Looking for new sources of revenue in a sea of financial services change?

This challenge isn’t just for distribution and marketing organizations. Financial advisors, agents and independent brokers need to focus on this every day. Generating new growth for one’s practice can require adding new specialized solutions.

Successful advisors today look to leverage sales and technical expertise when adding deferred compensation solutions to their practices. And the place to start is with a nonqualified deferred compensation (NQDC) specialist.  The titles associated with this individual can vary: wholesaler, consultant, sales vice president.  But the idea is still the same.  It’s more efficient to develop new sales from existing business market clients with the value that a specialist brings to each advisor’s location.  And what’s in it for you and your clients?  Three key areas of value: people, product and process.

Related: Advanced tax time planning: 15 life insurance considerations

Let me recount a story to illustrate why your practice should set high expectations when engaging these wholesalers.      

Recently an advisor, working through a broker general agency, came upon a deferred compensation sales opportunity with an existing 401(k) client.  The parent company wanted a solution for paying bonuses to key employees at a subsidiary company.  The BGA connected the advisor with an experienced NQDC consultant, and together presented a number of options to the parent company.  Ultimately the client chose a deferred compensation solution due to the tax deferred growth benefit.  The advisor and consultant helped implement a complete package including a tailored plan design, a financing option that was friendly to the client’s balance sheet, extensive education for participants to convey the value of the benefit, and ongoing administrative services for both the company and its key people.  

And the results?  The key employees participating in the plan were happy to receive their bonuses in a manner that allowed them to develop an individualized investment strategy.  The employer was pleased with delivering a well-received benefit for its top talent that also had a positive impact (financing the plan with corporate-owned life insurance) on its balance sheet.  And the advisor benefited as well, generating a mid-six figure commission and adding a new complementary set of solutions to an existing retirement benefits practice.

Deferred compensation plans serve an important role for employers, given their challenge to attract and retain an organization’s key leadership positions. (Photo: iStock)Deferred compensation plans serve an important role for employers, given their challenge to attract and retain an organization’s key leadership positions. (Photo: iStock)

The role of a NQDC specialist is essential in partnering with advisors, regardless of whether these plan sales are once-in-a-career, once a year or somewhere in between.  It’s about making it easier to deal with the people, products and process involved in implementing a successful and specialized solution.

Related: Six reasons why employers will buy NQDC… but not from you

I use the acronym ‘CLEAR’ as my short-handed way of helping advisors set their expectations of deferred compensation wholesalers:

            • C: Consult
            • L: Languages
            • E: Experience
            • A: Action
            • R: Resources

Continue on to read how how the CLEAR method outlines the expectations you should demand from a NQDC specialist.

            • C = Consult: A NQDC specialist should help you honestly assess the quality and the potential of employer sales opportunities.  This individual needs to meet each advisor where she or he is at in terms of understanding.  And it means delivering locally, on each advisor’s turf, so to speak.  Whether you know little, some or much about NQDC plans, a specialist varies the level of support for the situation.  That means recognizing times when the advisor needs to take the lead with the employer, and stepping to the front when in-depth expertise needs to take center stage.
            • L = Languages: What I mean here is that a NQDC specialist needs to both translate and speak the many languages heard from each employer’s decision makers.  A key to making a sale is communicating the value of the solution to different stakeholders and disciplines involved.  From CFO and HR leaders to CEOs and compensation committees and ultimately, the key employees eligible for the plan — the ability to communicate effectively is critical before, during and after the sale. 
            • E = Experience: These solutions require a breadth of experience with employers of all types (for-profit public and private companies to not-for-profit organizations) and sizes (small, mid-size and institutional).  Because no two sales are the same – some are standalone plans and some are part of a broader set of retirement solutions – the ability to leverage a wholesaler’s depth of expertise will pay dividends for advisors. 
            • A = Action. A NQDC specialist needs to provide local support in continuously moving the sales process forward with an employer’s many decision makers.  This can range from addressing Finance’s technical questions about profit and loss impacts to HR’s benefit enrollment questions.  It also means providing critical sales and technical expertise when an advisor is meeting with various department heads, executive leaders and compensation committees. 
            • R = Resources. This means the ability to deliver you the right resources at the right time throughout the sales process — from approach through close and plan implementation.  Everything should be directed with you in mind, because your clients and long term relationships are at stake.

Nonqualified deferred compensation plans offers your practice great potential for additional revenue growth. And the most efficient method for accessing it may be through a deferred compensation specialist who can offer the education you need to better understand the role of these benefits for your clients.  From there, helping you to assess opportunities and address the sales and service needs of employers in the NQDC market is the key.  But in the end it’s more than just additional revenue for you. It’s about meeting your expectations, and more importantly, those of your clients.

Warren May is a national vice president of life distribution at Principal Financial Group.

For financial professional use only.

Insurance products issued by Principal National Life Insurance Co (except in NY) and Principal Life Insurance Co. Plan administrative services offered by Principal Life. Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc. Securities offered through Principal Securities, Inc., 800-247-1737, Member SIPC and/or independent broker/dealers. Principal National, Principal Life, Principal Funds Distributor, Inc. and Principal Securities are members of the Principal Financial Group®, Des Moines, IA 50392.

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See also:

4 ways for LTCI specialists to reach out

COLI remains key vehicle in executive comp plans

Insider secrets of a final expense specialist

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