What you should know before meeting with a 401(k) prospect

Beginning with Calendar year 2009, 5500’s had to be filed electronically with the Department of Labor. All 5500’s were available on public information within 24 hours of filing. This is great for you as an advisor and I will tell you why.

When you review a 5500 before a prospect meeting you will walk into the meeting armed with talking points and questions. You will show your prospect that you took the time to be curious about them. You will make them feel special and you will be smarter. Some things to look for are:

1) If you go to the DOL website (www.efast.dol.gov/welcome.html) and the plan is not there, it is not a calendar year plan. When you talk to the prospect, tailor your conversations around their urgency, their deadlines. Look at their most current form on www.freeerisa.com instead.

2) Look at the effective date of the plan in 1c. If it was more than a couple years ago, has anyone looked at the plan since then? Is it still meeting the needs of the plan sponsor? When the plan was amended and restated for EGTRRA, were they given the opportunity to make other changes at the same time? This would have saved them money and will make you look like a star for mentioning it.

3) Look at the signature. If it is a typed name, it was filed electronically by the plan sponsor. If a signed copy is attached to the back of the package, that means the plan sponsor had the forms filed on their behalf. Their signature is now on public information! Were they aware of this before they submitted this way?

4) The Pension benefits listed in Question 8a or 9a will give you a good idea of the plan provisions. Code “2F” is an instant conversation point for you. It is an indication that this plan is intended to comply with ERISA section 404(c). 404(c) compliance is a way to abate Fiduciary liability. It is about process. It is almost assured that the plan is not complying with this code section. Have a small discussion about this code section and prove your value. Your prospect will want you back for more.

5) For plans large enough to require an audit, the audit will be attached to the filing. This is huge for you. It will give you an overview of the plan provisions. It will give you the assets held for investment! You can do a little homework and walk into that meeting with alternate investment suggestions. This was not easy for you to do before now.

This touches on only part of the 5500. There is so much more. Send me your contact information and the name of a prospect. I will assist you in developing talking points. When that prospect engages you, I want them to engage both of us. Together we will provide them with what all plan sponsors deserve, stellar service, a pro-active TPA and a fabulous advisor who will ensure a great retirement for themselves and their employees!

Tobi Cogswell,
Director, Consulting Practice
Tobi.Cogswell@acibenefits.com
310.212.2623

Is It Real, Or Is It Memorex

By Tobi Cogswell

Have you ever noticed how Bundled Providers speak to clients as if they’re reading from a gospel? In their world, everything seems so rigid and matter-of-fact. They’ve been known to adopt document provisions on behalf of your clients -- and not even inform your client of the elections that were chosen. Bundled Providers seem to do it their way.

But, what about your clients’ preferences? What’s best for them? Who should decide?

Here’s an example that helps make the point:

You have a client whose plan has an Automatic Contribution Arrangement. The plan document has the provision that participants can opt out within 90 days of their first deferral.

The notice prepared by the bundled provider states: “If you process any fund exchanges, loans or withdrawals within your account, you are no longer eligible for this withdrawal”

And, here is the critical point. Did they talk to your client about this? My guess is no. Was this approach in the plan document? Not likely. Is this provision in the law? No. It isn’t.

Protect your clients.
This is exactly why you and your clients need to partner with a consultant who will keep their interests at the forefront, and who will design and administer a plan that meets their needs. We may ask them some tough questions, like “why did you want this plan in the first place?” and “what do you want to accomplish with it now?” That will enable us to design, or re-design a plan that’s strong, flexible, attractive to their employees and something we all can be proud of. Something that will meet the needs of your clients now and as their businesses evolve.

We’re advisors. Your client is the boss. They should get what they need!

Now is the perfect time to talk to your clients about unbundling their administration and moving the compliance to ACI. They deserve to work with a firm that’s pro-active and always focused toward them. Our goal is to save them money and let them concentrate on doing what they do best – running their own businesses.

Call us before they pay for another year of average work.

Tobi Cogswell

Director, Consulting Practice

(310) 212-2623