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Retirement Planning > Saving for Retirement > 403(b) Plans

4 Retirement Plan Myths Debunked  

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As an advisor, you’ve probably heard many reasons why you shouldn’t sell retirement plans, such as they aren’t profitable,  the legislation is too complicated to navigate or even that your time is better spent elsewhere.

My experience working with thousands of advisors has shown me that these are myths. In fact, by not selling retirement plans, you are doing yourself a disservice.

Retirement plans are not only profitable for your business, but they also help grow it organically while making existing client relationships stickier.

As of 2019, there was $6.4 trillion in 401(k) plans, and according to Pershing’s Retirement Plan Network Case Study, 90% of all 401(k) plans are in the top 10 industries, with future growth expected with small plans under $1 million in assets.

Here we’ll debunk four of the most common myths about selling retirement plans.

Myth: Selling retirement plans are not profitable.  

Why it’s false: An advisor might charge 100 basis points on smaller plans, but fees for larger plans can range from 10-50 basis points. While this may not sound like much, it is.

This is because every single retirement plan you manage is an opportunity to create a stickier relationship with your clients.

Think about it this way: If you aren’t currently managing your client’s retirement plans, that means someone else is. That person can easily be forging a deeper relationship with your client, eventually swooping in and taking their other assets.

Leaving yourself open and unprotected like that is not only dangerous, but it also can be devastating for your business. If you look at selling retirement plans as a client retention tool, instead of by strictly calculating basis points, you’ll see that it’s a no-brainer.

Myth: Understanding the different legislation around selling retirement plans is too complicated, and I don’t have time to handle the volume of participant calls.  

Why it’s false: Actually, this is absolutely true, and our time should always be spent where we excel and doing what we enjoy. But did you know that you can outsource the technology, plan management, and participant support, similar to how you would outsource investment management?

We’ve all seen the benefits of outsourcing, including increased AUM, lower operating expenses and higher personal income. In fact, there are companies out there, like mine, that provide you with access to retirement counselors that service all participant requests.

And these outsourced firms help you with most of the work, from creating prospect materials to managing the plans and providing the support. Just make sure that whoever you choose to partner with doesn’t compete with you.

Myth: My time is better spent finding new clients.  

Why it’s false: Aha! I’m glad you think so, because managing retirement plans is the perfect way to mine for new business. Not only can you grow your assets under management organically by expanding your relationship with current clients, it also provides you with an effortless way to meet prospects.

Once you get introduced to these folks, you can turn the tables and be the advisor described above: one who swoops in to help them manage their assets.

Fidelity found that 61% of plan sponsors evaluate their plan advisor annually, and 25% do so more than once a year, which means there’s plenty of prospecting opportunities.

Myth: I don’t want to deal with a bunch of millennial small retirement plans.

Why it’s false:  This actually isn’t a myth but it is bad business. Millennials are set to inherit an estimated $68 trillion in assets from baby boomers (the largest wealth transfer in history), and they’re not keeping that money with their parents’ advisor.

If you don’t figure out how to get in front of those millennials, those assets will be going to your competitors. Not only that, millennials are quickly growing up. They are in their prime work and family-building years, and their wealth is accumulating.

When you look beyond the basis points, you’ll find an incredible opportunity in selling retirement plans, which are proven to grow an advisor’s business. Frankly, if you’re not doing it, you’re leaving money on the table.


Jay Jumper is the CEO of ProNvest, an independent RIA firm that helps advisors service retirement plans through the use of technology and financial advice.