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Retirement Plan Asset Retention: Best Practices for Success

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Advisors who focus on the retirement marketplace—along with their broker/dealers—are currently trying to figure out how much business will have to change because of new regulations from the Department of Labor (DOL). With the full compliance date more than a year away, though, you have time to focus on your existing relationships and improve your retirement plan asset retention rates.

The retirement marketplace is ripe with opportunities—and with more than $24 trillion in assets as of December 2015, it’s also ripe with competition. With that in mind, I’ve put together some best practices that can help you retain the clients you have and position yourself as the go-to retirement advisor for other potential clients in your area.

It’s All About Service

Plan sponsors need an experienced retirement plan advisor to help them navigate the retirement plan landscape. The key to any long-lasting client relationship? Service. Your clients have placed a tremendous amount of trust in your ability to be the manager of their retirement plan assets. Repay that trust by providing such a high level of service that your clients couldn’t fathom operating their plan without your involvement.

Communicate Proactively

Visibility, either in person or via written communication, is paramount for cultivating a trusted relationship with a plan sponsor or decision maker. When plan sponsors run into challenges or need assistance with problem resolution, you should be their first resource—or loop in appropriate service providers to help.

Another best practice is to stay ahead of the curve on tricky compliance-related matters. You can showcase your value, plus strengthen relationships with a plan sponsor, by proactively keeping abreast of the nondiscrimination testing process, Form 5500 and audit preparation, control-group scenarios, or operational roadblocks. And as the changes brought about from the DOL regulations become clearer, your plan sponsor clients will look to you for guidance on this front as well.

Finally, be familiar with the time of year that certain qualified plan tasks take place, and call your clients to help them prepare and organize for the impending event. (Here, you might want to consider using a CRM to manage your customer contacts and/or share documents with plan sponsors.)

Remember, going out of your way to help your client may take a few minutes of your time, but the impression you leave will last far longer.

Manage the Relationship

The dynamics of a retirement plan can be confusing to a plan sponsor. There are different players—recordkeepers, third-party administrators, advisors, and consultants—with varying roles and responsibilities that often overlap. You will often be the one who brings the service providers to the table during the sales process, so making sure everyone is on the same page post-sale is of immense importance. In essence, you will need to be the “quarterback” of the retirement plan team:

  • Clearly defining roles and responsibilities

  • Streamlining processes

  • Articulating expectations

  • Maintaining efficient lines of communication

Be sure that you get to know the key decision makers of the plan as well, and be alert to any changes in personnel. Doing so will allow you to stay one step ahead and potentially ward off any impending attempts by competing advisors who would like to poach the business from you.

At the end of the day, business owners, executives, and plan sponsors want to focus on running their business, not their retirement plan; creating efficiencies for them will allow them to do just that—and allow you to preserve the relationship and the assets.

Know Your Retention Rate

Do you know how your income or profitability would be affected if you lost your largest retirement plan client? If you don’t, perhaps you should.

  • Calculate your current client retention rate.

  • Determine what it will be going forward, based on your business plan and the goals of your practice.

  • Factor in the cost of resources and time associated with your asset retention efforts.

A long-term projection of how asset retention will affect your bottom line is a crucial component of business planning.

Benchmark Fees and Services Periodically

Periodically benchmarking a plan’s fees and services helps ensure that expenses are reasonable. There’s an ancillary benefit to assisting with benchmarking a retirement plan as well: You ensure regular and pointed interaction with the plan sponsor or key decision makers at the firm. Thus, benchmarking is not only an essential component of fulfilling your fiduciary duty, but it also serves as an invaluable client retention tool.

Maintaining a service calendar that details scheduled benchmarking, as well as other essential retirement plan management activities—such as benefits committee meetings, employee education, and enrollment and investment reviews—will help you stay top of mind with your clients, while providing valuable and necessary guidance.

Look to Your Book for New Opportunities

The retirement plan market is broad, lucrative, and ripe with new selling opportunities. But don’t overlook the opportunities within your current book of business in your pursuit of new clients. Instead, follow these best practices to cultivate and plan for your existing clients, which can in turn lead to growth, profitability, and asset retention for your practice.

Looking to enhance your retirement business for both individual and plan sponsor clients? Download Leveraging the New Normal: Partnering for Success in a Changing Marketplace to learn how Commonwealth can help.

This post originally appeared on Commonwealth Independent Advisor, a blog authored by subject-matter experts at Commonwealth Financial Network®, the nation’s largest privately held independent broker/dealer–RIA.


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