Most DC record keepers, and even DCIOs, build their sales and marketing strategies around the size of DC plans.
Though services and investments differ greatly depending on the size of plans, sales in the 25-10,000 employee size market are made by advisors, where Fidelity estimates that 84% plans use one. So shouldn’t sales and marketing strategies be geared around the different types of advisors, rather than the size of the plans? And why should advisors care?
Let’s review the different types of plan advisors:
- Emerging Advisors — accommodators and “blind squirrels”
- Core Advisors — $25-$250 million DC AUM, usually younger and using DC plans to build their wealth management businesses
- Elite Advisors — over $250 million DC AUM, which includes the new and growing specialty groups and differs widely among wire house, hybrid and RIA professionals
Emerging Advisors deal almost exclusively with plans under $3 million; Core Advisors will reach into the $25-$50 million market; and the so-called “Elites” usually don’t do plans under $3 million, though that might change (though not likely using traditional products).
Not only must DC record keepers serving the advisor sold market need to be able to service all plans from $1-$250 million in assets, they must be able to bridge their service model across the range of advisor types. The wholesaler that can deal with an Emerging Advisor must be prepared to sell a lot of plans; those that sell to more experienced advisors must be patient and be able to deal with more sophisticated advisory practices. A number of successful firms today are accomplishing this with bifurcated sales forces.
And while all providers have platform relationship managers dealing with broker dealers, very few have assigned sales people to service or leverage the unique needs of the specialty groups, which are very different than traditional BDs.
So why should plan advisors care? Have you ever had a cocky rookie wholesaler who has never sold a plan with more than $7 million in assets come in to meet you? It’s frustrating and a real waste of your time, even if the plan may be right for that record keeper. And that’s a mistake that even record keepers with bifurcated sales forces make when they assign wholesalers by plan size rather than advisor type.
Smart plan advisors work only with providers that send in wholesalers who can service and help these more experienced professionals. No one has time to train these sales people — especially not plan advisors.
