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.
(Related: What to Expect From Nonqualified Deferred Compensation Plan Support)
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)?