Three Steps to Success with Small Retirement Plans

Think small retirement plans aren’t worth your time? If so, you may be missing out on big opportunities.
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Studies estimate 127,000 start-up defined contribution plans will be implemented through 2016.* Why the surge of growth? Growing companies recognize retirement plans offer many benefits for the business, the employees and the owner—including attracting and retaining talent, building and diversifying business owners’ personal assets and helping employees secure retirement peace of mind.

This creates a tremendous opportunity for financial professionals who can sell and service small plans efficiently. Each sale can help to:

  • Generate a steady stream of revenue;
  • Create a wealth of cross-selling opportunities; and
  • Offer access to highly qualified prospects, including business owners and executives.


Despite the potential, this market is relatively underserved. More than one-third (37%) of small business owners currently don’t use a financial professional, according the latest Principal Financial Well-Being Index: Business Owners. 

3 steps to success

We’ve worked with many financial professionals over the years who have built profitable businesses in the small plan market. Some the best practices among those who are successful in the small retirement plan market include: 

1.     Keep your prospect pipeline full. To market retirement plans efficiently to small employers, it’s important to keep your prospect pool full. An experienced wholesaler told me recently, “I work with a two-person team that has sold more than 50 plans in the past five years. Most have less than $5 million dollars in assets. They have a very rigid, thorough follow-up process. They stay in front of everyone they contact until they win the business or the prospect refuses to respond. They believe a ‘no’ is not a ‘no.’ It is just a ‘not right now.’”

Where can you find new prospects? Leverage centers of influence (such as CPAs, attorneys, brokers and commercial bankers), network through social and professional organizations, obtain leads from current clients and research Form 5500 data.2.     Develop an octopus practice. An octopus practice has many diverse sources of revenue. Small business retirement plans offer incredible cross-selling opportunities. For every dollar in a retirement plan, there are many more in a prospect’s net worth—college funds, home equity, personal accounts and IRAs.  

As you work with small businesses, make sure you actively look for cross-selling opportunities. While prospects develop, focus on generating additional sales by helping meet the needs of current small business clients. The opportunities are significant.

3.     Marshal your resources. The retirement plan market is complex and highly regulated, so it helps to have business associates with specialized expertise. Leverage the expertise, tools and resources that are available from third parties, such as plan service providers and third-party administrators (TPAs).

These associates can help design, implement and provide administrative services for small business retirement plans, as well as provide tools and resources that help you support and service your small business clients. These relationships are essential to working efficiently.

Grow—and diversify—your practice with small retirement plans

The small plan market has remarkable potential for financial professionals who employ best practices and work with business associates with complementary expertise. Financial professionals who tap into this growing market—and work efficiently in it—have opportunities to build strong, profitable practices with diversified revenue streams. Resources in Principal Financial Group’s  Small Plan Resource Center can help.


Tom Donnelly is regional vice president of sales at Principal Financial Group Donnelly is responsible for the West region of the United States and leads a team of professionals who consult with financial professionals and their retirement plan clients. Donnelly is a veteran of the retirement business, joining The Principal in 1985.   

*Firm growth projections are based on U.S. Small Business Administration (SBA) and calculations, which are based on data provided by the U.S. Department of Commerce and Bureau of Census; market penetration rates are based on 2010 Spectrem Group calculations and internal projections based on historic growth rates.  

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.