Advisers pitching 401(k) plans: Do your homework

As more advisers jockey for 401(k) business, they’ll have to find different ways to stand out among prospects and win new plans.
Research from Franklin Templeton Investments shows that plan sponsors turn to referrals from peers to uncover advisers they’d like to work with rather than responding positively to cold calls.
“It’s not what you do that’s important but how you do it. You’re trying to impress upon a plan sponsor why they should choose you,” said Joshua Dietch, a managing director at Chatham Partners and a panelist Monday at the American Society of Pension Professionals & Actuaries’ annual 401(k) Summit in Las Vegas.
“The difference between winning and losing [business] comes down to the degree of conviction of what one adviser can do over the other,” he said.
In that sense, it comes down to which adviser candidate is a better fit for the company based on its needs and its culture. Advisers need to do their homework and get to know their prospects so they can showcase their abilities and how they can help.
That extra bit of work can make all the difference when an adviser is competing against a handful of peers for a plan, noted panelist Jania Stout, vice president of the fiduciary consulting group at PSA Financial Services Inc.
About a year ago, her firm won the business of a pharmaceutical company with $130 million in 401(k) assets and $90 million in pension assets. Ms. Stout believes that understanding the company’s culture and doing research on the members of the plan’s investment committee were instrumental in beating other advisers who pursued the client.
“It was a great win for us,” she said. “We built in the committee’s mission statement throughout our whole presentation, and every service we offered tied back to it. It goes back to being prepared.”
Since happy employees make for happy plan sponsor clients, advisers also ought to think about what they can do to enhance the experience for workers.
For instance, Ms. Stout realized that one of the obstacles to getting participants to raise their 401(k) contributions was that they were hobbled with debt. She began hosting educational webinars for workers on debt elimination, which were well-attended.
“The feedback they gave their employers was tremendous,” Ms. Stout said. “We can’t just be focused on 401(k)s; we have to look at the whole picture.”