If you have been involved in the employer retirement plan market, you may want to diversify your client base.
One way to do that is to move the focus of your practice from selling investment services and insurance products, toward providing concepts, plans and solutions.
Three trends have created prospecting opportunities for advisors who can offer employers solutions.
Leveraging these three powerful shifts can help you reap new sources of revenue, or increase the amount of revenue coming from existing relationships.
1. Employers are struggling to find and keep top talent.
Let’s start with the challenges facing employers in recruiting and keeping key employees. According to The Conference Board CEO Challenge 2017 survey, the top ‘hot button issues’ identified by U.S. chief executive officers include the companies’ failure to attract and retain top talent and problems with developing the next generation of leaders. The CEOs recognize that future organizational success depends on having the right leaders plan and execute new processes and resources for a changing world.
And these issues aren’t just concerns for large employers. Small and medium-size organizations, which make up over 99% of all U.S. businesses, face the same challenges. In 2017, Principal surveyed more than 1,000 business owners that employ from two to 500 workers. When asked about issues affecting their workforce, the owners’ top concerns centered on:
Affordability of employee benefits. 55%.
Availability of qualified job applicants. 50%.
Attracting talented employees. 49%.
Knowing these concerns, you can open conversations with employers by using a series of questions to allow the business owner/decision maker to drive discussion. Use questions like, “When thinking about your business, what key concerns keep you up at night?”; “What issues are you and your organization facing as you recruit, retain and reward high-performing key employees?”; and, “How have you tried to resolve these issues in the past?” This approach seeks first to understand the employer’s priorities. It also positions your focus on solutions that support future business strategies that help the employer meet commitments to its key employees.
2. Employers need retirement solutions targeted to meet the needs of their top talent
American workers are concerned about retirement savings. And that concern isn’t limited to non-managers. Highly compensated employees may have concerns that cannot be addressed with the same retirement benefits offered to all employees.
A chart accompanying this article shows the range of income replaced at retirement by Social Security and qualified plan benefits, such as benefits from a 401(k) plan. As income goes up, the income replacement percentage expected from these benefits goes down, creating an income gap.
Does this mean you should ignore employer-based solutions (like 401(k) plans and traditional pension plans) or individual products (like IRAs and investments)?
I’m suggesting that an employer’s key people – and business owners themselves – may have unique issues to consider when it comes to retirement. For example, they may have greater concerns about inflation reducing their purchasing power in retirement. They may be open to tax-deferred savings opportunities beyond qualified plan limits to help them enjoy a quality of life in retirement similar to what they enjoy today. And business owners may be interested in establishing special incentives that tie select staff to the organization for the long-term.
3. Nonqualified supplemental retirement solutions can differentiate you from the pack.
Nonqualified supplemental retirement plans help employers and owners of closely held businesses protect their organizations, offer targeted benefits for key employees, such as managers and senior executives, and protect their lifestyles, so they can lead their best lives.
What are these solutions?
There are many names and concept designs that come under this umbrella. Executive bonus plans, select executive retirement (SERP) plans and nonqualified deferred compensation (NQDC) plans are a few of the more common ones. But, at their core, they represent an employer’s opportunities to help key employees facing lower retirement savings benefits due to qualified plan contribution limits. They deliver benefits that recognize the value of these employees to the organization. And they create tax-efficient options for owners and their businesses.
Advisors shouldn’t fear having to ‘go it alone’ when adding these specialized solutions to their practices. Leading providers in this field provide support platforms to make it easier. Turnkey packages exist that provide resources to:
Educate prospective employers and business owners about available options
Discuss design features to address each employer’s situation
Explore various financing options to meet cost and performance expectations
Provide administrative services to manage solutions as employee benefits.
These solutions require experience with employers of all entity types and sizes. Because no two sales are the same, be sure to evaluate a provider’s scale, service and stability specifically dedicated to nonqualified plans.
Regardless of whether business market prospecting opportunities are once-in-a-career, multiple times a year or somewhere in between, nonqualified solutions allow you to establish stronger ties to your most valued customers. By educating yourself on the basic questions to ask to better understand employer needs, and engaging with the right specialists and resources, you can help equip your clients with sustainable long-term solutions.
The power of these trends helps you find and assess greater sales opportunities in the business market. But in the end, it’s more than just driving revenue for your practice. It’s about building a relationship of trust with business owners and employers. And it’s about ensuring your access to the right people, process and products that allow your business clients to compete and win, regardless of the market challenges they face.
—-Read Clark Survey: NQDC Plans Remain Widespread Among Retailers on ThinkAdvisor.
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