Buddy System
But, generally, the process can be expensive and time-consuming.
As a child, I remember helping my father, a financial adviser, paste address labels on postcards or the envelopes of other direct mail letters. I don’t know whether he ever got clients that way, but I think I got a penny for every label—back when a penny had value to a little kid!—so I was happy to help. Somewhat surprisingly, I know many retirement plan advisers still use direct mail; though, in today’s environment that might mean direct email or a mass email newsletter, rather than something posted to the potential plan sponsor client’s mailbox.
Each year, when we survey our retirement plan adviser audience and ask where they get the most business, direct mail isn’t it. Advisers instead cite referrals. While many advisers look to clients as a major referral source, strategic partnerships are the place through which the majority of advisers say their new clients are brought in.
But how do they get to be that trusted partner to a certified public accountant (CPA), third-party administrator (TPA), Employee Retirement Income Security Act (ERISA) attorney or recordkeeper? Of all the advisers those professionals may encounter, how does one particular adviser get the client lead? It usually comes about because the adviser and the CPA, TPA, ERISA attorney or recordkeeper have taken the time to form an ongoing relationship and professional understanding, and the CPA, TPA, ERISA attorney or recordkeeper trusts that the plan sponsor will be well served by the adviser.
These ongoing relationships between retirement plan advisers and the other parties that provide services to retirement plans can go well beyond a simple referral source. Ultimately, the ability to build and nurture these working partnerships can foster a cooperative camaraderie that can make it easier for advisers to focus on true value-added servicing, and their clients benefit as well from having a “team” of people—and by extension their home offices—focusing on their plans.
Our cover story this issue describes the value of those partnerships and how advisers can use them to build their book of business, keep their current clients happy and broaden their service models.
Two valuable partners for advisers, in fact, are the focus of our research this issue: recordkeepers and defined contribution investment only (DCIO) providers.
On the recordkeeping side, we have the PLANADVISER Recordkeeper Services Guide. One concern advisers have when managing these multi-partner relationships is that of getting cut out of the equation—having a recordkeeper or platform partner decide to “go direct” to the plan sponsor client. For this reason, many advisers choose to work with vendors deemed “adviser-friendly.” In the annual PLANSPONSOR Recordkeeping Survey, the recordkeeper respondents were asked multiple questions about the work they do with advisers, and 58 responded about doing business with or through intermediaries. You can see which recordkeepers do the most business through advisers and consultants—and the types of fee structures they can accommodate and the support services they offer to advisers—beginning on page 66.
PLANADVISER’s second annual Defined Contribution Investment Only Survey represents more than $1 trillion in DCIO assets as of the end of this year’s first quarter. As open architecture becomes more common at retirement plans, and the investment lineup is no longer filled with funds offered by the recordkeeper, DCIO providers have become valuable partners for advisers. Our annual survey offers insight into the size and top funds of 37 providers, alongside a description of products and services that DCIO providers offer to financial advisers who sell into and service the defined contribution (DC) market.
We hope this critical information on key partnerships that can yield stronger service and, potentially, client leads—as well as our research data—helps you augment your own practice.