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The 4 Biggest Concerns of Retirement Plan Participants

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Summer is almost over, and the kids are heading back to school. Now is a good time to help your clients better focus their attention on your offer to provide investment advice for their company retirement plan account.

In my 14 years of developing existing clients into company retirement plan advice clients, I have consistently run into four main retirement plan participant concerns.

This list of concerns is battle-tested with prospects, too. I have made thousands of telephone prospecting calls to plan participants that are now individual company retirement plan advice clients. The key to that transformation is in learning how to respond to these four main concerns.

1. Company retirement plan participants have no access to independent analytical tools that help them identify stock market risk. These investors don’t know the major trend in the stock markets at the time they are fully invested in stock-market mutual funds.

Even when the stock market is rising, most plan participants allocate the majority of their company retirement plan account to mutual funds in asset classes that are lagging the overall stock-market benchmarks. They mistakenly diversify themselves out of a great deal of stock-market investment return. 

The confidence to fully invest, or to preserve principal, at key stock-market inflection points is the most important investment management strategy missing for such investors.

2. Individual company retirement plan participants have no logical, organized and disciplined investment management strategy to preserve their account principal.

As U.S. economic and stock market conditions change, the majority of company plan participants remain 100% invested at all times. Family, work and personal obligations take attention away from their investment management duties.

An advisor who expands an existing investment-advice relationship to include advice on the individual’s company retirement account is in a much better position to focus the client’s attention the handful of times each year that require risk-level decisions.

3. The vast majority of company retirement plan investors have no existing fiduciary relationship with an independent investment advisor. 

Company retirement plan propaganda and online tools are no match for in-person advice from an investment advisor. Strong existing relationships will beat e-mail newsletters and colorful Internet pie charts every time.

Watch your existing clients’ eyes light up when you tell them that you can help improve the investment management decisions in their company retirement plan account. When you tell your clients that you are willing to take a fiduciary responsibility for the investment results in that account, your client relationship rises to a completely new level.

Don’t forget about your client’s working spouse. Many times I have more than doubled my household assets under management by asking for a copy of a company retirement plan account statement from the spouse of an existing client.

4. Be prepared to explain to an existing client the options for the payment of your fees should you advise on their company account. Most company retirement plan providers prohibit paying investment advisory fees to third-party advisor directly from the plan account.

If there is an SDBA (self-directed brokerage account) option in the company retirement plan menu, you may be able to get your advisory fees paid from this self-directed account money-market fund.

Sometimes a better option is to for the client to pay their company retirement plan advisory fees with after-tax dollars. Investment management fees fall under IRS section 212, which makes those fees a tax deduction on Form 1040 and allows them to be included on schedule A.

Annual investment advisory fees for many of my existing company retirement plan advice clients have helped push their annual miscellaneous deductions above the threshold of 2% of adjusted gross income—thus making my company retirement plan advice fees tax deductible.

I am not a tax advisor, but I have plenty of CPA clients who have provided me with enough of an education on the after-tax fee option to make it part of my client and prospect company retirement-plan advice presentation.

When you learn how to deal with the four biggest company retirement-plan advice concerns that participants have, there will be no stopping the growth of that niche of your investment advisory business.


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).”

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