Marketing

[Guest pensiondoc]

I am consultant to an insurance company. I have done businees with some of the agents for 5-10 years who know me and refer me to other agents, as well as to clients.

The insurance company has product which has an administrative arm to it, and they charge for administration. The fees are competitive so if I want the business, I know I will have to lower some of my fees, which is OK. The company calls it "recordkeeping services." We all know there is a world of difference between "pension administration", "employee benefit consulting" and "recordkeeping".

I am frequently asked, and not by the experienced salesmen, "why should we use your services when the Company offers their services?"

I have thought of a comparison chart, but does anyone have anything put together already? The scenario would be the same for a fund house administration or for a bank that does administration.

Obviously we stress the value of our personal service, we will be there for the client in 3 years, we are specialists, one on one relationship, etc., etc.

Thanks,

Steve

[Guest Headhunter]

If the consulting firm's value advantage isn't obvious to the average business customer, does that extra value actually get delivered?

If the business customer fails to see the advantage, it may not actually be worth consideration.

Many of the package providers do the core jobs better than consulting firms.

That, plus inadequate skills in sales, cause proper market decisions.

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www.k-consult.com

[Guest pensiondoc]

I was looking for some help with the comparison, not an esoteric ranting about who has the greater value, the small consultant or the bigger firm.

Spoken like a typical headhunter.

[Guest Headhunter]

Sorry pensiondoc, didn't mean to fire you up.

Your difficulties with sales (much of your career, despite your preferred title) point to an attitude problem having to do with the majority of your potential clients (newer agents).

Obviously, when a potential customer doesn't buy fron a salesman (you), a sales failure has occurred: It isn't a matter of tricks or inadequate marketing material, it's first a matter of personal relationship skills (respect, listening and helping). Only secondarily is it the product or service.

The most critical distinction between "experienced" salesmen (the ones who make life easy for you) and the newer ones you disdain is this: The newer, "less experienced" ones offer greatest potential for revenue growth (ie. sales growth, wellbeing of your insured or shareholders).

Package providers don't necessarily appear large to the customer: Many deliver primarily through the vestiges of local TPAs (eg Schwab) and through true consulting firms who have learned to sell their core services straight-up, not buried in complex and unnecessary administrative fees.

The "experienced" people, while reliable producers and luxurious for you to deal with (they "appreciate" your value without your having to work too hard) do not represent the future of the business, nor do they represent the hopes of your insurance company, nor do they serve the majority of the plan sponsors or participants in your market.

As comments about headhunters, I've been in the 401(k) business almost exclusively (recently working with personal trust/estate planning as well) for a dozen years, have placed over eighty professionals nationally, mostly with some CEBS or ASPA training. I do know something about the business. Half of the positions on which I work result in hires with only one candidate. I know

what's involved in sales. Since you asked a sales-relevant question, I responded with expertise.

I'm sure someone else will provide you with a more comfortable answer.

A half dozen competitors share almost all of the National market in retirement plan sales with me, and they, as I am, are experts when it comes to YOUR marketing issues.

Your bad opinion of headhunters suggests that they've talked with you but been unable to help you with your career goals. I wonder if your attitude problem is not the reason.

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www.k-consult.com

[Guest pensiondoc]

I think we're getting way off base!!

I am the principal of a TPA firm. I have around 200 clients, the majority of whom I get by referral from existing clients, accountants and, yes, insurance agents.

The purpose of my ORIGINAL e-mail was that one of my clients is a huge (300 agent) insurance agency. I was to give a pension lecture last week, and in my discussion, I was to compare MY TPA services with that of the new "recordkeeping services" the home office of this particular insurance company has unveiled. I knew I'd get the question, so I wanted to do a comparison of the two services. That is why I was asking if such a comparison had ever been done before.

I am in the lucky position of not really having to do any marketing, except in front of the client, selling myself and my firm when the prospecting has already been done.

[actuarysmith]

I get asked this question by brokers all the time - "why should we use your services instead of the bundled approach?". There are so many reasons it is not funny. Here are just a few-

1. We are local. We can meet with them and the client and explain the ins and outs of the plan admin process face to face. We can meet with any of the company advisors considered appropriate. There are no time zone delays if they choose to call us.

2. We can greatly increase most brokers close rate on new business. Most brokers don't know siccum about the admin side of a plan; testing, 5500's, asset transfers, loans, payroll, etc. etc, They usually try and fake their way through those questions and it shows. When prospecting for takeover plans, most sponsors want assurance that someone knows what they are doing.

3. We can fill out the adoption agreement and take full advantage of the IRS rules and regulations. Most bundled providers tend to use cookie cutter approaches and treat all plan sponsors the same. We don't - we can customize a plan to a unique sponsor. We can also offer cross-tested / new comparability plans. Most bundled providers do not offer these services.

4. We can provide a flexible document that does not tie them to any particular investment. Many insurance company, brokerage firms, and Mutual fund houses, have documents that specify particular investments (such as propreitary funds). This does not give the client the full flexibility that we can offer.

5. We can handle most of the day to day questions for the broker. With the bundled approach, the broker is usually in the role of primary contact. We can free the broker up from this time consuming function , and allow them to go make another sale.

6. Our level of service, staff experience, low staff turnover, turnaround time, call back time, report formats, etc. etc. etc. are all superior to most bundled programs.

As proof that we are not alone in feeling this way, it has been interesting to watch so many insurance companies, mutual fund houses, and banks, actively seek out local third party Admin firms to "partner" with them on a local basis. Just look at American Funds, Nationwide, Manulife, Kemper Scudder, MFS, Franklin Templeton, Amercian Skandia, Aetna/ING, etc. etc.

If this model did not work well, they would not waste the time trying to develop it.

Sorry for the long post, as you can see - I am not at all passionate about the subject......

[Guest JimJ]

Hey don't forget objectivity and for some open architecture. Also, the big one fees. No wrap products and/or CDSC's and market value adjustments. Retail funds w/ complete disclosure. Expertise and a staff solely focused on retirement plan administration. Your not a commodity, sell against the idea and take a consultative approach to the sales process. No insurance product can compete at that level.

Actuarysmith also pointed out many good ideas.

Headhunter - anyone claiming to be an expert or having expertise in the field of qualified retirement plans recordkeeping, administration, sales and marketing proves they still has much more to learn.

[Greg Judd]

Originally posted by actuarysmith

I get asked this question by brokers all the time - "why should we use your services instead of the bundled approach?". There are so many reasons it is not funny.  

As proof that we are not alone in feeling this way, it has been interesting to watch so many insurance companies, mutual fund houses, and banks, actively seek out local third party Admin firms to "partner" with them on a local basis. Just look at American Funds, Nationwide, Manulife, Kemper Scudder, MFS, Franklin Templeton, Amercian Skandia, Aetna/ING, etc. etc.

If this model did not work well, they would not waste the time trying to develop it.  

Sorry for the long post, as you can see - I am not at all passionate about the subject......

Interesting topic. Doubly so considering when it was opened, & the fact we're still circling it.

Re: "developing the model..." We're very selfishly interested in how you go about deciding which brokers are worth your time investment.

We provide information that helps providers understand who's working with whom in the employee benefits industry. While many of our clients 'get' the value of grooming high-yield relationships, many others surely would benefit from better understanding their markets.

acvertainment section>

Any thoughts much appreciated.

[Greg Judd]

Originally posted by JimJ

Hey don't forget objectivity and for some open architecture.  Also, the big one fees.  No wrap products and/or CDSC's and market value adjustments.  Retail funds w/ complete disclosure.  Expertise and a staff solely focused on retirement plan administration.  Your not a commodity, sell against the idea and take a consultative approach to the sales process.  No insurance product can compete at that level.    

Actuarysmith also pointed out many good ideas.  

Headhunter - anyone claiming to be an expert or having expertise in the field of qualified retirement plans recordkeeping, administration, sales and marketing proves they still has much more to learn.

Forgot to mention I heartily agree with JimJ's assessment of the available expertise. The defined contribution marketplace has been largely an order-taker's business, saleswise, until fairly recently; well-schooled sales/marketing people were a rarity, & are still fairly uncommon.

[actuarysmith]

I am not sure I understand your recent post at all.............

With that said, you appear to be referring to my comment about "developing the model"........

What I meant, is that many banks, insurance companies, and mutual fund families have figured out that using independent, local TPA's is a better way to go after small to medium sized plans that doing the admin themselves.

As far as how do we (our firm) decide who is worth the time-

There are no hard and fast rules here. But there are several factors to consider-

1. How much business experience does this broker have?

2. How did they find the prospect? (phone call, mass mailing, friend, association, etc.)

3. What is their committment to the retirment plan area? (have they had any training in this area?)

4. What is the major focus of their practice?

When I get a call from someone who "has never done a 401(k) before" and find out they were cold calling, and that they have only been a broker for 6 months and that they have a done deal - I would tend to minimize the time I spent with this person...............

P.S. the above story, while humerous, has actually occured more than once.

[Greg Judd]

Originally posted by actuarysmith

I am not sure I understand your recent post at all....

for not understanding at all, you made some very good guesses! Thanks!

Interested in your notes in #s 3 & 4: are the opportunities that "cross the divide" (health/disability/life brokers finding 401k opportunities in their client base) too few & far between? There are still a fair # of small businesses ( <500 employees) that sponsor health benefits but haven't bitten the 401k bullet. Many of these have brokers handling their group health business who can't /don't /won't pursue retirement side opportunities, or whose working relationships with 401k specialists is catch-as-catch-can.

[actuarysmith]

In terms of health and welfare brokers - this may be considered a good investment of our time (as TPA).

While a health broker is not likely to know much about retirement plans, they probably have a good business sense and can "read" a prospect. In addition, if you are talking about going through the existing client list of a health and welfare broker, this would very likely be fruitful.

That broker already has credibility with the prospect/ client and this factor would more than make up for the fact that they don't know much about retirment plans.

Again, the hard ones are the rookies, the "cold call' cowboys, mass mailing marketers, or sometimes even the stockbrokers.

Usually, these people do not understand how to weed out a good prospect. In addition, they are usually desperate to sell something, and they have a lot of time on their hands because they don't have too many clients yet. They don't mind wasting alot of our time because they don't have much to loose.

I don't want to appear too cynical. There are some good people out there just starting out that can turn out to be big producers later on. The trick is to develop an intuitive sense about whether your kissing a future prince, or just a toad.....................

[GBurns]

One of the things that I have noticed is that very few agents sell retirement plans.

The main thing that I have been able to attribute this to is the target contact. In companies that are not mom and pop but which have become large enough to have a HR and Benefits Dept. the insurance agent deals at that level and has very little if any contact with the decision makers. the decison to have a health plan etc was already made all the agent is doing is either providing service or replacing coverage or carrier.

The sale of a retirement plan requires that there be a corporate decision to have such an employee benefit, then HR or Benefits are empowered to go out and get quotations etc from agents and providers etc.

To initiate the corporate decision requires contact with the decision maker usually the President or CEO. This is not agent territory.

The ability to get to decision makers is not determined by length of service in the insurance or other industry, it is a matter of personal ability. So the choice of who to use should be based on factors other than length of service such as the ability to approach decisionmakers. That is why the average insurance agent and health agents in particular do not sell much in this are.

[Greg Judd]

Originally posted by GBurns

To initiate the corporate decision requires contact with the decision maker usually the President or CEO. This is not agent territory.

Our experience has been a bit different. Presidents/CEOs of firms "large enough" to have HR/benefits staff (we've found no hard & fast headcount threshold) may be the driving force for 401k implementation - or not.

Further, where they are, they often look to HR/benefits staff to present them with a selection of service & vendor alternatives, vs doing the investigating & making that selection themselves. More & more brokers find that their hr/benefits contacts look to them to provide help beyond their 'traditional' service functions. Many don't have and/or aren't prepared to develop cross-functional expertise themselves, but do want to contribute to the overall success of their client's benefits program if they're able to. So, they seek out working relationships with capable retirement plan service providers.

[GBurns]

You missed the point. The CEO/President, as you say looks to HR/Benefits to present them with the details not the decision. They make the decision, HR/Benefits does the grunt work but does not make the decision.

[Greg Judd]

Originally posted by GBurns

You missed the point. The CEO/President, as you say looks to HR/Benefits to present them with the details not the decision. They make the decision, HR/Benefits does the grunt work but does not make the decision.

Didn't miss it this time, GB.

No real-world analysis is value-free. If the broker's actively involved in the analysis/recommendations process, s/he may help shape the decision to their benefit - by demonstrating their business acumen & service-forward approach, if nothing else.

If they aren't involved, whether the choice helps/hurts them is a matter of chance.