Prospecting with basic $300 plan

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Feb 1, 2010 3:39 pm

Curious as to your opinions on cold calling using a basic, inexpensive advisory program for $300/yr. to begin meeting people for future rollovers.......whether or not you think it would work or how it should be explained.....

 
Basically, the client gets an annual face-to-face with a Moringnstar Instant X-Ray, and then quarterly updates....best used with 401k clients who have the vast majority of their net worth in company plan(though would apply to anyone).....no conflicts, don't hold any funds, find out what they have elsewhere....real simple to understand.
 
As for me, I'm a $175k indy guy with $125k in fees and trailers......want to take that next step and think this may work down the line.  Get 200 people, and with 5-7% moving/leaving jobs per year, the rollovers would continue coming in....
 
Any thoughts?
Feb 1, 2010 3:43 pm

Maybe... but that stuff is free at the local library...and most 401k companies now include such software..

 
But I think it would work because calling works, may have to shorten the pitch and remove $300 comment..
Feb 1, 2010 3:49 pm

 
This is something for someone who finally sees past this "education" BS and realizes they need advice......they want someone, no no one, and this is a real easy way for them to have an advisor who does't require much committment from them, nor does the advisor hold their funds.....an easy way to start.......then just do what you say you're gonna do and get to know them better.......
 
The 401k part is just a way to start the converstaion.....I'm not a 401k expert......
Feb 1, 2010 3:51 pm

Don't include the price?  Scares them away? 



If people only knew.......1% fee is normal, so that's a $30k account, which gets you:


1...Ignored


2...Sold crap


3...Charged 3% per year.....

Feb 1, 2010 3:55 pm

Far from an expert in cold calling(but a savvy veteran) if you called up a corp directory and told thme for $300/year you will give them a Morningstar Xray.. I am not even sure if you would get a response..


Don't really understand you last post  about, ignored, sold crap and charge 3%/year
Feb 1, 2010 3:58 pm

How inexpensive 300 per year is......what I meant.

Feb 1, 2010 3:58 pm

I think he is saying the level of service a client can expect from a normal FA for a $30k account.

Feb 1, 2010 4:23 pm

A firm up in Massachusetts already does this.  They charge either a small fixed fee or 25 bips or something (it's much smaller than a regular fee).  It appears to be very successful, as it fills the pipeline.

 
But I don't think you get the people through cold-calling.  I think you have to penetrate one or two BIG employers.  I think this particular firm did it with Telecom workers or something.
Feb 1, 2010 4:35 pm

 
Thank you.....and I'm way ahead of you, the difficult part is getting past the companies' issues with feeling like they are promoting you......opening themselves up to liability......should just choose five advisors and let the employees decide.
 
Any idea the name of the firm in Mass?
Feb 1, 2010 9:19 pm
hci:

 
Thank you.....and I'm way ahead of you, the difficult part is getting past the companies' issues with feeling like they are promoting you......opening themselves up to liability......should just choose five advisors and let the employees decide.
 
Any idea the name of the firm in Mass?
 
I don't think they were any type of preferred providor for an employer - they jsut networked through a group of employees doing seminars, etc.
Their philosophy is that they will charge a normal 1% fee for a brokerage account (IRA, etc.), but a nominal amount for 401K accounts because they have finite investment choices.  I also think they view it as a "loss leader" that keeps their pipeline juiced with actual paying clients for future advisory work (at point of rollover).
 







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Feb 6, 2010 2:24 am
hci:

Curious as to your opinions on cold calling using a basic, inexpensive advisory program for $300/yr. to begin meeting people for future rollovers.......whether or not you think it would work or how it should be explained.....

 
Basically, the client gets an annual face-to-face with a Moringnstar Instant X-Ray, and then quarterly updates....best used with 401k clients who have the vast majority of their net worth in company plan(though would apply to anyone).....no conflicts, don't hold any funds, find out what they have elsewhere....real simple to understand.
 
As for me, I'm a $175k indy guy with $125k in fees and trailers......want to take that next step and think this may work down the line.  Get 200 people, and with 5-7% moving/leaving jobs per year, the rollovers would continue coming in....
 
Any thoughts?

Might get caught up in arbitration if the advisor on the plan catches on you are "servicing" their clients.   My understanding of fiduciary responsibility and advisor liability is that one is not supposed to give advice to participants in a 401k plan if you are not advisor on the plan. If you sell them a Morningstar report, and are meeting with them, you're advising them.    
 
Selling them a Morningstar report means you are selling them on something their employer is already paying for in the fiduciary review and carrying the fiduciary responsibility for. You'd be charging participants for someting they should already be getting and commonly included in the information provided to participants.  You'd be putting your neck into the fiduciary liability noose too, as far as I can see it. 
 
You'd be far better off learning more about 'K plans and taking them on.
 
Kicking and Screaming tonight.