What type of car do you drive? Is it a Nissan Versa?[1. Car and Driver magazine named the Nissan Versa 2017's Cheapest Car.] If it’s not a Versa, then you appreciate value. You could have purchased any car, from the top of the line to the least expensive, and you chose [insert your car type].
Well, why? You probably felt that this car matches your value system. It aligned with the goals and objectives you were trying to accomplish (drive to client meetings, go to the gym, lug the kids around, please the spouse, etc.). Therefore, you acted and made the purchase.
It’s the same with plan sponsors. They are seeking a service provider and advisor who aligns with their retirement plan’s values. However, they may not realize it; and this is where you can stand out, while ending the race to the bottom.
Without the Presence of Value, it is Worthless
Since 408(b)2, we have been living in a world of open fee transparency. It was a little rocky in the beginning as we learned to comb through the different disclosure notices. Then, with technology integration and fee benchmarking tools, we’ve come a long way in a few short years. Or have we?
As advisor camps claimed value propositions on fees, funds, fiduciary, retirement readiness, plan design, participant outcomes and the like, we successfully reduced the cost basis of the retirement plan industry. Overall, this is a good thing. It makes it more affordable for employers to offer a retirement plan and, ultimately, strives to help more hard-working Americans achieve successful retirement outcomes. Now what?
Get Ahead of the Conversation
A recent newsletter claimed that 57% of plan sponsors would have a more negative view of their advisor if they found out about the conflict-of-interest rule from a third party.[2. Invesco DC Summit, Spring 2017.]
We have found that these five elements create a story that is very compelling for the retirement plan decision committee to confidently understand your value and feel comfortable with your advisory fees, as you work to strengthen your trusted reputation as a retirement plan professional.
Post-Conflict-of-Interest Conversations
It’s all about value and demonstrating to employers what you bring. It is describing and detailing the services that plan sponsors pay for and, more importantly, why these services are critical for plan success. With the conflict-of-interest rule, advisors need to document and demonstrate the services offered and delivered. Again, this is good for our industry. It should accelerate the shift from generalists to specialists.
Chances are you don’t drive a Versa. So, why are we selling your services as a commodity? Instead, you should realize that as a retirement plan expert, you are the Mercedes Benz of the advisory world and should charge accordingly. Your expertise about recordkeeper platforms, plan design, fiduciary plan governance, compliance requirements, benchmarking, replacement ratios, retirement readiness and more should be revered as golden knowledge.
Take the time to update your marketing materials to reflect your experience and expertise, and then promote-promote-promote your professional retirement plan advisory skills.
One last thought: even though you may not charge Mercedes Benz prices, we know that you deliver Bentley service. Once the plan sponsors work with an experienced advisor, they’ll never want to drive a Versa again.
Thanks for reading and happy marketing!
Rebecca Hourihan, AIF, PPC, is the Founder and CMO of 401(k) Marketing.
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