familiar with. I am not the broker of record on the entire company retirement plan.  I only provide investment advice to individual company retirement-plan participants. 

I acknowledge to my company retirement-plan advice clients my fiduciary role in providing them individualized investment advice on their mutual fund menu options in their company retirement-plan account offering.

Providing fiduciary investment advice to an individual company retirement-plan participant is no more or no less the same level of investment advice I provide as an RIA to clients that I advise on their outside company retirement-plan accounts.

My individual company retirement-plan participant investment advice service includes both the menu of mutual funds available in the company retirement-plan menu, as well as the self-directed brokerage account option found in an increasing number of company retirement-plan offerings.

The self-directed brokerage option is a huge opportunity to talk to existing clients about your ability to dramatically improve both the principal preservation and the growth of principal in their company retirement-plan account.

Through the next few blog posts in this space, I will outline step-by-step the process of how to build an individual company retirement-plan advice niche business.

The opportunity is there for your investment advice practice.  The amount of existing retirement-plan account assets in your existing client accounts is ten times more than you have ever imagined.

Advisors can learn how to prospect for and open that first individual company retirement plan advisory account.

Stay tuned here…

Ric Lager is founder of Lager & Company, Inc, co-creator of the “No More Pies” investment series for financial advisors and author of “Forget the Pie: Recipe for a Healthier 401(k).”