How to Set Yourself Apart in the 401(k) Space

Posted by PlanFees on Feb 23, 2022 8:07:00 AM

The retirement plan space is exciting, challenging and highly competitive. The rewards can be considerable, but it can also take significant effort to achieve and maintain them. One of the best strategies for doing just that is to clearly define your value proposition and differentiate yourself from the competition. Here are three ways to position your advisory offering to set yourself apart, build your professional brand and grow your book of business.

1. Lowest Fees? Not Always …
There’s no doubt that fee compression has created somewhat of a “race to the bottom” mentality in the retirement plan industry, such that many advisors use the opportunity to lower investment, advisory and other fees as a primary angle to prospect new business. And this isn’t necessarily a bad strategy so long as it also aligns with a plan sponsor’s overall business goals. To cast a wider net, consider aiming for fee reasonableness, value and transparency instead. Ultimately, it’s not to an employer’s benefit to save on fees if it comes at the expense of needed services for sponsors or participants. In just two minutes, PlanFees Prism can give you a quick diagnostic of how a plan’s fees compare with similarly sized plans in terms of number of participants or assets under management. But the fee conversation doesn’t — or shouldn’t — end there; it really is just the beginning until a sponsor understands what they’re getting in return for the fees they and their employees pay. And that leads us to our second point …

2. Breadth and Depth of Service Offering
Some plan sponsors’ business goals require higher touch service that a bare-bones advisory offering won’t meet. When a plan’s participation rates are low, for example, more frequent consultations with employees may be exactly what’s needed to course correct. So, if you offer monthly group sessions or more frequent one-on-one meetings, your client needs to understand that your level of service may not be a given with a lower cost advisor. They should also realize that a “bargain” advisor may just meet with your retirement plan committee once a year instead of quarterly. Based on survey data from a wide cross-section of more than 1,500 U.S. advisors, the PlanFees Prism365 Advisor Fee & Services module lets you benchmark advisor fees for the delivery and service frequency (semi-annually, quarterly, etc.) of 15 essential fiduciary services. Accessible with just a few clicks — the data in your Prism365 report can set you apart from the competition — especially for larger or more complex plans and organizations with greater participant needs.

3. Financial Wellness
The need to provide financial literacy education and support to participants in the form of holistic financial wellness programming has been on the radar of employers for some time, but is increasingly being viewed as a “must have” benefit within the retirement plan industry. It’s become frustratingly clear how things like excessive debt and lack of an emergency fund can hinder employees’ retirement readiness — as well as hamper their productivity. As a result, advisors are being called upon to offer a broader array of financial education beyond basic investment planning and asset allocation consulting to assist employees across the entire spectrum of their financial lives. And the pandemic has only increased the desire for comprehensive employee financial wellness, especially programs that boast higher than average utilization rates. This is one area in particular that presents a fantastic opportunity for advisors who want to set themselves apart.

The Bottom Line
Don’t look to win the race to the bottom if you want to succeed in the retirement plan space. Instead, race to meet your prospects and clients exactly where they need you to be.

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Topics: 401(k)