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Retirement Planning > Retirement Investing

Is Giving Clients Free 401(k) Advice Your Hobby?

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Is Providing Clients with 401(k) Advice Just a Hobby?

Do you have any current clients who are working? If so, you probably have provided more than a few of them with a quick review of their company 401(k) retirement plan mutual fund menu options.

You can be honest with me. I will not tell anyone; especially your broker-dealer. You are part of an ever-growing list of investment advisors who are managing tens of millions of dollars of client retirement assets on the side—for free.

For years, I have received e-mails and phone calls from investment advisors who proudly proclaim they are in the individual company 401(k) retirement plan investment advice business. The most common reason given for why they give free investment and asset management advice to clients of company 401(k) retirement plans is that it serves as a great client relationship builder.

However, when you are giving part of your investment advice experience and expertise away for free, what value does your client place on the other part of your investment advice?

Providing company 401(k) investment advice for free makes no sense to me. Investment advice is your profession; it’s not a sideline or hobby. You should get paid for the value you provide your clients.

Today’s technology lets any investment advisor build and support an individual company 401(k) retirement plan investment advice niche business. Providing free investment management advice on company 401(k) retirement plan assets should no longer be a client-loss leader.

Have you ever asked your best clients to pay for company 401(k) retirement plan menu investment advice? Don’t be among those investment advisors who never asks clients to pay for the value that they provide.

You have surely read all the headlines lately on the status of the Department of Labor fiduciary rule and future company 401(k) retirement plan rollovers. Here’s a thought: manage your client’s current company 401(k) retirement plan account long before a rollover is an issue.

If you do a good job managing the client’s current company 401(k) retirement plan account, do you think that your chances will improve to get the rollover business?

Many of your clients don’t have the expertise or inclination to thoroughly analyze their company 401(k) retirement plan menu of options. Some also lack a logical, organized and discipline investment management strategy for these accounts.  

What to Do

I suggest that you focus your client’s attention on these company 401(k) retirement plan account issues:

  • How have you made past investment management decisions on your company’s 401(k) retirement plan default menu of options?  How do you know “what to buy?”
  • Do you have a complete disclosure and understanding of the annual costs associated with each mutual fund on the default company 401(k) retirement plan menu? (The company 401(k) retirement plan sponsor provides this information, but many clients do not look at it.)
  • Would you be interested in an independent, third-party ranking of the investment performance for all default company 401(k) retirement plan mutual funds? I have my favorite third-party resources for this information. You can use the resources available at your firm, or send me an e-mail and I will point you in the right direction.
  • Do you currently have a stock and bond market risk-management game plan? This is an especially important prospecting strategy now. Most clients are very concerned about the current all-time high stock prices and all-time low interest rates. Use those concerns to ask about their company 401(k) retirement plan accounts.

I have 17 years of experience providing company 401(k) retirement plan investment advice to individual investors. I am willing to bet that if you offer to provide a handful of your best clients with the answers to these concerns, you will launch an entirely new investment advice niche.

Are you really interested in building a new investment advisory niche in your local market that will expand your assets under management by several million dollars by the end of 2017?

Your best clients deserve more than a “free look” at their company 401(k) retirement plan assets. You can provide the necessary value to get paid. Hobbies are for retired people.


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