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Four Steps for Advisors Looking to Service Retirement Plans

With many advisors rightfully wary of anything that resembles "selling," why risk going out on a limb to push such plans, particularly if they aren't a central aspect of your practice?

A number of small to mid-sized retirement plans are currently serviced by financial advisors that merely dabble in the retirement plan business. 

With many advisors rightfully wary of anything that resembles "selling," why risk going out on a limb to push such plans, particularly if they aren't a central aspect of your practice?

There are several benefits of servicing retirement plans, but the biggest one is that they are a means to an end. If you advise one retirement plan, you gain access to all plan participants as a trusted advisor. With more and more pressure on providers to keep administration fees low, resulting in lower fees to the advisor, financial professionals find themselves searching for other ways to monetize each employer relationship. These plans may be an underexplored avenue. Being the trusted advisor on the retirement plan makes you the easy choice for solving the needs of the participants on assets outside of the plan. And this convenience is passed onto the client, who can come directly to you, with whom they already have a relationship, instead of having to deal directly with a large plan provider that doesn't know them from Adam.

That said, there are several risks of which advisors should be aware. Common mistakes include positioning yourself as the expert when you aren’t seasoned in retirement plan design and administration and feeling that you can single handedly service the plan sponsor and participants alone. Both of these areas highlight the importance of finding the right partners (more on this below). Most advisors aren't retirement plan experts, and there's no shame in that, but that doesn't mean they don't have some value to add in that area. Being cognizant of your limitations is key. Ultimately, the client's well-being is paramount, not the advisor's ego.   

Here are four useful steps for advisors interested in getted started servicing retirement plans:

  1. Find the right partners. This is the most critical piece of the entire process. The right partners will service the retirement accounts, help with prospecting and provide you with the necessary plan support. Ideally, these partners help you look like the expert on servicing retirement plans, bringing the necessary tools and resources, while leaving you manage the relationship. Whether you have a list of approved providers from your broker-dealer or open access to any providers, choosing one or two that you can work with on a consistent basis has its advantages. Consider an advisor-friendly plan provider (one that doesn’t compete with you), Third-Party administrator (TPA) and managed account provider. While many providers bundle these services, it can be beneficial to look for an unbundled solution that can best service your clients while positioning you for growth. Finding partners to advocate your value as the advisor while not offering competing services can be essential for your success.
  2. Build your target list. You’ll need to start thinking about where and how to find new retirement business. Many advisors have never considered the value of their current clients. Maybe some of your existing clients are successful executives that run their own businesses. Consider asking them who currently manages their retirement plan and if they would be open to allowing you to evaluate their plan. If they already trust you with their personal accounts, chances are they will be more than happy to have you evaluate their plan. I’d also suggest pulling a list of local small to mid-sized businesses in the area that offer retirement plans. There are many free or low-cost web-based options that conduct plan searches based on the location and plan size. This, along with other search criteria, will help you narrow down your prospecting.
  3. Research and hit the phones. While cold calling might seem overwhelming, you’d be surprised at how many opportunities there are once you pick up the phone. First, you can easily check the health of any retirement plan online and should use that information to your advantage. Second, if you’re calling local businesses, chances are they’ll like that you are located nearby. But the most important part of the process is simply asking for the business. Retirement plans are sold and not bought, meaning that most plan sponsors are not searching for a new advisor or providers, so you must be the one to suggest and subsequently prove that a change may be in their best interest.
  4. Pitch the business. While some may look at this part of the process as “selling,” I encourage you to tackle it more as proposing a consulting role. Like any pitch, you shouldn’t come in guns blazing, trying to sell a product. Instead, take time to assess the current situation and understand the challenges, so you can focus on advising the client. Which is really the whole point here. Once you secure a meeting, good partners will assist with most of the legwork, including providing you with the necessary educational materials and value propositions. I encourage advisors to always take someone to the meeting with them. Having someone to take notes and watch for signs or signals is important, not to mention having someone there as a positive reinforcement. Bringing in partners to help pitch a comprehensive solution may be the ticket that closes the deal. I have been to many meetings where one of the ancillary services brought to the table by a partner is what the client latches on to.

Once you have the business, make sure to lean heavily on your partners, so you can do what you do best: manage the relationship and fulfill your fiduciary obligations in the client’s best interest. The above simple steps should help you not only harness the opportunity but expand your business offerings to ensure you diversify your income streams. 

Just remember–you can either aggregate or be aggregated. If you don’t deepen your relationships with your clients, someone else might.


Stephen Johnson is a Senior Vice President at ProNvest, an independent RIA firm that helps advisors service retirement plans through the use of technology and financial advice.

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