As participants begin to delve into the new breakdown of their retirement plans, what can you do to reduce the backlash and support greater participant success?

As a rule of thumb, over-communicating is better than the alternative. Employees will appreciate you, and better yet, many will be more willing than ever to meet with you to discuss their personal financial planning. In the end, you will get paid more for your actions, not less!

Here are five of the best strategies for coming out on top in a post-fee disclosure universe...

Click here to view the entire article.

At your first meeting, it can be difficult, occasionally, to gather the necessary information without feeling as if you’re “grilling” the person. Participants may not want to reveal too much about themselves; however, you need to get as much information as possible. By starting a social conversation with your client, you can help to put them at ease, building their trust while you collect all the essential data.

• Create a Dialogue—You should ask questions, but don’t be afraid to tell the client about your personal life, too. For example, you have a son or daughter who is just applying to college and the client’s child is now a freshman at the local university. You shouldn’t hesitate to ask them how he or she likes the school. By sharing a little bit about your personal life (when appropriate), you can relate to your client on a deeper level. If they know that they can trust you, they will share more information with you.
• Don’t Sell Them—It’s important to put your client at ease. It may be stressful for them to talk about their financial situation with you. If they are like most other people, their retirement savings have been volatile the past few years. Let them know that you genuinely want to help them to achieve a brighter financial future – a paycheck for life.
• Work From a Paper, But Don’t be Afraid to Go Off Topic Sometimes—It is best to have an outline of questions that you need answered, but if you get off topic, that’s alright. It’s better for your relationship to get to know the person. However, don’t stray too far so that you end up talking sports or politics for an hour. The client’s time (like yours) is valuable. There’s a delicate balance between building trust and wasting time, but it is essential not to make the client feel rushed.
• Discover What They Aren’t Telling You—A large portion of communication is non-verbal. Make sure you can tell the difference between an anxious client and one who is in a hurry. Similarly, you should try to control your body language as much as possible to keep the conversation going. If the person is talking about something important, nod your head as a way of prompting him or her to continue. Don’t cross your arms in front of your chest, even if the conversation is not going the way you want it. This is a signal that you are uncomfortable or bored and literally creates a barrier between you and the person. Keeping an open posture, facing them with your arms at your sides (or discreetly taking notes on important points), is an invitation for them to keep talking.
• Be Prepared to Listen—You should be listening to everything the person has to say. Make eye contact, and if the discussion pertinent, ask for more information. Be attentive and present in the conversation.

Your initial meeting with either a participant or non-participant is a crucial moment. You need to gather their financial information while beginning a long-term professional relationship. Not everyone is blessed with the gift of gab, but if you can master a few tactics, you will be well on your way to putting people at ease, building their trust in you and, hopefully, increasing your assets under management.

Before Retirement
As Social Security’s demise looms on the horizon, an increasing amount of Americans worry if their savings will be enough. The 401(k) plan has come to be one of the greatest vehicles for providing an adequate retirement. However, many workers (according to some estimates 40 percent) do not enroll in their companies’ 401(k) plans, and if they do, they probably are not saving enough. There are several steps you can take as an advisor to help participants to begin saving early and often, ensuring themselves Paychecks for Life®.

Step One: The 401(k) on Auto-Pilot
Many studies have shown that automatic features, including auto-enrollment, auto-placement, auto-escalation and auto-rebalancing, drastically improve participants chances of having successful retirements. Although participants cannot always control the automatic features in their plans, the sponsor can. You should talk with plan sponsors about restructuring plans to include automatic features, which offer them benefits, such as increased enrollment and fiduciary protection, as well.

Step Two: Other People’s Money
Participants are the masters of their own destinies, and you can teach them how to exploit other people’s money in their 401(k) plans. The first investors in their 401(k) Paycheck Manufacturing Company (besides the participants themselves) are their employers. If their company has a contribution matching program, make sure that participants use it. If they do not contribute at least the full matching percentage, they are missing out on free money. Some participants will only contribute two or three percent of their salaries to their 401(k)s, but if their employer is offering a five percent match, they should contribute at least that much to start.

The second investor in their Paycheck Manufacturing Company is Uncle Sam. Although most people consider him to be a “taker” more than a “giver,” Uncle Sam has provided 401(k) participants with a great opportunity. The contributions made to 401(k) plans are made with pre-tax dollars, and this allows participants’ assets to grow more quickly than if they had contributed in after-tax dollars. If your participants are in the 25 percent tax bracket, for every $100 they contribute, they are not taxed the $25 they would have been if they had not invested that money in their 401(k)s. They are already guaranteed a 33 percent return on their money, just by contributing to their 401(k)s.

Approaching Retirement
In addition to the steps made well before retirement, there are several other actions you can take when participants are thinking of retiring.

Step One: Assets vs. Liabilities
Dan is age 65. He put money into his 401(k) for over 40 years, and now he’s ready to enjoy the fruits of his labor. Dan has managed to put away a considerable sum of money, but will it be enough to cover his liabilities? Many advisors simply focus on the assets that participants were able to accumulate, but some are beginning to compare this amount to liabilities. If Dan has a large amount of debt (if he hasn’t paid off his mortgage or his credit cards, for example), his retirement plan assets might not be enough to provide him with a Paycheck for Life.

The first step in determining if participants are ready for retirement is to compare their assets with their liabilities. This will provide an initial snapshot of their financial future. If it’s unclear whether participants will have enough money to enjoy their retirement years, you can explore other options, such as working longer, increasing contributions to the maximum amount, etc. If you are uncertain about whether assets will be depleted prior to the actuarial age of death, it’s always better to err on the safe side and offer them several alternatives to ensure that they won’t run out of money, including buying an annuity, which is discussed in more detail below.

Step Two: Lifespan
Unfortunately, we can’t see the future. We don’t know if Dan will live to be 82 or 122, but either way, it is our job as advisors to make sure he will never have to struggle financially. It is difficult to calculate lifespan, but we can estimate spending needs slightly better if we do. Depending on spending habits, Dan needs to replace 70 to 90 percent of his annual income.

We can try to estimate Dan’s lifespan based on his parents, but there is still some risk involved since there are many factors that we may not know. Both of his parents may have smoked heavily from a young age, but Dan may never have touched cigarettes. Dan may be overweight whereas his parents exercised regularly. The list is endless. The best thing we can do is overestimate his needs rather than leaving him without money. There are on-line calculators available that estimate longevity based on health and a number of other factors.

Step Three: Annuities
Annuities are an increasingly popular investment choice since they provide guaranteed income, no matter what. Annuities protect retirees from a variety of risks, including outliving assets, but they also protect against investments declining in value and against inflation. Many participants do not consider lifetime income options because they are unfamiliar with this these kinds of investments. You should talk to participants and educate them about lifetime income options, including annuities.

Some plan provider may offer an annuity option within the 401(k). Although these options are typically called “lifetime income solutions,” they behave very similarly to annuities, which participants are often more familiar with. To use this option, participants must first purchase a “rider,” a contract for additional insurance, which can insure all of or only a portion of the participants’ assets. These types of annuities may not be for everyone since there are fees involved that reduce the portion of investable money within 401(k)s. Since not all providers offer annuities options within 401(k) plans, portability is another issue. “Traditional” annuities, outside of 401(k) plans, do not have these drawbacks and can be a great asset if longevity or inflation are major concerns for participants’ assets.

Retirees may not want to buy annuities as soon as they retire, but it is helpful to set aside a sum of money for future purchase. This keeps their options open if they are ever in need of alternative sources of income.

As advisors, we can take steps and make recommendations to participants or those nearing retirement. By helping participants to utilize the resources at their disposal, we can ensure that participants have a Paychecks for Life®.

Blogging for Current Clients
A blog allows your clients to follow the latest happenings of you and your firm, as well as to keep current on the latest investment and retirement plan trends. Clients can follow your blog in their RSS feeds and be updated automatically as they review the latest postings from other blogs that they follow. If you can’t think of blog topics, consider your current clients as your target audience. Are most of your clients interested in the latest compliance issues or in increasing participation rates? Are they large or small plans? Sending out surveys is a great way to discover what is interesting to your clients. Blog posts can open up conversation between you and your clients and allow you to offer additional services to them.

Blogging for Prospective Clients
Your prospects may not be following your blog, but if you have their email addresses, you should be sending them your e-newsletter. Your newsletter should contain a snippet of your blog post, which will link to your blog for the full article. In this way, viewers can see the entire article and other useful information available on your website. If you’re using an e-newsletter platform, such as Constant Contact, you can see you is interested in your blog and who signs up for the blog.

Although you should focus your blog on issues that pertain to current clients, by having a target market in mind when writing posts, you will be able to attract similar (or new demographics of) clients. E-newsletters containing posts should be a part of your drip marketing campaign since they will keep your name in front of your prospective clients. This creates top of mind awareness, and when they need a retirement plan advisor, they will be more likely to call on you.

Blogging for Unknowns
Although your blog is geared towards clients and prospects, it may attract people that you don’t even know. Search engines, such as Google, increasingly rely upon blogs to provide information. If your blog contains relevant information regarding fee disclosures, your post may show up in the results of people searching for more information on the topic. If those people are plan sponsors looking for a new retirement plan advisor, they might contact you for more information, a meeting, etc. If you optimize your blog for search engines, your post could show up in the top results of Google, Bing, Yahoo, etc. When managed correctly, having a blog also pushes your website up in search result rankings. If people are searching for a financial advisor in your area, this could give you a huge advantage over your competition.

Popular blog platforms include Blog.com; Blogger, owned by Google; SquareSpace.com; WordPress.com; Weebly.com; TypePad Micro; Live Journal; Jux and Posterous Spaces. Most of these platforms are free.  

Having a blog not only helps you to retain current clients, it also aids you in marketing to prospects and unknowns. Blogs can drive visitors to your website and have a number of advantages. Posting regularly will increase your chances of gaining more visitors and, potentially, more clients. If you don’t have a blog yet, you should consider starting one. 

• Record Everything—FINRA recently toned down its filing requirements regarding social media, but this does not mean that they won’t examine your posts. As an advisor, you’re used to keeping proper documentation, and this does not stop when you get to social media websites. Recording also helps you to keep track of what you have and have not put online so you don’t repost the same article or message.
• Determine the Level of Involvement—It can be difficult to decide whether your firm should obtain a Facebook page or not, or whether each advisor in the firm is expected to maintain a professional profile. Keep in mind, the more people involved, the more monitoring that needs to be done and the greater the potential for compliance violations.
• Discover the Benefits of Social Media—Will social media help you to obtain prospects or will it consume your time without any results? In our experience, LinkedIn is particularly helpful in obtaining clients (if properly optimized), but it really depends on your practice.
• Separate Business and Personal Accounts—This may seem like an easy one, but it is one of the most important principles to follow. If you, an employee or other advisor in your firm posts something work-related on their personal social media page, it can result in the same consequences as if they posted it on their work profile. Once something is posted, even if deleted, it was still there and could have been seen by a client or prospect. Make sure that everyone in the firm knows how to strictly maintain these boundaries.
• Open Accounts, but Don’t Post—If you’re worried about compliance but still want to get involved in social media, go ahead and join. If you don’t post anything but instead use the accounts to keep up-to-date on your clients’ lives, you can still enjoy the benefits of social media websites. By having a LinkedIn, Facebook, or Twitter, you can see when John Doe finds a new job or when Jane and Chris Smith have a baby. This way you can preempt their questions about 401(k) rollovers and college savings accounts by sending them congratulatory emails and asking them if you can be of any assistance.

Social media can be a great tool for advisors, if used properly, but the compliance worries associated with it can scare away many in the retirement industry. By following some guidelines, you can avoid compliance problems while gaining a great ally in the age of technology.

• Advisor Success Formula

For the Risk-Averse Investor
Your clients are probably scared of taking any major risks, and who can blame them? Risk is a natural part of investing, and they can reduce their risk by selecting “safer” investments. However, are these investments the best choices? Sit down with each of your clients and explain to them the risk level of their current asset allocation. Show them the average growth of portfolios at similar, higher and lower risk levels. Typically, investors that take higher risks have higher average gains. Loss will happen, but it doesn’t mean that investing in “safer” options will result in the highest or steadiest portfolio growth.

For the Anxious Participant
Clients and participants experience less anxiety when financial advisors communicate with them regularly. If they know what is going on, investors will likely feel more confident and may contribute more to their retirement accounts, even during uncertain economic times.

For Those Who Don’t Want to Invest Right Now
Many investors’ portfolios took more than a few hits in the last year, but that shouldn’t reduce the amount of contributions that participants make to their 401(k)s or other investment accounts. Of course, they may still sustain losses this year, but those losses are nothing compared to missing out on a financially secure retirement. Skipping even one year of contributions can postpone retirement by a few years.

Due to recent volatility, investors are uncertain of their financial futures. This has left many risk-averse and not wanting to contribute to their retirement accounts. Some see investing now as simply throwing away their hard-earned money. However, by explaining risk and asset allocation, by communicating regularly with clients and by encouraging participants not to miss contributions, financial advisors can keep clients investing in their futures. 

• Advisor Success Formula

Let me share an example of "How do you do special?" that I experienced recently.

One of my favorite hotels in New York City is The Muse on West 46th street. It is conveniently located right off of Times Square and centrally located to all points north, south east west of Manhattan. Translation – you can get there from here easily.

The Muse is a Kimpton Hotel. You animal lovers will know instantly what I am talking about. They cater to guests and their animals. You want to bring your favorite pooch to New York and forgot the bowl, no problem, Kimpton's got you covered. You get the idea. Now my wife and I don't own a dog or any animal for that matter, but what I have learned is any hotel that caters to guests’ animals knows a lot about catering to their guests’ littlest, quirkiest needs, wants and desires. And that makes for a great hotel.

Last month, I was leading a workshop in Chicago at Morningstar's office. Across the street was Hotel Burnham, a Kimpton Hotel, where my staff and I stayed. It was a vintage hotel, the kind of place Al Capone camped out in his heyday. I checked in around 6:05 pm. As the young lady behind the counter checked me in she said, “Mr Epstein, we have free complimentary wine tasting from 5-6 pm every night.” I responded by saying, "Unfortunately, I am only staying overnight and checking out in the morning and I'll miss the wine tasting." She smiled pleasantly and said, "Just one minute." She went in the back room and came out and handed me a bottle of wine and said, “I hope you enjoy."

Now that was nice, but it was not the special moment I am writing about. As she handed me my key she asked, "Is there anything else I can do for you this evening." I smiled and playfully said, “Well, I am feeling a little forlorn." She asked, "And why is that?" I responded, “Well, I left my dog at home and I really miss him."

Without blinking an eyelash, she said sweetly, “Would you like a fish sent up to your room?"  A fish? Her response left me speechless. I don't believe I have ever had any one offer me a fish (have you?), let alone a hotel desk receptionist!  "Really?" I answered in complete awe. "Certainly," she said. “I’ll have a fish sent up to your room immediately." "Thank you,” I smiled. “I don't believe I have ever had a fish sent up to my room." "My pleasure," she responded. "Is there anything else I can do for you?" "No," I said, "I think you've done me ‘special’ just fine!"

Still stunned, I made my way to the elevator, my bottle of wine in hand and my anticipation for my fish wrapped tightly in my imagination. Not less than five minutes after checking into my room, there was a tap on my door. "Room service." Like a little child on Christmas morning I opened the door with anticipation.

Sure enough, standing at my door was a hotel employee holding a large glass bowl, filled with water, a rainbow of colorful glass stones and a beautiful bright red beta fish swimming around a bright blue sea corral!  "Have a nice evening," he smiled and handed me my own personal fish! Amazed, I closed the door, placed the bowl gently on the night stand by my bed, and sat down for 30 restful minutes admiring my fish and the special treatment I had just received. Special! You bet!!

How do you do special?

Hotel Burnham
1 W. Washington Street
Chicago, IL 60602 
Phone # 312-728-1111 

• Advisor Success Formula

Another advisor said, "We aren't getting the job done. If the goal is to get participants to save to replace 70 to 90 percent of their income at retirement, we, as an industry, are failing and I’m afraid the government will do another ‘land grab’ just like they did with Louisiana and Oklahoma from the French!"

Tom Kmak, the CEO of Fiduciary Benchmarks, made an even stronger case for our focus and energy in the wrong place. "Even if you did reduce fees in a retirement plan,” Tom said, "it is the least important factor in increasing participant success." He then went on to list five other factors that have a proven advantage in increasing participant success! Auto features and an increase from 50 percent match up to 6 percent of contribution to 100 percent match up to 8 or 10 percent of contribution. This changes participant behavior and metrics by 70 to 80 percent Tom proclaimed and then proved it with his new benchmarking studies! Tom's comments reminded me that all of the DOL's emphasis on 408(b)(2) as a government mandate and reform to try to lower costs still misses the mark when it comes to moving the dial forward on participant retirement savings success.

Let the alarm be sounded! We must admit that the 401(k) system is broken and, in addition, may be restricted by the ERISA code upon which it was built. We have thrown billions of dollars at retirement system. It has been reformed countless times and modified. We have created sophisticated investments and technology to make it easier for plan participants to save and invest for their future. We have trained thousands of advisors to sell tools and systems. And the result is we haven't moved the savings rate dial. Six percent contribution, on average, won’t get the job done. And we know it!

And 408(b)(2) and 404(a)(5) fee and participant disclosure won’t get the job done either. We are just going to confuse and upset more plan sponsors and participants! And we’ll waste even more time, money, energy and paper on the part of advisors and record keepers in getting this word out!

The problem with all of these changes by the DOL, all of these reforms (and every reform that came before it over the last 30 years) is of no use anymore, because that is merely trying to fix or improve a broken system.

Instead, what we need is a real innovation and transformation of the 401(k) system. We need a revolution of ideas and a fundamental change in the structure of ERISA.

One of the real challenges is to innovate fundamentally in any business, especially ours which is governed by tax laws that require governmental approval to change a system. There is also the status quo. A system of trillions of dollars creates incredible territorial claims by record keepers, financial institutions and the politicians. There is a natural human nature desire to fight against innovation that could change the landscape for everyone involved.

Innovation is hard, because it also means doing something people don't find easy. For the most part, changes challenge what we take for granted. Things that are obvious.

For example, it's obvious that people are lousy savers or don't understand investments and, therefore, will never save enough for retirement.

The greater problem with transformation is the Tyranny of Common Sense. The things people think can't be done a certain way because that's the way they are done. Like a 401(k) should always be self-directed and a 50 percent match up to 6 percent is the norm.

President Abraham Lincoln spoke these words to the 2nd annual meeting of Congress in Dec 1862. He said, "The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise--with the occasion. As our case is new, so we must think anew, and act anew. We must disenthrall ourselves, and then we shall save our country."

Disenthrall. It's a great word. It means there are ideas all of us are enthralled to which we seemingly take for granted as the natural order of things – the way things are.

At the time, Lincoln was talking about slavery, which was the natural order of things for millions of Americans – the way things were. And he was calling for a revolution, a transformation and an abolition of slavery! And it happened.

Today, we stand at a crossroads for our industry. We are finally, I believe, waking up to the fact that all the emphasis we have been putting on "fiduciary responsibility, 3(21) and 3(38) programs” has done absolutely nothing to transform the failure of the 401(k) system to increase participant success.

We must acknowledge that the system is not working. "The dogmas of the quiet past are inadequate to the stormy present." We know the majority of plan participants will be enslaved by a life of working for a living long after retirement, because the system we have spent billions on will not create a paycheck for life for them at retirement! "We must think anew and act anew. We must disenthrall ourselves." Only than shall we save this retirement system!

• Plan Participant Success Formula

LinkedIn offers many tactics that can be utilized by financial advisors to fill the pipeline of leads.By using the “advanced search” option, you can easily filter and narrow prospects in your targeted industry. The “advanced people search” has options to highlight keywords, names, locations and postal codes, as well as job titles, schools and companies. If individuals or businesses use certain keywords numerous times throughout their profile, those names should come up first on the search page.

For example, if CPAs are good referral sources for you, you can search for CPAs in your zip code and build your database of accountants. With LinkedIn’s Business, Business Plus or Executive paid accounts, you can search by company size, interests, years of experience and Fortune 1,000. Seniority level and function are in beta testing.

To further build the network and make quality connections with prospects, your invitation emailshould include a personal message explaining your intention and the benefit the person would receive by connecting with you.

While you can build a robust pipeline with FreeErisa and subscription databases, such as Judy Diamond and Larkspur, don’t neglect LinkedIn’s platform with increasingly better search capabilities, which can provide an important tool in the everlasting pursuit of leads.

• Advisor Success Formula

Creating & Packaging a Message

The objective of identity branding is to create a memorable message and image for your audience. The first step is to articulate your message. If you need help, contact a boutique advertising or marketing firm and ask their opinion, or use your value proposition. Be imaginative in your delivery. Oftentimes, this is the first image that potential clients will see when they read a letter from your firm or visit your website. The next step is to converse with your audience. The goal is to create an emotional connection, so that they use your services.

Once you’ve decided on your message, it’s time for packaging. All your materials should use your logo and your message. This includes business cards, letterhead, envelops, websites, etc. With a consistent message, your brand will become the standard idea associated with you and your firm.

Constructing an Image

Image, or how others perceive you and your firm, is another important aspect of branding. There are four steps to buildingyour image through community service: articulate a social problem, offer a real solution,contribute to the community and challenge businesses to participate. Use your strengths to help those in need. After taking up a cause you believe in, share it with your clients and prospects, send them an update on your mission and tell them how you are helping your community. Include your contact information and ask them if they would like more information on how to get involved. Community service is a positive way to build your image.

Writing articles is another way to increase your credibility. Choose topicsin whichyou excel. Discuss family businesses, small business owners or issues that frequently affect your target audience. Pitch the article to publications that your potential clients may read. You can also send copies of the published article to prospects and clients. When they have an issue, they are more likely to contact you since you are the perceived expert in the area. This will not only help build your image, but also increases the number of opportunities you may have.

Identity branding isn’t always easy. However, utilizing these techniques can help you open doors. Branding creates awareness and gives your firm an advantage. By creating a clear message and image for you and your firm, potential clients are more likely to contact you when they need a financial advisor.

• Advisor Success Formula

Defining a Bear Market

There are a variety of definitions for a “bear market.” A bear marketis not the equivalent of a recession. One difference is that they have different signaling factors. Recessions have a beginning and end that an official or recognized institution acknowledges. According to Investopedia.com, a bear market is defined as: “A downturn of 20% or more in multiple broad market indexes, such as the Dow Jones Industrial Average or Standard & Poor’s 500 Index, over at least a two-month period.” Other definitions use a “peak-to-trough” approach, similar to Standard & Poor’s explanation: “A peak-to-trough decline of at least 20% of the S&P 500 Index.”When defining bear markets in history, the latter definition is typically used.

Determining the Length of a Bear Market

Since World War II, there have been 11 of these markets, which average a duration of 17 months. However, these troublesome times vary considerably in length, from 36 months beginning in 1946 to just three months in 1987. Since late July of this year, the S&P 500 has had an overall downward trend. As overseas markets are not fairing much better, many have called for individuals to fasten their seat belts and prepare for a bumpy ride. Others have denied the presence of a decline in our current economic future. For the sake of brevity, it is generally difficult (and sometimes controversial) to determine the span of these declines.

Thinking of Severity

Investors commonly ask, “How bad will the market get?” Again, there is no concise answer. Rate of return on investment in the S&P 500 Index measures severity. The average return of a bear market is
-32%, meaning that investments lose nearly one-third of their values. Severity and duration don’t always go hand-in-hand. For example, although 1946 has seen the longest bear market since World War II (36 months with a -30% return), the largest decline came in 2000 (30 months with a -49% return).

Recovering to Pre-Bear Market Levels

Even after reaching a trough, the market’s climb back to the level of its previous peak can be long. This increase is the “trough-to-peak” or recovery period. As S&P is quick to point out, “Different benchmarks and economic periods will produce different results.” For this reason, recovery periods also vary significantly. Although the bear market that began in 1973 only lasted for 21 months, it took a total of 69 months to recover to the previous peak level. Conversely, the 36-month decline of 1946 took just 15 months to recover to previous highs.

Learning from the Past

Despite the uncertainty that is indigenous to bear markets, one can learn many valuable lessons. Investors should avoid trying to “time the market,” since no onecan predict the end of a bear market with absolute certainty. Another mistake commonly made by investors is “anchoring” or incorrectly using a number or percentage as a point of reference. Short-term decisions made because of “anchoring” often endangers long-term growth.

Panicked investors can easily make poor decisions, but financial advisors must provide a historical prospective. In this way, investors can make more educated and more rational decisions about their portfolios and their economic futures. Remember, “Past performance is no guarantee of future results;” a bear market will not last forever.

• Advisor Success Formula

There are many services and websites that can start you on your way to marketing success. Many of these sources can provide you with company names and plan administrators. Some of these include 401k Exchange, Judy Diamond, Brightscope, Free ERISA, Larkspur, Marketing Resource, Pension Planet, Strategic Alliance, etc.

Since there are about a half million 401(k)s, it is important that you limit your target prospects. To do this, you need to define your target market and analyze the type of clients you want. This will help you to limit your database to a target segment, or your niche. Begin by analyzing your current client base, since this can be a blueprint for your prospect database.

There are many factors that can help you come up with a valuable and concise database. Variables to consider include:

1. Distance – One of the first items to consider is distance. You should limit the area you want to focus on to one that is manageable for traveling to prospect meetings. This can be 10 to 50 miles, depending on population density, or yourtravelling preference.

2. Industry – If the majority of your clients come from a specific industry or you have expertise within a certain industry, you should probably narrow your focus to that industry. Or you may want to focus on industries with growth trends or on a unique industry where the competition may not be as fierce.

3. Number of Employees – Do you work best with large companies? Or do you truly shine in small operations? Analyzing your clients’ sizes can help you identify the size of prospect you’d like to target.

4. Plan Size – Similar to the number of employees, the amount of plan assets you are able to handle can also limit your prospects. Again, by analyzing your current clients’ assets you can determine the plan size that is best for you.

5. Account Balance – The average account balance of participants’ shows the plan’s activity and influences the types of service you provide for a specific client. By analyzing current clients’ average account balances, you can identify your target amount.

After you’ve identified the profile for your current clients, you can begin to mine the databases for appropriate prospects. Since this might not be the most valuable way to spend your time, you should consider hiring a college student to do this for you as a cost-effective solution. The student can use your parameters to identify your target companies to add to your database.

By hiring a student with good phone etiquette and an engaging personality, you can have them call plan administrators and update contact information. Giving them a natural sounding script can reduce their chance of making mistakes.

By taking the time to create an up-to-date, targeted database, you’ll have the foundation around which you can build a successful marketing and sales campaign.

• Advisor Success Formula

Plan Information

According to the DOL, plan information that does not refer to the suitability of “any individual investment option for a particular participant” is not “advice.” Many sources can educate participants on the plan and do not constitute a “recommendation.” This includes information on the benefits of participation and contribution increases. The information can also contain facts on the risk of early withdrawals. These materials can educate participants on the investment alternatives offered within the plan, such as “descriptions of investment objectives and philosophies, risk and return characteristics, historical return information,” etc. Advisors can use this plan information to teach participants about their options without endorsing a specific investment method or product.

General Financial and Investment Information

It is important for advisors to inform investors of common financial concepts, like “risk and return, diversification, dollar cost averaging, compounded return and tax deferred investment.” Investment education should also cover inflation and its effects and how to estimate retirement income needs and assess risk tolerance. Advisors can also present materials on “historic differences in rates of return between different asset classes (e.g., equities, bonds or cash).” As long as the information does not have any immediate connection to the options within the plan, advisors are not acting as a fiduciary.

Asset Allocation Models

Another great education tool, asset allocation models help investors determine their strategies as well as the risks and rewards. These models are:

• Available to all participants
• Structured on investment theories that are widely accepted and “take into account the historic returns of different asset classes”
• Inclusive of all the facts and assumptions that the model was created from
• Accompanied by a document that states: “in applying particular asset allocation models to their individual situations,” investors must consider their unique assets, such as home equity, savings, etc. in addition to their plan assets

If these models recognize a specific asset class that is contained within the plan, they must also include a statement indicating where to obtain information on investment alternatives.

Interactive Investment Materials

This final category includes worksheets, questionnaires, software and other materials that participants can use to “estimate future retirement income needs and assess the impact of different asset allocations on retirement income.” These materials can only be based on accepted theories and historic returns. The information must also follow similar guidelines to those under asset allocation models. These materials will help participants assess multiple asset allocations and determine independently their investment strategy.

The bulletin presents advisors with an opportunity to generate clients. If participants want or need investment assistance, advisors can provide the informationoutside of the workplace and in a separate investment counseling arrangement.

Although the DOL has proposed expanding the definition of a fiduciary, IB 96-1 will still provide “safe harbor” education options for advisors. By knowing their limitations, financial advisors can provide better education, while protecting themselves from liability. The DOL’s IB 96-1 helps advisors to remain protected from fiduciary responsibility and provides an outline for proper investment education.

Tracking dates that educational information is provided to participants can further safeguard against liability. Having participants and prospective participants sign agreements stating that they understand that their financial advisor guided them through safe harbor information is another way to reduce the risk of becoming a fiduciary. For more information on how to properly document your activities, see The 401k Coach Wealthcare Report Card that is available to attendees of all Boot Camps and the Year 1 program, which begins April 2012.

Success for this option inside the 401(k) plan is building traction. Both the IRS and DOL seem to agree that the time is right to offer participants a distribution option, which provides them with guaranteed income payments  - "paychecks for life". “They have issued a request for information (RFI) that could catapult changes supported by the federal government to facilitate the uses of guaranteed lifetime income options in the defined contribution plan space.

The RFI requested public responses to 39 questions covering a wide variety of topics that will help the IRS and DOL determine the extent to which the federal government should facilitate the use of guaranteed lifetime options and how they should do it. Hundreds of comments were submitted and the agencies are now evaluating these submissions.

Regardless of the outcome, one thing is certain: 401(k) participants need credible and reliable guaranteed income solutions INSIDE the 401(k) plan to help them create a paycheck for life for their retirement years. Plan Sponsors/Fiduciaries need protection similar to that offered by the DOL in the Pension Protection Act, if they are going to offer these complex products and riders inside the 401(k) plans that they are deemed responsible for! And the advisor community needs a road map on how to educate employees on fiduciary protection, as well.

While there are numerous issues to be addressed here is my "wish list" for the DOL.

1. Mandate the Guaranteed Income Option:  Make available guaranteed income options in the 401(k) plan by enacting legislation "mandating" that the 401(k) and any other individual account defined contribution plans offer a guaranteed income option. Don't make it an option to NOT have the option. Let's legislate the "guarantee" back into the retirement plan, as it was in the defined benefit days.  This would not force a participant to elect the guaranteed-income option as the only distribution option in the plan. Lump sum would still be an exit strategy. Rather it would ensure that all participants had at least one, if not more than one, guaranteed income option other than the lump sum.
2.  Fiduciary Protection: Make the selection of the lifetime income option by the plan sponsor a " non-fiduciary "option, or at best provide fiduciary protection for the plan sponsor similar to those offered by the Pension Protection Act for QDIA and other "default options." Currently, the DOL has long held that the selection of an annuity option is a fiduciary act and further that the fiduciary is obligated to periodically monitor that provider. A few years ago, the DOL issued a proposed regulation for the selection of a provider for an annuity option in a defined contribution plan. The regulation, as proposed, mandated 14 separate items a fiduciary must consider to make a prudent selection of an annuity provider within the meaning of ERISA section 404. This mandate amounted to an automatic "gag" order and the certain death of annuity options in any ERISA plan!  To the extent that the selection of an annuity (or guaranteed income) provider is more burdensome than the selection of any investment option or plan service provider, fiduciaries will never consider annuities for inclusion in the plan. I can just hear a plan sponsor's ERISA attorney now, "Are you crazy; do you realize the liability you would assume by adding this guaranteed income product to your 401(k) plan!  What happens when the insurance carrier underwriting the guaranteed income 40 years from now for your employees goes out of business and the plan participant's widow sues you (or your estate since you may not be around either)! "The DOL did make significant changes to the final regulation, which provides a safe harbor for fiduciaries, providing that they will have fully met the prudence requirements of ERISA section 404(a)(1)(B). I don't know about you, but even with these improvements, my phone still isn't ringing off the hook from plan sponsors saying, "Wow these new regulations are a great improvement; I feel safer now, let's go ahead and add that valuable guaranteed income benefit for all my employees." The DOL has miles to go before my plan sponsor fiduciaries can sleep!
3. Education and Advice to Participants: It is clear from comments in the RFI that a key component voiced by the industry for the successful implementation of a guaranteed income option is participant education and advice. You and I, my dear advisors, will be (and continue to be) the success to any implementation of these options. The continued issue, however, is that plan sponsors have long been nervous about providing advice fiduciary advice to participants. The DOL's 1996 Interpretive Bulletin 96-1 on providing Education without Advice has not done much to solve this problem. When retirement plans include a guaranteed lifetime income distribution option, participants will need and demand assistance in deciding what type of distribution option is best for them and their beneficiaries. And plan sponsor fiduciaries and advisors will need protection in offering this education and advice! The DOL should clarify and extend IB 96-1 to permit plan fiduciaries to provide participants with information on issues relating to the distribution stage, including estimating the amount of money needed and calculating the best method to ensure that retirement savings provide income through retirement.  As a wish list item, I would request the DOL create guidance as to how the advice to participants, regarding the use of a guaranteed lifetime income distribution option is non-fiduciary.
4. The time has come for guaranteed lifetime income benefit options to be the norm inside employer sponsored retirement plans.  All studies show that America's workers want the protection and guarantees afforded by these products. The manufacturers have the financial ability and expertise to craft viable lifetime options and with the capitalist system, the means to create competitive products. The advisor community is the best educated in the world to assist employees in making the right decisions. All that stands in the way is the “liability" issue. The DOL can provide the protections necessary to encourage the implementation of these valuable benefits, 
5. DOL, America needs and wants a "paycheck for life." Time to give it to them!  

Success starts with an early arrival at your meeting. You want to make sure you can get into the room to set up your equipment, if you have any. This includes making sure your laptop, projector, etc. are up and running properly. You should give yourself enough time to review your notes to make sure that you are prepared to speak as soon as the meeting begins. Practice the first few sentences out of your mouth, so they sound nature.

The R-Factor Question™

A good way to start your meeting is to ask the R-Factor Question™:“If I were meeting here three years from today and you were to look back over those three years, what has to have happened during that period, both personally and professionally, for you to feel happy about your progress?” The answer to this question can give you great insight into the prospective client’s needs and desires for the immediate future.By uncovering this information, you can set the tone for the rest of the meeting. You can focus on what is relevant to the prospect and how you can help them achieve their goals. By following up with more specific questions, you can gain more foundational information that you can use later in the meeting.

The D.O.S.™ Process

The goal of every first meeting is to uncover your prospect’s Dangers, Opportunities and Strengths (D.O.S.™). This will enable you to demonstrate your skill and desire to work for their company as their pension consultant. You can also gather plan data from the sponsor to assess where the plan is and what it can achieve in the future. Using this process, you ask the prospect about three dangers thatneed to be eliminated, three opportunitiesto be leveragedand three strengths to maximize.

The dangers could include poor performance, high employee turnover, lack of prospect education,low participation, maxed-out employer contributions, etc. By identifying the areas that are hazardous, you can demonstrate how you can reduce or eliminate these problems as their plan consultant.

The opportunities could include employee retention within the plan, better plan performance, educational meetings, etc. These opportunities present easily attainable objectives for you to accomplish. You can then incorporate these objectives into your proposal.

Finally, the strengths can include a profitable company, profit-sharing contributions, good or competitive benefits, etc. Each answer the prospect gives can lead to a discussion that will reveal valuable information in a short period of time. All of the plan sponsors’D.O.S. answers can be highlighted in your proposal, proving how your unique services fit their needs.

After completing the R-Factor Question™ and the D.O.S.™process, you can then proceed with your presentation.This presentation should highlight your skill and credibility. Now you can now focus on the areas, which the plan sponsor has already discussed with you. Be sure to give your written materials to the prospect after your meeting is finished, so their attention will be on your presentation and not the handout. When you are finished, schedule a second meeting. In this meeting, you will need to provide additional analysis of the information you have gathered, including their plan, plus discuss your fees.

Your first meeting is a great opportunity that will set the tone for your relationship with the prospect. After a productive meeting, the prospect is much more likely to consider your services. By using a repeatable process, you increase your chances of success by impressing the prospect with your expertise, as well as with the creative solutions that you can provide to eliminate the dangers, leverage the opportunities and maximize the strengths.

The best marketing plan is designed with an end in mind. You should start your journey knowing where you want to be and at what time you will be there. Creating a marketing strategy provides an excellent opportunity for you to define and launch initiatives to capture a greater share of retirement plan business in your marketplace. By using these five steps in implementation, you will have greater vision and focus in the coming months.

Determining Your Current Position

In order to decide where you want to go, you must first know your starting position. By examining your dangers, opportunities and strengths, you can create marketing objectives that align with your business. First, identify the dangers, or the elements that are preventing you from achieving your goals. Next, select the opportunities on which you can focus to create success. Finally, describe your strengths as an individual and as an organization. These strong points can help you achieve your marketing goals in the shortest amount of time.

Targeting the Market

The next step in creating your strategy is to define your target market and analyze the type of clients you want to attract. Select an industry, such as manufacturing, service, retail, healthcare, etc. By focusing on one or two specific industries, you can specialize your practice, refining your expertise. Next, select the types of plans you would like to work with, as well as the plan size, assets and average account balance. Finally, determine the company size and the distance you are willing to travel. After compiling this information, you will have a complete profile of your target market.

Building You Database

One of your most valuable assets is your database: The more people on your list, the more potential business. However, quantity is nothing without quality. In order to assemble your database, first select a source for leads. This could be an existing list or one that you’ve paid for from Judy Diamond, Larkspur, 401k Exchange, etc. Next, evaluate the list to eliminate existing clients and prospects that don’t qualify. Clean the list by fixing mistakes and calling to update contact information. Your database will become your target audience for marketing.

Creating Marketing Initiatives

After you have built your database, it’s time to plan your marketing activities. Pre-approach letters to prospects establish your credibility and explain how your services may be helpful. Webinars are an inexpensive and easy way to increase your exposure to prospects. There are a variety of topics, including Department of Labor, fiduciary issues, fee disclosure, etc., that can help you attract a wide variety of potential clients. Other marketing mediums include newsletters, surveys and articles. There are several resources, such as Constant Contact, SurveyMonkey and Go to Webinar, which can make your marketing initiatives run smoothly and efficiently.

Delegating Your Marketing Plan Tasks

Now that you have successfully created a list of marketing ideas, it’s time to delegate the tasks. Create a worksheet that contains your targeted audience for the project, the type of project and who is responsible for each stage. Make sure to include a budget and follow-up date. Effectively delegating your projects to your staff will take some of the pressure off you so that you can focus on the big picture.

By following these steps, you can grow your firm exponentially. In carefully preparing and implementing your strategy, you can create a thriving marketing campaign. Planning your success provides a great path to achieving your goals.

1. Memorialize the Meeting

Your first priority should be your notes from your meeting. As the minutes pass, you are likely to forget important details that could make all the difference when attempting to convert the prospect to a client. The best time to memorialize your notes is right after the meeting. Today, with all the available technology, it is easier than ever before to create a digital memory of the meeting.

Services such as copytalk.com will transcribe voice mail messages. You can also use a dictaphone and have your dictation transcribed. An even easier way is to use voice-recognition software, such as Dragon Naturally Speaking, that turns your speech into text on your computer. Whatever you choose to use, speed is of utmost importance since, as research has shown, responsiveness is one of the top reasons why a company selects one professional over another. These notes can then be turned into a proposal or used to answer the sponsor’s questions and sent to the prospect.

Plan to send a letter to the plan sponsor that outlines your value proposition. This letter should include a summary of your experience, your capabilities and the tools that you can provide, as well as your value-added services. Using your notes, you can also show how your unique services can reduce or even eliminate the plan sponsor’s current weaknesses and complement their strengths.

The second letter that you should send out is to the person who referred the prospect to you. Strong and consistent referral sources are the best way to keep your prospect pipeline flowing. If you work with the prospect’s CPA, TPA or other professionals, you want to build a strong relationship with them that will benefit your client. One way to accomplish this is by sending them a message about the meeting. They will be more likely to refer you business if they are kept in the loop about what’s happening with their client.

The next step is to evaluate the first meeting and improve your process in the future. Whether the meeting was successful or not, self-evaluation of your performance is critical in moving towards a better overall process. Begin by creating a summary of your experience at the meeting, including where you’d like to improve. Ask yourself if you would do anything differently. By conducting this exercise, you can create a better experience for the next prospect.

Time may pass without another appointment with the plan sponsor, and there are many reasons why this happens. However, it does not necessarily mean that you are out of the running. The plan sponsor, as well as all your other prospects, should be added to your database. This way, you can continuously “drip” your marketing campaigns on the prospect. As research has shown, it takes approximately eight contacts to turn a prospect into a client. By maintaining a consistent flow of information to the plan sponsor, you can increase your closing ratio.

A lot of time and energy goes into planning and executing a successful first meeting, but this is not your only chance to shine. Even after the spotlight is off of you, you should work behind the scenes to continue to impress your prospect. By staying consistently in the plan sponsor’s mind and having a post meeting strategy in place, you can increase your conversion rate and your success.

Phone Introductions

            “Hello, my name is John Smith from XYZ Financial. Is Ms. Jones available?” This seems like a perfectly proper introduction, which identifies who you are, where you’re from and who you’d like to speak with. However, seasoned gatekeepers will already have their fingers on the “transfer-to-voicemail” button. The first issue with this introduction is formality. Not only does the gatekeeper not know who you are, but apparently neither does your target. By using first names, you put yourself at a familiar level with the gatekeeper. This will help you get you through the door.

“Hello Mary, this is John from XYZ Financial. Is Joan available?” This is better than the first example. However, this introduction still allows for uncertainty in the mind of an experienced gatekeeper. By simply stating that you are calling for a specific purpose, instead of asking, one may presume that the target is expecting your call. You’re now just inches away from an entrance.

“Hello Mary, this is John from XYZ Financial. I am calling for Joan in regard to the company’s retirement plan.” This example might just be the key to the door. The introduction doesn’t leave room for follow-up questions. Try not to pause midsentence, since stopping will make you appear unsure. By using first names and a confident tone, naming the person for whom you are calling and identifying the purpose your call , the gatekeeper might just let you put your foot in the door.

The Next Step

            You tried your best introduction, and you were still denied access. Whatever the reason, don’t give up. When gatekeepers say that their colleagues are busy, ask when they will be free to talk. If a time isn’t clear, ask to make an appointment, either in person or by phone. By making an appointment, you will already have your foot in the door. However, an annoyed gatekeeper may deny you an appointment. Never get pushy or rude. Remember, the people on the other end of the phone are working as they were trained. Ask for the target’s voicemail. Then thank the gatekeeper for his or her time.

            At this point, there are several options available that relate to one simple idea: gatekeepers are people, too. After a few days, call them back. Establish a good rapport. Be humorous and creative in your approach. Find something in common, but remember to thank them for their time. When you feel comfortable enough, ask if they can do you a favor by answering a few questions about your target: What is his or her preferred name, method of communication, etc. If you are polite and genuine, chances are that they will be, too. The goal is to gather information at every contact.

After the gatekeeper has answered your questions, send him or her a thank you letter and attach a letter for your target. Say how much you appreciate the valuable time he or she spent with you and ask for the target’s letter to be passed along. Call again after a few days to check if the gatekeeper got your letter. You may be surprised by a phone call from your target.

If All Else Fails….

Sometimes, there’s a nut you can’t crack. After repeated attempts and phone calls, you’ve been denied access through the door, but you still shouldn’t give up. However, you may want to talk with the relief staff. Call during lunchtime or at the end of the day.Someone who isn’t as experienced as the regular gatekeeper may let you in. Remember, confidence is key.

A good rapport with these individuals can take you a long way. Even though they might not have any input in the decision-making process, they can make or break your chances of success. By following these few simple principles, you can move past the gatekeepers and get your foot in the door.

When you are educating plan participants and helping to create a stable financial future for them, you may find it difficult to determine the amount for reasonable plan fees.Because excessively high plan fees can eat into the accumulating balance of participants, the income that balance can sustain into retirement can be much lower than expected. How advisors can determine what is reasonable is hotly debated within the industry.

            Advisors can charge more than their competition if they provide more substantial services. The problem is not in charging higher prices, but in deciding what makes certain services more “substantial.” Providing participant education and investment advice can be value-added services;, however,  it is difficult to quantify the impact these activities may have.

Service level agreements offer one solution to this issue. By outlining plan sponsor meetings and educational programs that would occur throughout the year, advisors can assure their plan sponsors and participants that they have their best interests in mind, even if it means higher plan fees. By offering knowledgeable financial and investment advice, these gatherings can give ample opportunity to generate further business on an individual basis. Not only will advisors be fulfilling their obligation to help create a Paychecks for Life™for plan participants, but plan sponsors and participants will also be more likely to make use of their advisor’s other services.

            In the future, legislators may determine exactly what is reasonable for a financial advisor to charge in plan fees. However, the current situation allows advisors to charge what they want, even if it is excessive. High fees can damage the growth of plan participants’ Paychecks for Life™ and this can ruin opportunities for participants and advisors alike. By detailing services and holding plan sponsor meetings and participant education sessions, advisors can increase their plan fees while differentiating their services from the competition.

• Sending out personalized thank you cards
• Hosting a client appreciation event by invitingclientsto a wine tasting or a reception with a guest speaker
• Holding a golf outing with an industryexpert
• Sending out gifts
• Mailing books that you recommend (a list of which is on my website)

Demonstrating your gratitude to 401(k) plan participants may take a different path than your high net worth clients or plan sponsors. Since most participants’ retirement plans suffered during the past few years, a sympathetic ear may be all it takes. This is where the 401(k) Participant Gratitude Challenge comes into play:

1. Make a list of 100 401(k) participants. This list can be comprised of participants from one plan or multiple plans, depending upon the impact you wish to have.
2. Meet with each of the participants on your list over the next year to check up on them. Ask them how their financial situation is compared to the last several years.
3. Listen to their stories, not in order to sell them a product or provide a solution to their situation, but only to hear to what they have to say.
4. Learn what their goals are and how they fit into their new financial future. Ask them how they view their financial future.
5. Ask them to write down their fears, opportunities and strengths. Have them circle the top item in each category.
6. Ask them about their favorite books, authors or subjects.
7. Send them a kind note regarding your conversation and list the items they wrote downfor them to reflect on. Enclose a book that you think they mightlike to read(not on finance, unless that is truly their interest).
8. Watch the responseand impact your gratitude will have.

In today’s fast-paced society, sitting down to listen to your plan participants can give you a competitive advantage. Lend your ear to these participants and point them in a positive direction. By taking time to demonstrate sincere sympathy and gratitude for your participants, you are truly expressing your value as a financial advisor. Not only will clients and participants want to continue to use your services, but they will also refer you business. Sometimes a little gratitude goes a long way.

The 401(k) education process has become a rigid and lengthy presentation of charts, graphs and statistics accompanied by an enrollment kit with even more numbers and charts. This can leave participants feeling frustrated, anxious and hesitant to make decisions. Creating interactive presentations is the first step in alleviating the fatigue that participants feel at the end of an enrollment meeting.  To encourage the participants to listen, financial advisors should: know the audience well, keep the message direct and straightforward, and entertain, in addition to enroll and educate. The attention span of society has been condensed into 30-second clips. Well-regarded 401(k) plan advisors know how to hold the attention of their participants, which begins with a well-defined education process.

The first step of this process is preparation. Financial advisors should schedule meetings or conversations with the plan sponsors or human resources managers to obtain details about the plans in order to customize their presentations to the needs of the audience. In new plans, this process can be straightforward. Employees will need help understanding the tax advantages and features of their plan, in addition to blackout periods (if appropriate), as well as help encouraging employee participation.

In existing plans, this process can be slightly more involved. Questions for the plan sponsors should include the participation rate, average deferral rate, asset diversity, etc. Financial advisors should also ask if the company is interested in making changes to its plan. With this overview, financial advisors can narrow their focus to the key issues that affect the plan and its participants.

The next step is in considering the plan from the participant’s perspective. This allows financial advisors to fine-tune the presentation even more. Types of questions for the plan sponsor include: What kind of company is this and what kind of employees does it have? Is the presentation for salaried, as well as hourly wage employees? Will the audience be highly educated and technical or will the majority of the audience be lower-income employees? These are all important questions, which help evaluate the points, which the financial advisors should emphasize and which others can be left briefly mentioned.

The third step involves assessing what actions need to be taken in order to move employees forward in their participation and understanding of the plan. This includes: increase participation rates, increase deferral rates, impact investment diversification, discuss rebalancing and plan changes, etc. Depending on the background of the audience, some of these issues will need to be discussed more in depth than others.

The fourth step involves targeting the largest segment of the audience in order to capture the most attention. Why bore current participants with the tax advantages that they are already receiving? Why explain growth and value strategies if the audience is primarily newly eligible employees? Financial advisors will want to keep their information focused on their overall message, because optimal learning occurs when appropriate information is given in small segments.

Edu-tainment™ moves away from the college lecture and towards an interactive process delivered with flair. Financial advisors should be resourceful when creating their presentations. The job of financial advisors is to wow the employees while offering them something new and different. Some ideas include playing music, decorating the room and making casual conversation with the employees before the presentation. This will draw the audience into the presentation from the beginning. Make the presentation applicable and relevant, but also fun and memorable.

The final step is in reaping the rewards from the due diligence. Continue to meet with employees on a quarterly, semi-annual or annual basis and address their financial problems and provide solutions. Financial advisors should clarify their objectives with the plan sponsor and encourage continued measurement.

Research has shown that 401(k) education is most beneficial if done on-site. However, education meetings are not enough. Understanding the audience and being creative will not only give financial advisors a head-start for enrollment, but it can also give the man edge over the competition. When looking for a financial advisor, plan participants will certainly remember the person who played their favorite song or who finally made sense out of their 401(k). By making enrollment meetings fun, as well as educational, financial advisors can increase their revenues by obtaining additional clients from among the plans’ participants.

An audit is never fun, and roughly three out of four plans audited by the DOL have at least one violation. The Employee Benefits Security Administration (EBSA), a division of the DOL, handles these audits with legions of attorneys and paraprofessionals. The best way to educate your clients on how to avoid being an easy target is by holding a seminar or webinar with your local DOL representative and an ERISA attorney where your current and prospective clients are educated and updated on the rules. A seminar venue is an ideal time for attendees to ask questions pertaining to their unique situations.

The first step in preparing for a DOL seminar or webinar is to contact your local DOL representatives and invite them to give a presentation to your clients and prospects. You can also invite an ERISA attorney in your area to answer questions and allow their clients to attend as well. Topics for discussion can include EBSA investigations and enforcement actions, DOL’s expectations for plan sponsors, fiduciary responsibilities, litigation updates and the consequences of a DOL audit. These are some general areas in which your clients may have more specific needs and will be able to have their questions answered, without the threat of plan or fiduciary violation. This seminar also provides the opportunity to invite prospective clients, so they see your interest in keeping clients up to date on compliance issues.

Educating your clients about DOL regulation changes can seem like a daunting task. By going directly to the source, you give your clients an exceptional opportunity to be educated and to ask the experts. An additional benefit to a DOL seminar is the prospecting value. Prospective clients will be impressed with your ability to host a seminar with DOL representatives.

For more information on how you can conduct a DOL seminar and help your clients and prospects maintain their compliance as plan sponsors and fiduciaries, contact us at info@the401kcoach.com or order our DOL seminar kit with a step-by-step guide to get you on your way to becoming the DOL expert in your area.

I believe the events of the last two years and the success your biggest clients have had in surviving this time period offer you an incredible opportunity to learn what these successful individuals did to eliminate their greatest dangers, focus on their best opportunities and enhance their greatest strengths.

Now is the time to follow the “Telling the Truth Process” and leverage this interaction into multiple referral opportunities. Here’s how we are using this process both at The 401k Coach and in our 401(k) and Investment Practice at Epstein Financial Services:

Step 1: Make a wish list of the top 50 to100 business and professionals you want to do business with over the next three years.

Step 2: Contact your top 20 best clients and tell them you’d like to meet them for a “cup of coffee” at Starbucks or lunch (if you have more time). Tell them that you would like to interview them for a project you are doing on how your community’s leading business and professional leaders survived the greatest economic crisis of our generation! I promise you no one will deny you a free cup of coffee and the chance to share their experience with a willing listener.

Step 3: Location, Location, Location.

I like to conduct these meetings at my favorite local watering hole – Starbucks. Why? First, every BMW, Mercedes, Porsche, Land Rover and even a Bentley or two always pulls up to this location. Second, I like to get there early, have my drink and be sitting in the window seat near the entrance. When my client arrives, I either have his or her favorite drink ready (this is what a great client management system is for) or I offer to buy.

By sitting in the window seats, my client and I are: a) comfortable in those wonderful sofa seats and b) visible to everyone coming and going. Inevitably, someone I know and, more importantly, someone they know will enter, see us and come over to say hello. This is a great opportunity for me to meet someone they know (usually successful in our community) whom I may not know yet. And chances are they are a name on my wish list

Step 4: The Telling the Truth Conversation.

After some usual small talk, I will say to my client, “Bob, thanks for taking the time out to meet today. I really wanted to ask you a couple questions: How did you manage to survive these last two years with all the significant economic turmoil? What did you do, exactly, to survive financially both at a personal level and in your business?” Chances are that his answers will last 30 to 40 minutes as he begins to describe his experiences.

Here are the benefits of asking these questions:

     1.      You are probably the only person to have asked them these questions. As they recount their stories, there will be some hard memories and some remarkable accomplishments that you can learn from. Be sure to write them down.

     2.      By answering the questions, they will have the chance to describe what happened to them and solidify how they were successful in surviving this difficult time.

     3.      They will qualify those individuals in their personal life (such as a spouses, business partners, associates, friends, etc.) who supported them, as well as key employees in their businesses who worked diligently by their sides to support their success. They will probably acknowledge those employees they either had to let go or left on their own.

After they answer, then ask them:

“Given what you’ve learned during these last two years, I would now like to ask you this: If it was three years from today and we were sitting here looking back over those three years, what would have had to happen for you to be satisfied with your progress going forward?” (Note this is The Dan Sullivan question from The Strategic Coach)

After they answer that question, then ask them, “Given your answer:

     1.      What are the greatest dangers you face today, that if you don’t eliminate them, they will prevent you from achieving that bigger future you just shared with me?

     2.      What are the greatest opportunities you now have available to you, that if you just focused on your best opportunities, they would accelerate your future success?

     3.      What are the strengths you and your company now have coming out of those past two years, that if you just enhance those strengths, they would increase your chances of success?

You have now performed an incredible service to your existing client (as well as for you). You have helped them achieve greater clarity and confidence, and articulated the capabilities (strengths) they have to succeed in the future. You have helped them articulate what they did over the last two years that led to their continued success, what their vision is of the future and a game plan to achieve that future by eliminating their greatest dangers, focusing on their best opportunities, and leveraging and enhancing their greatest strengths. What a gift.

YOUR PAYOFF – Referrals

It is at this point I always ask my client: “How do you feel now after our conversation?” Unanimously, it is confident, clear, enthusiastic, energized and grateful.

Now it’s time for you to ask them to help you, as you have just helped them.

I lead off by saying, “I too have asked myself these questions and want to share with you what I discovered.” This is your chance to connect and share your lessons from the last two years, as well as your vision for the future. I say, “Here at The 401k Coach and Epstein Financial Services, we want to double the size of our business in the next three years and be considered the premiere 401(k) advisor firm in our area. To do that, though, I need to connect with successful business people just like you.” At this point, I take out my wish list and say, “I have identified those companies that I believe could benefit most from our unique services and am wondering if you know any of these individuals who own these companies.” This is when you share your wish list with your existing client. They are certain to know one or two if not more of the folks on your list.

I than ask, “Would you have any problem making an introduction for me? I want to be clear I am not asking if you know if they need my assistance or services, only for an introduction.” If they hesitate, I might say, “Imagine if they walked into Starbucks right now and saw you. Naturally, they would walk over and talk with you…and naturally you would introduce me.”  “Right,” they say. “Well that’s all I am looking for, an introduction.”

I then go on to share with them, that I have a referral letter of introduction that I would like to send to the individuals they know on my list, with them as the referrer. I tell them I would like to send the letter to them to review. They usual say no problem and that is it. For now.

When I get back to my office, I review the names on my list that my client knows with my office manager, who then sends the referral letter.  A few days later I call and ask, “Did you get the letter? Do you like the letter? Can we send the letter to the folks you know?” If they say, “Yes,” I ask them to write a personal note of introduction at the bottom of the letter, which becomes a testimonial from them to the person I am trying to connect with. Sometimes they want to make changes in the letter and that’s fine. They then sign the final letter and we send it to the referral. I follow up with a call in a few days to secure an appointment.

The last step in this process is to always follow up with your referral source to:

     1. Thank them for the introduction.

     2. Let them know the results of your connection.

     3. Send them a Starbucks gift card to show your gratitude.

I promise that if you commit to take the next 90 days to reach out and connect with your top 20 clients and ask them these questions, you will be amazed with the results.

The concept of a Duty of Prudence, under ERISA section 404(a)(1), states that a fiduciaries shall discharge their duties “with the care, skill, prudence, and diligence under the same circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of alike character and with like aims.” Prudence “is measured according to the objective prudent person standard developed in the common law of trusts.” The standard is not of a common layperson; rather that of a prudent fiduciary with experience dealing with a similar enterprise.

There are two general components of ERISA prudence:

1.      “Procedural Prudence” focuses on the conduct of the fiduciaries when making the investment decision and not on the resulting performance of the investment. In this case the “process” used to investigate and evaluate the investment is the key.

2.      “Substantive Prudence” if the court finds that a fiduciary failed to investigate a particular investment adequately, “the court must examine whether, in light of the facts that an adequate and thorough investigation would have revealed the investment was objectively prudent.”

The court examined “whether the fiduciaries engaged in a thorough investigation of the merits of the investment at the time the retail funds were added to the plan,” and concluded that they did not.

The Plaintiff’s Victory

The court found that the defendants breached the duty of prudence and awarded $370,732 in damages (on a $3 billion plan) and replacement of the retails funds to institutional share class.  The court wrote, “Fiduciaries must look seriously at plan expenses, know and understand their nuances, avid paying unreasonable expenses in the administration of the plan, and where there is a choice between retail and institutional shares of the same fund, there must be some advantage offered by the more expensive retail share class over the institutional.”

The Duty to Ask

The court rejected the defendant’s argument that because they had solicited and relied on the advice of their financial experts, Hewitt Financial Services, that they had conducted a thorough investigation. The judge registered his “wonder” that no one in authority, such as members of the Edison Investment committee, “asked” if there were less expensive institutional funds alternatives.

Duty to Tell

The real life problem that this case represents is that most plan sponsors have little or no knowledge or understanding of share classes or other matters concerning their plan, which is why they rely so heavily on their advisors. If members of an investment committee of a $3 billion plan don’t know what to ask, imagine the predicament of an owner of a “mom and pop” $3 million retirement plan!

It would seem that before charging the plan sponsors with The Duty to Ask, as Tibble reflects, shouldn’t we expect a retirement plan advisor to exercise the Duty to Tell the plan sponsors there are less expensive investment options available?

In light of this case and these questions, going forward it may be “prudent” and even “loyal” to have an ERISA Prudence Checklist to bring with you to each due diligence meeting with your plan sponsors. This checklist would include revisiting a plan’s retail mutual fund offering to determine:

1.      Whether the investigation behind those offerings were prudent.

2.      Did the fiduciaries conduct the investigations themselves or did they rely upon third party advice? (Duty to Ask-Duty to Tell)

3.       If the latter, was the advice reasonably justified?

4.      Not withstanding the reliance, did anyone approach the investment vendor and seek to secure institutional share class pricing?

5.      The answer to these questions should be well documented in the fiduciary meeting minutes as part of ERISA prudence.

Remember the questions of ERISA prudence rise and fall on the deliberate process undertaken by the plan fiduciaries, not the result of the process.

Keep this list handy when checking your service and fee agreement.

1.      Describe the services that you, the service provider, are providing to the plan;

2.      Identify the role that you are assuming vis-à-vis the plan, e.g., fiduciary, RIA, recordkeeper, broker or other service provider; 

3.      Identify all compensation, direct and indirect, that you reasonably expect to receive from the plan;

4.      Disclose compensation separately that is on a transaction basis or charged directly against the plan’s investment and reflected in its net asset value if that compensation is to be paid among related parties;

5.      Identify the services for which the compensation will be paid, the payers and the recipients, and status of each payer;

6.      Explain how much compensation will be received upon the termination of the agreement, including an explanation of how any prepaid amounts will be calculated and refunded upon termination;

7.      Explain how compensation will be received by you (e.g., from the plan, from participant accounts or from participant investments); 

8.      Disclose investment related compensation, a description of any compensation that will be charged directly against the amount invested, description of annual operating expense and a description of any ongoing operating expenses (e.g., expense ratios) if you are a plan fiduciary or record keeper;

9.      Estimate the cost of your recordkeeping services or disclose a formula that may be used to determine your recordkeeping fee if you are a bundled service provider;

10.  Include the date that the service agreement will end (bearing in mind that fee disclosure is required in advance of the date that a service agreement is entered into or renewed).

Your service agreements should be reviewed routinely to ensure that they comply with regulations.

Service agreements and other issues affecting the 401(k) industry will be covered in the 401k Coach Year 2 program on January 20^th and 21^st in Chicago.