5 Steps for Stronger Retirement Plan Asset Retention

With more than $24 trillion in assets as of December 2015, the retirement marketplace can be a lucrative arena—and many of you have seized the opportunity to build your retirement plan business. Whether your client is a multinational for-profit corporation, midsized educational institution, or locally based not-for-profit organization, you’ve established yourself as an expert on its benefits packages, setting your practice apart as the local go-to resource. But what good is a new $2 million client if an existing $3 million client leaves you for greener pastures?

Although current industry focus is on the Department of Labor's (DOL) new Conflicts of Interest Rule, and how that will potentially change how you conduct your retirement business, you shouldn't overlook the retention of existing clients. By adopting key best practices, including the five steps outlined here, you can be on the road to stronger retirement plan asset retention.

Plan sponsors need an experienced retirement plan advisor to help them navigate the retirement plan landscape. The key to any long-lasting client relationship? Service. Your clients have placed a tremendous amount of trust in your ability to be the manager of their retirement plan assets. Repay that trust by providing such a high level of service that your clients couldn’t fathom operating their plan without your involvement.

Visibility, either in person or via written communication, is paramount for cultivating a trusted relationship with a plan sponsor or decision maker. When plan sponsors run into challenges or need assistance with problem resolution, you should be their first resource—or loop in appropriate service providers to help.

Another best practice is to stay ahead of the curve on tricky compliance-related matters. You can showcase your value, plus strengthen relationships with a plan sponsor, by proactively keeping abreast of the nondiscrimination testing process, Form 5500 and audit preparation, control-group scenarios, or operational roadblocks. And as the changes brought about from the DOL regulations become clearer, your plan sponsor clients will look to you for guidance on this front as well.

Finally, be familiar with the time of year that certain qualified plan tasks take place, and call your clients to help them prepare and organize for the impending event. (Here, you might want to consider using a CRM to manage your customer contacts and/or share documents with plan sponsors.)

Remember, going out of your way to help your client may take a few minutes of your time, but the impression you leave will last far longer.

The dynamics of a retirement plan can be confusing to a plan sponsor. There are different players—recordkeepers, third-party administrators, advisors, and consultants—with varying roles and responsibilities that often overlap. You will often be the one who brings the service providers to the table during the sales process, so making sure everyone is on the same page post-sale is of immense importance. In essence, you will need to be the “quarterback” of the retirement plan team:

• Clearly defining roles and responsibilities
• Streamlining processes
• Articulating expectations
• Maintaining efficient lines of communication

Be sure that you get to know the key decision makers of the plan as well, and be alert to any changes in personnel. Doing so will allow you to stay one step ahead and potentially ward off any impending attempts by competing advisors who would like to poach the business from you.

At the end of the day, business owners, executives, and plan sponsors want to focus on running their business, not their retirement plan; creating efficiencies for them will allow them to do just that—and allow you to preserve the relationship and the assets.

Do you know how your income or profitability would be affected if you lost your largest retirement plan client? If you don’t, perhaps you should.

• Calculate your current client retention rate.
• Determine what it will be going forward, based on your business plan and the goals of your practice.
• Factor in the cost of resources and time associated with your asset retention efforts.

A long-term projection of how asset retention will affect your bottom line is a crucial component of business planning.

Periodically benchmarking a plan’s fees and services helps ensure that expenses are reasonable. There’s an ancillary benefit to assisting with benchmarking a retirement plan as well: You ensure regular and pointed interaction with the plan sponsor or key decision makers at the firm. Thus, benchmarking is not only an essential component of fulfilling your fiduciary duty, but it also serves as an invaluable client retention tool.

Maintaining a service calendar that details scheduled benchmarking, as well as other essential retirement plan management activities—such as benefits committee meetings, employee education, and enrollment and investment reviews—will help you stay top of mind with your clients, while providing valuable and necessary guidance.

The retirement plan market is broad, lucrative, and ripe with new selling opportunities. But don’t overlook the opportunities within your current book of business in your pursuit of new clients. Instead, follow these best practices to cultivate and plan for your existing clients, which can in turn lead to growth, profitability, and asset retention for your practice.

Do you maintain a service calendar to help with benchmarking your fees and services? What other best practices do you implement to retain retirement plan assets? Please share your thoughts with us below.