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Nov 17, 2008 6:43 pm

This is not a market I have ever gone after and I don't intend on spending a ton of time here, but last week I randomly and accidentally cold called my 5th grade teacher, who was one of those teachers that had a significant impact on mine and my family's life.  A great guy.

We got to talking and decided to get together this week to catch up.  While we were on the phone, he had mentioned that most of the teachers I had (which he somehow remembered) were close to retiring.

So I'm curious for those of you that market to teachers, what are their hot buttons when it comes to the 403(b) plans or other matters?  What else have you learned after working with them?

Ice, I'm sure you have plenty of knowledge on this...

Nov 17, 2008 6:51 pm

I have found most public school teachers never really contributed to a 403b instead rely on a pension(pay approx 75% of last five years, for rest of their life)…

Nov 17, 2008 7:07 pm

I agree.  Most that I know did not contribute much to 403B.  When there is no employer match, there is not much (perceived) value to contributing.

  IMO, the 403(b) market is best utilized if you completely commit to it as a focus of your business.  You have to get several school districts (of course, it depends on the size of districts) under your belt, and work them religiously.  I know some insurance/indy-type guys that just take their ING or AXA products all over the place, and suck up a few thousand accounts.  You have to commit to volume to make it work, otherwise, you end up with 250 accounts with 25K each in them.  You probably need in the range of 750-1000 accounts to make it work.  The last thing you want is a few hundred worthless accounts taking up time, at the same time trying to work a book of "real" clients.  I wouldn't try to do both.   In your case, the better option might be to work it from the inside out - sort of like getting access to a company where you just want to work with the "A" list employees.  Get this guy as a client, then start setting up meetings/seminars by invitation only through him, for people "close to retirement".  You don't want every 30 year old 2nd grade teach comign to you because she wants to "start investing".
Nov 17, 2008 7:32 pm

Snags, I've had a fair amount of success in our area catching them as they leave the public school system with some 403b (they tend to call it TSA) money, and also FL has a lump sum partial distribution option which is available to rollover.  Squash is right about the majority of their retirement coming from a def. benefit pension, but I've found that most do have some $ available to rollover from some of the plans.

In my experience, they've responded very favorably to someone taking the time to actually work up a portfolio plan showing them the different things that you can do for them.  They're used to only seeing the Horace Mann or Valic schlub hanging out in the breakroom, so the only product they have generally seen is some sort of annuity, and they usually haven't even had that explained to them fully.  If you take the time to do a full work-up, I think you'll end up in the driver's seat.

You can see some 200k - 250k accounts, if they've been diligent and started early.  I think the most I've seen coming out of the school system might have been 300k +-, and that included the Florida lump sum option, so that's a little higher than normal.  Not a lot of whales there, but it'll enable you to be in place to catch the spouse's 401k, as well as whatever else they've got going on.  They tend to completely trust and appreciate what you're doing for them.   I don't know about the rest of you guys, but I've learned that I'd rather work with 10 $400,000 accounts that will listen to me and appreciate what I'm trying to do for them, as opposed to one $4,000,000 that fights me and shops me every step of the way.  
Nov 17, 2008 7:46 pm


I don't know about the rest of you guys, but I've learned that I'd rather work with 10 $400,000 accounts that will listen to me and appreciate what I'm trying to do for them, as opposed to one $4,000,000 that fights me and shops me every step of the way.  [/quote]   I agree completely with that.  Plus, there might be more referral opportunities from 10 people than 1, especially if that one doesn't like to refer people in the first place.   On that note, there is a HUGE opportunity to find people with 100k-200k.  They generally fly under the radar of many other advisors and aren't getting that great of service.    Moreover, I've come across a few of those types lately that have this money either in old 401k's or non-managed accounts that feel they don't have enough to have an advisor, or think it's too expensive, especially with the "planners" out there charging $1,000+ just for a plan, and then get paid to implement the plan.
Nov 17, 2008 7:56 pm

  teachers are great annuity clients

Nov 17, 2008 9:25 pm

Teachers spend entire careers never having made a major decision. This becomes obvious when asked to make a decision about what to do with their money. I’m with Vin on selling them annuities. Use the word “pension” a LOT when talking about annuities.