Fulfilling a promise to expand on my previous article, “Plan Sponsor Prospecting; Context, Perception and Strategy,” as a brief recap there are four key considerations when developing an in-house prospecting strategy and executing a successful campaign:
1. Campaign sustainability
2. Selecting the right prospects
3. The value proposition you will offer when prospecting
4. Drip process
The third consideration is perhaps the one that requires the most thought. The value proposition you wish to offer to compel plan sponsors to meet with you is obviously the most challenging. To explore that and be effective requires a deeper understanding of the 401(k) prospecting landscape.
Consultative Selling
The average plan sponsor with 3M in assets gets about three or four calls per quarter from FAs offering a better alternative. Yet few succeed in getting in the door. If you have ever tried straight cold-calling on retirement plans, I’m sure you know how difficult it is. But understanding the prospecting landscape means understanding why it is so difficult.
Back in college, or Sales 101, many of us learned there are essentially two selling disciplines; a “needs motivated” sales process and a “consultative selling” process. Without a doubt, prospecting and selling in the 401(k) market falls into the complex consultative selling category.
For comparative purposes, a “needs motivated” sales process as applied to prospecting means that when contacting a prospect, you are presenting a solution that addresses a commonly recognized need or some “pain” for that prospect or company. Examples might be if you were offering accounting services, selling office supplies or products, etc. Your prospecting call and the warmth of reception to your call is often a matter of timing dictated by the need or “pain.”
However, when prospecting retirement plan sponsors, sadly the company 401(k) plan is usually far down on the list of day-to-day priorities — if not totally “out of sight, out of mind.” Therefore, the timing of your call will rarely affect the outcome of your prospecting success.
Yet many prospecting attempts made by FAs quickly fail because they employ a “needs motivated” sales approach and language, which might begin something like this: “My name is ___________, from ABC Wealth Management. We specialize in helping employers bring better management to their company retirement plans. I wanted to give you a call to check in and ask how you felt your current plan is doing. Are you happy with it? Are you getting enough support?”
Approaches like that might sound logical since the goal is to identify “pain” to leverage. However, too many plan sponsors — especially in the small and micro markets, where most advisors work — simply don’t know enough about retirement plans to recognize any “pain” if it existed. If there are no lawyers breaking down their door, why shouldn’t prospects be perfectly satisfied with their 401(k) plans? After all, their current advisor seems like a nice and professional person, so why shouldn’t they be happy with him or her? A healthy percentage of plan sponsors still actually believe their plans are “free”! What could possibly be wrong with that?
When well executed, a consultative sales approach at the prospecting stage avoids queries about a prospect’s perception of “satisfaction” or “pain” with the sponsor’s incumbent plan or advisor relationship. Put more succinctly, a plan sponsor’s perception of satisfaction with the plan or incumbent advisor (if they have one) is frankly irrelevant.
Create the Need
If you take one thing away from this article, it should be that the fundamental difference with a consultative sales approach is that the “need” is not discovered… it is created!
To do this effectively, your outreach must be issue- or agenda-driven rather than needs-oriented. Some examples might include discussing how employers have leveraged your firm’s expertise to ensure they are complying with sweeping new DOL regulations. For example:
• “Have you ever performed an assessment to verify that your plan is up to date? Has anyone ever helped you in this area?”
• “Have you ever conducted an assessment to ensure your plan is structured so that key executives and/or owners can maximize their retirement savings potential and tax advantages?”
• “Now that fees have been disclosed by your current provider, have you ever had an independent assessment to ensure that those fees meet a standard of ‘reasonableness’ as recommended by the Department of Labor?”
Execution
With the right combination of issues you want to ask plan sponsors to consider, execution is the next phase:
1. Keep your issues as broad as possible to appeal to a larger percentage of prospects.
2. As outlined in my previous articles, always send a pre-call letter outlining the issues you will be contacting the employer about.
3. When you contact the prospect, stick to the issues outlined in your letter.
4. Offer assessments of those issues without cost by offering to conduct “exploratory” meetings.
In conclusion, an issue-oriented prospecting outreach, when well executed, simply allows the conversation to go in more directions. It raises curiosity and enables you to elevate your game beyond that of a typical sales call. As a consultative sales professional, this is exactly where you want to be.
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