Raise your hand if health care reform has you worrying about your revenue streams and the kinds of margins you'll be able to sustain going forward.
I'll bet that nearly every benefit consultant reading this has an arm up at this point, and for good reason. Take heart, I have a valuable piece of advice for you: Start thinking about retirement plans - not what you've set aside in your nest egg, per se. Yes, that is important, but we'll save that for another discussion.
My focus here is how 401(k) sales might be a very logical - and profitable - addition to your business. Here are three very compelling reasons why:
1) The 401(k) marketplace is huge. - and growing rapidly. Assets in 401(k)s were an impressive $3.6 trillion in 2012 - a number that is expected to grow 33% to $4.8 trillion by 2017, according to Cerulli Associates.
2) One of the largest and most attractive segments of the 401(k) marketplace, micro- and small-company plans, remains untapped. The micro-small market is frankly enormous, and yet is often overlooked, ignored or even neglected in comparison to the heightened attention and competition large corporate plans see on their turf.
The micro-small market has some very attractive figures, too. By some estimates there's $500 billion in 401(k) and qualified benefit plans with $10 million or less in assets, which account for 96% of all 401(k) plans, according to the Cerulli report.
3) There's no time like the present - and by that we mean 2013. Let's face it. Health care reform's biggest changes are rapidly approaching - open enrollment starts October 1, and nearly the full works go into effect Jan. 1, 2014. The curtain is about to go up on a nationwide network of health exchanges, reform's cornerstone, and essentially a market mechanism that will compete directly for clients with benefit consultants.
And if that is not a big enough shakeup, consider just how much is still unclear. It is impossible to predict precisely how all of the system's new and untested pieces will work together.
A great starting point
Benefits consultants couldn't be better positioned in the 401(k) marketplace. You will not have to start from scratch since you are beginning from a strong foundation - the relationships you have established with small company decision makers.
When you think about it, no one else knows your clients' benefits needs better than you. Why, then, send them elsewhere for retirement solutions when you can actually profit by deepening existing client relationships?
The fact is, 401(k) and other qualified plan business dovetail nicely with what you already do. This opportunity is a way to transform your business into a one-stop benefits shop, a move that helps you fend off competition and protect your existing business.
We also all know it's far easier to sell new products and offerings to existing clients than setting out to sell new clients on your current product line. Here's a bonus: The additional new business may help you qualify for the types of sales incentives a number of carriers offer.
The right partners
All of which sounds great, you say, except for the learning curve involved. My answer: You don't need to become a qualified plan expert overnight in order to get a running start and be quite successful early on. The key is to team up with the right sales and service support partners who can do the heavy lifting for you.
The truth is the right backup makes relationships a more important piece of the 401(k) business puzzle than qualified plan expertise. Find the firms that know the small business marketplace thoroughly - their experience and tailored turn-key solutions will make things infinitely easier. The best providers can help you set up quickly and get your clients the information they truly need.
Don't fear. There are easy ways to open the topic with existing clients. Ask a few questions about a client's pension plan or 401(k) and offer a free retirement plan assessment. This is an analysis and talking point solution that the best carriers in the business will be able to provide you.
Underscore how retirement plans will carry more weight with employees in the years after health care reform shakes things up. Stress the fact that 401(k)s are a benefit that can help smaller companies hold their own with large corporations in competitive employment markets.
And no matter what, don't forget: The best business minds don't cower in the face of big changes - they instead spot new opportunities and seize the moment. Here's your chance to do just that with a new twist on your existing business.
Davis is national sales manager for Guardian Insurance & Annuity Company, Inc., a wholly-owned subsidiary of The Guardian Life Insurance Company of America. The opinions expressed by Davis do not necessarily reflect the opinions of Guardian Life Insurance Company of America, Guardian Insurance & Annuity Company or Guardian Retirement Solutions.
