401K prospecting

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May 18, 2009 6:16 pm

I have some 401K's currently, and they work well for me.  But I have not actively pursued them very much.  Curious what other people's experience has been.  I very rarely meet people that manage a lot of 401K's, so it's hard to benchmark my experience.

 
What do most people charge for, say, a 1.5mm plan?  I typically use Hanc***, Hartford, American Funds, and get anwhere from 25 to 50 bips.  I could get a little more if I wanted to, but that sort of goes against how I sell the plans.  I've learned the pain points, and am planning on an active campaign to acquire more plans (1mm+).  Anyone have much experience with these?  Skip the "401K's are a waste of time and there's a long lead time."  I know all that already.
May 18, 2009 6:28 pm

I used Fidelity Advisor. Lots of fund choices, up front 1% and then a 25bps trail..



Insurance plans are the easiest to go after(Hanc***,Hartford..etc) because they are VA plans with large expenses(and jacked up MF expenses). Typically target 5MM and more, process takes at least 6 months(a year is more likely).



For smaller plans 1MM and less, sometimes SIMPLE plans are better and easier to get in the door since everyone is calling on 401K..(Cost less, get rid of all the admin fees that drive up the prices(profit) on small plans)

May 18, 2009 7:50 pm

All great points. Typically, I just try to become broker on the account, then look to make changes. In my area, insurance companies dominate the 401K space, so there's lots of poaching to be done. But it's easier to become broker on the account before trying to change the plan. Usually I seel on service along with trying to save costs. If you only sell cost, it's tough to get the plan before you sell them on a new one. Sometimes inertia prevents sponsors from making providor changes. But service is usually non-existent, so that's an easy sell.



The only problem I find with F.A. is the lack of choices for smaller plans. Anything 5mm+ usually has decent choices, though.



When you say 1% upfront, do you mean on assets brought over to Fidelity from another plan, or 1% on contributions? I know with Hartford and some others, you can get a fat upfront check for bringing assets over.

May 18, 2009 10:31 pm
The lead time isn't that long if they are in your pipeline!  Shoot squirrels they say, as you hunt elephants! (or just eat squirrels)
 
35-50 bps is the range I play in. Lincoln for an annuity plan and fiduciary responsibility concerns. The 401k toolbox and Ibbotson sell themselves. American Funds for anything else. (limits what I have to know to pitch a plan).  
 
I hit a LOT that should not be a 401k - typically not for assets, but for number of participants and cost that could be put to benefit of employees.   I go for BOR and then advise SIMPLE for year end. Works like clockwork.  Easy in, easy out, nice relationship with decision makers and net new asset flows.
 
TPA partnerships are critical.
 
 
May 19, 2009 12:33 am

BOR= broker of record

May 19, 2009 8:53 am
Takingnames:
The lead time isn't that long if they are in your pipeline!  Shoot squirrels they say, as you hunt elephants! (or just eat squirrels)
 
35-50 bps is the range I play in. Lincoln for an annuity plan and fiduciary responsibility concerns. The 401k toolbox and Ibbotson sell themselves. American Funds for anything else. (limits what I have to know to pitch a plan).  
 
I hit a LOT that should not be a 401k - typically not for assets, but for number of participants and cost that could be put to benefit of employees.   I go for BOR and then advise SIMPLE for year end. Works like clockwork.  Easy in, easy out, nice relationship with decision makers and net new asset flows.
 
TPA partnerships are critical.
 
 
 
Agreed.  Problem I find is that most fo the 401K "salesmen" in my area sell 401K's whether the businesses need them or not.  But you're right, unless the business is structured in a way that the owner needs a 401K (for higher deferral/PS limits), SIMLPES usually are fine (and cheaper, and easier, etc.).