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.
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)
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.