The challenge: What do you say to clients when their recent investment experiences have been traumatic and the outlook is uncertain, at best, and frightening at worst? Generally, in down periods, advisers avoid communicating with clients because they feel guilty and fear that clients will blame them for poor performance. Actually, clients are more upset by a lack of communication than anything else. And lack of communication will drive many clients to leave their current adviser once year-end statements go out later this month.
The opportunity: It’s not too late to reach out to clients, especially with information they need on a subject of vital interest: their retirement. The current environment provides an excellent opportunity to focus your efforts on retirement and becoming a retirement resource. Over the next four weeks, in fact, we’ll focus on the steps necessary to make sure that you are capturing your clients’ rollovers. We’ll follow that in February with how to uncover rollover prospects.
This week: Look at rollovers
The recent InvestmentNews story,
Layoffs spell opportunity for advisers, points out opportunities for proactive advisers.
Helping clients protect their retirement assets is the perfect reason for a call. When you talk, reassure them of the soundness of their long-term financial plan, get an update on their work situation (it’s on their mind) and position your practice as a retirement resource. Part of being that resource is informing clients that you can address their rollover questions and provide solutions. You may be surprised to learn that many of your best clients may think of you as an investment or planning professional, but not someone who knows a great deal about retirement issues, such as rollovers, guaranteed income choices and long term care.
Rollovers are big business. Rollover assets grew to almost $314 billion in 2008 and are expected to rise to $2 trillion by 2013, according to Cerulli Associates Inc. of Boston. You can start preparing for the rollover wave by gathering more information about your current clients. First, update your records to include information about your clients’ employer, work history and whether they are currently enrolled in a 401(k) or similar plan at work.
From your ongoing work and annual reviews, you should know when your client and his or her spouse are planning to retire. If you don’t have this information, gather it as quickly as possible.
Capturing rollover assets isn’t easy. Competition is fierce; especially from the institutional money managers that currently hold plan assets. Plan manager giants including Fidelity Investments of Boston, The Vanguard Group Inc. of Malvern, Pa., and Merrill Lynch & Co. Inc. of New York have extensive marketing campaigns in place to retain those assets once plan participants retire or are laid off. In fact, the large money managers not only want to keep those assets, they want to attract the assets your clients maintain outside the plans — the accounts you manage — and consolidate them when a rollover occurs.
So, how do you position yourself to capture clients’ rollovers? You do it through steady, ongoing communication. Contact clients with a blend of calls, e-mails and letters, reminding them that you are their retirement plan resource. Supply them with helpful facts and specific information about retirement and retirement-related issues (taxes, Social Security, etc.) that illustrate your expertise and demonstrate your value.
Over the next four weeks we are going to give you a plan and action steps to position your practice as a retirement resource and capture rollover assets. But this week, start by segmenting your best clients into four groups according to their retirement profiles:
Retired: This group is interested in estate planning, medical expenses and steady income.
Pre-retirees (50–60): Maximizing accumulations, retirement transition, rollovers.
Prime work years (30–50): Coordinating college and retirement investment plans.
Under 30: Debt elimination, maximizing retirement contributions.
When you complete this process, you’ll probably discover that of the top 20% of your clients, most will fall into the retired and pre-retiree segments. If most of your best clients are already retired, your principal retirement market opportunities probably will lie in becoming a resource for ideas and information about retirement income (don’t forget Social Security), estate planning (including taxes) and health-related issues.
For your clients who are still working, make sure you have current information about their employment and retirement plan situation. If not, make a call or send an e-mail to gather this information so that you can provide this segment with more assistance.
By segmenting your clients by assets and age groups, you will identify your opportunities quickly and be ready to demonstrate your value as a resource. That’s our focus next week.
Next week: Reinforce your value as a retirement resource (success story on retirement check-up seminars).
Week 3: Identify your top five retirement services.
Week 4: Promote your practice as a retirement resource.
