Your clients understand the competitive value of offering a retirement benefit and, naturally, they want a plan that helps them and their employees take full advantage of the opportunity to save on a tax-advantaged basis.
While starting a new 401k plan is relatively easy, it doesn't guarantee a plan is optimized to a client’s unique situation and goals or structured to provide flexibility or cost efficiency. And the difference between “any” plan and “their” plan can make an enormous difference in how much they may eventually save towards a comfortable retirement.
Advisors have a primary choice between partnering with companies who sell insurance or investments and offer 401k plans as part of their financial services lineup (and business model to gain assets) and independent recordkeepers who tend to be local or regional specialists who focus on actively collaborating with financial and tax advisors to design and operate retirement plans tailored to their clients.
“Independent” recordkeepers focus on retirement plan expertise and supporting, rather than competing with advisors. This is what independence really means – to be free of conflicts of interest around investment products and advice.
Retirement plans create long-term value for clients and advisor opportunities to earn recurring revenue for providing excellent service. Naturally, plans are also asset gathering vehicles that reflect the larger investment picture of company owners and employees, many of whom may already be (or may become) ideal wealth management clients.
Financial services companies, especially larger ones, tend to offer retirement plan products that work best for them. That means limited plan design options, investments, and standardized services that simplify their work. It may be efficient for them, but it’s definitely not optimized to your client. If anything, it’s the other way around.
A well-designed retirement savings plan considers a company’s unique situation as well as their short- and long-term benefit goals to help optimize the potential to reach their financial goals.
Perhaps the single most important factor in plan success is starting with a tailored design that reflects an owner’s personal and corporate goals and that maximizes opportunities for long-term tax and savings benefits. It’s anything but a one-size-fits-all answer.
Key: An independent recordkeeper can help design a plan that optimizes for owner goals as well as employee savings opportunities. For example, Safe Harbor 401k designs allow owners and other highly compensated employees to maximize their savings potential while assuring that rank and file employees broadly benefit as well. For owners who have invested years of capital and energy in building a profitable business, Defined Benefit and Cash Balance plans allow for six figure contributions and can be paired with a 401k.
Some retirement plan companies are first and foremost insurance or mutual fund companies or related entities that prefer their own brand investments.
Key: The word “independent” is key. An independent recordkeeper does not sell proprietary investment products and is free of such conflicts of interest. Instead, they offer an “open architecture” approach to supporting a universe of cost-efficient mutual funds, ETFs, CITs, and other choices that flexibly serve retirement plan needs. This independence means more than transparency, it means you have access to broader and more cost-effective choices.
A flexible, well-tailored plan is obviously desirable, but the true value of a 401k or other retirement plan lies in the results it helps drive. It’s about plan success – and that means maximizing participation and helping your employees get the most out of their opportunity to achieve the income they will need through retirement.
Key: Employees who are financially fit are more likely to retire on time and cost a company less. An independent recordkeeper presents a modern, mobile-friendly user experience along with financial education and wellness to help participating employees get out of debt, manage a budget, save for emergencies, and ultimately, put themselves on a path to saving more for their financial future. That’s all part of helping create better long-term outcomes. And that’s good for everyone.
While some companies look for a retirement plan solution simply based on cost, many seek a partner that takes the time to understand their goals and is focused on delivering real value over time.
Cost is always a factor, but an inexpensive plan that does not meet owner or corporate needs or that limits the ability to optimize tax and savings benefits can wind up being very expensive in the long run.
Key: An independent recordkeeper is a collaborative, expert organization that focuses on mission over product and client over transaction. This model is built to support advisors and to deliver a differentiated quality experience that wins and retains business.
The 401k or other retirement plan a company sponsors will represent one of the most important opportunities they may ever have to save for future income security. Consider partnering with an independent recordkeeper that focuses on optimizing the potential of your clients’ financial success.
For more information or assistance, contact us.
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