40 Years and 11 Days

40 Years and 11 Days

The 40th anniversary of the Revenue Act of 1978 is nearing. The act added Internal Revenue Code Sec. 401(k).  Forty years from obscure code to $6 Trillion.  The reports are that early backers of the code created it as a way individuals could supplement their retirement income from a defined benefit plan.  They never intended 401(k) plans to become the primary retirement wealth accumulation vehicle it has become for about 50% of tax paying Americans.  It was 1981 before the first plan was submitted for approval.  I encourage you to read, The Day I Designed The First 401(k) Savings Plan, by Ted Benna.  http://401kbenna.com/401k-history.html.

Congress has tried to repeal or alter IRC 401(k) several times over the years when it realized the growing amount of taxes that would not be collected. Over eleven days in October this year IRC 401(k) went from budget bargaining chip to a non-negotiable topic.

Tankersley, Jim. “Republicans Consider Sharp Cut in 401(k) Contribution Limits.” NY Times, October 20, 2017

Weiss, Miles. “Here’s How Money Managers Plan To Battle 401(k) Cuts in Trump’s Tax Plan.” Bloomberg, October 22, 2017

Bryan, Bob. “Trump says ‘there will be NO change to your 401(k)’ after reports Republicans want new caps on retirement savings.” Business Insider, October 23rd, 2017

Lenzner, Robert. “Slashing Pre-Tax 401(k) Contributions Would Be A Big Middle Class Double Cross.” Forbes, October 30th, 2017

Bolden-Barrett, Valerie. “Update: GOP tax plan released, no cuts to 401k contributions.” HRDIVE, October 31st, 2017

There may be changes in the amount of pre-tax contributions and a major re-construction of the American Retirement Savings System in the future. If you are a financial sales professional currently serving or considering to serve the 401(k) marketplace you should have comfort knowing your career is on solid ground based on the duration, ferocity and quickness to protect the current 401(k) structure.  Time is on your side.

December 1st, 2017

Happy Anniversary!

Happy Anniversary!

What were you doing 30 years ago today, October 19th, 1987?  I was in my fifth year as an Account Executive at Merrill Lynch in Dayton.  We had been told for months by the firms’ chief technical strategist, Robert Farrell that there could be a major downward move in the stock market.  I learned that tree’s don’t grow to the sky thirty years ago today.

The most memorable moments of the 19th and for the next few days was speaking with individual clients.  They were interested in their account values, but they wanted to make sure I was doing OK.  They knew that in addition to managing the emotion of the market, I was getting married in five days.

Thirty years after the biggest one day percentage drop in stock market history, the US economy has withstood incredible highs and lows as today the DJIA is 10x the value it was at the close of the market on October 19th, 1987.  Similar to marriage you have to have long term belief and commitment.  Happy Anniversary to my wife.

Continued Success.

Chris Barlow

Managing Director

KnowHow 401(k)

Founded in 2000, KnowHow 401(k)’s purpose is to increase the number of effective Advisors that serve the 401(k) marketplace.

October 19th, 2017

Treasury Terminates myRA and Congress Reverses Rules on State Sponsored Starter Savings Plans

Treasury Terminates myRA and Congress Reverses Rules on State Sponsored Starter Savings Plans

The Trump Treasury and Republican Congress have eliminated or weakened two initiatives, a federal program and various State programs, created specially to provide starter savings options for any employee not covered by a private employer retirement plan. These plans charge no fees to employees or employers and employers do not assume any fiduciary responsibility for their employee’s participation. The main benefit for employees is accumulating their savings thru payroll deduction at their employer, the ability to automate their savings. Payroll deduction is the feature that behavioral finance tells us removes a major impediment – inertia – for an individual to begin and develop a saving habit, encouraging them to more fully participate in our free enterprise society.

I wrote an article posted in December 2015 titled, “Let All Save”, in which I bemoaned comments by several retirement industry professionals that federal and State sponsored savings programs would take business away from for profit firms. The Treasury just did away with the myRA program for cost cutting reasons and Congress took away the State’s exemption from ERISA, causing several states to pause their programs.  Other states are still moving forward with their plans including California, Illinois and Oregon.

The myRA and State plans are designed for low and middle income tax paying Americans that work at one of the 96% of US companies that employ fifty or fewer employees that don’t sponsor a retirement plan. This segment of employer size has the most failures, employee turnover and the lowest percentage with a company retirement plan.  This is also the employer segment where most employees are low and middle income tax paying Americans.  58% of those Americans with the lowest 10% of income have access to a private employer retirement plan according to a March 2017 Bureau of Labor Statistics report.  myRA and State programs are for the 42% of the lowest paid and other middle income tax paying Americans not covered by an employer plan.

There will always be employers that chose to never sponsor a retirement plan at their company, and most employers have to believe they will have an ongoing enterprise before they offer a retirement plan. That could be ten years or more.  All the while employing low and middle income tax paying Americans that need to save automatically from their first day of employment.

We should be improving and encouraging participation in employer based payroll deduct savings programs, even any federal or State program we don’t get paid on. Without alternatives, the elimination and dismantling of these starter savings plans make no sense and opposes a core way we grow our economy, promoting the ability of the individual to accumulate capital for future investment.  These voluntary federal and State sponsored programs incubate future clients for Advisors.  Even the myRA program mandated that once a participant’s account balance reached $15,000, it had to be transferred to a private sector financial services firm that could involve an Advisor. As investors account balances grow so does their belief that they need the assistance of an Advisor.  Let’s give the lowest income employees the opportunity to more fully participate in the American dream.

August 2nd, 2017

A Perfect 401(k) Prospecting Tool

A Perfect 401(k) Prospecting Tool

401(k) Advisors are active at this time of the year prospecting, profiling and delivering sales presentations in the hope of acquiring new plan clients. Selling season is once again upon us.  I want to make you aware, if you’re not already, of one of the most perfect prospecting tools ever and it’s supplied by the Department of Labor.

Follow this link to the Internal Revenue Service instructions for Form 5500, https://www.dol.gov/sites/default/files/ebsa/employers-and-advisers/plan-administration-and-compliance/reporting-and-filing/form-5500/2016-instructions.pdf

Scroll to page 81 where you will find the ERISA COMPLIANCE QUICK CHECKLIST. The checklist was prepared by the IRS in partnership with the DoL’s Employee Benefit Security Administration and contains fourteen questions, eleven of which if the employer answers any “No”, and three of which if they answer any “Yes”, are instructed to “..review your plan’s operations because you may not be in full compliance with ERISA’s requirements.”  This perfect prospecting tool is a great guide for you in the development of your service model.  Explain to the employer how your service will help them to compliantly answer the questions.  Few employers read the instructions for Form 5500 and have not seen the checklist. It’s a great community service you can provide.  Best of luck and persist with your prospecting activities.

July 18th, 2017



7 Reasons Why Cold Calling Is Still The Best Way To Contact 401(k) Plan Sponsors, And Why You Should Do The Calling

7 Reasons Why Cold Calling Is Still The Best Way To Contact 401(k) Plan Sponsors, And Why You Should Do The Calling

Besides being given a plan that you would have otherwise pursued, I believe of all available ways to connect with your target 401(k) plan prospects is by using the telephone and cold calling. Cold calling is not dead, not even a little bit.  If cold calling were dead – why are there lead firms willing to sell you leads of 401(k) plans they cold called?

And I believe that owners cold call best. Whether you are the team leader or solo Advisor, you are an owner.  And owners like talking with owners, key executives like talking with owners.  These are the seven reasons why I believe cold calling is the most effective form of growing your 401(k) business where you control your message and pursuit of plans that make sense to you.

  1. I believe you are responsible for making the first impression with a target plan prospect. When either you or someone from a lead firm initially connect with the prospective decision maker, according to Dr. Amy Cuddy* the prospect immediately asks themselves two questions; 1. Can I trust this person? 2. Can I respect this person? Who do you want responsible for the first impressions with the prospect? A caller you hire will not be able to communicate your value better than you.
  2. It is a small amount of time – 30 minutes to two hours a day based on your goals. It’s daily “exercise” to grow your business and accomplish your goals.
  3. Your experience is a differentiator in the marketplace. The longer your length of service the greater distinction you can make between yourself and your competition. And your competitors may consider cold calling too difficult, ineffective and demeaning.
  4. Calls can last longer because the decision maker can hear your passion and focus to assist them and their employees to achieve their goals with the company plan.
  5. On the phone you can reach as many potential plan prospects in 1 or 2 hours than the more expensive ways of buying leads, buying lunch for referral sources and time to cold walk and drop by target plan prospects.
  6. Telephone prospecting relays your value and is measurable. And you can quickly determine the quality of the prospect and whether to continue to pursue them or not.
  7. If the 401(k) conversation isn’t going well, you can pivot to discuss the most important company or personal financial need they have at the time.

Even if the decision maker doesn’t take your call, leaving a quality voice mail, month after month demonstrates your persistence. Persistence is easily recognized by the decision maker because it is a quality they admire about themselves.  As you continue to call they will reward you and take your call.

Cold calling is just one activity you can execute to process Cold prospects. I strongly encourage the development of a referral network with your continued success.  Educate your referral sources about the plans you are pursuing and ask them who they know at each.  But unless you are overwhelmed with qualified referrals, I believe a part of your day should be spent processing Cold plan prospects and the most effective way of doing that is cold calling.  Smile and dial.

* Dr. Amy Cuddy, Psychologists, Harvard Business School. Book, Presence.

May 18th, 2017

Do You Buy 401(k) Sales Leads?

Do You Buy 401(k) Sales Leads?

I don’t dispute the opportunity for lead companies to operate and sell appointments to 401(k) Advisors. Advisors tell me they buy appointments because they want to grow their business and it is a cure for their lack of time or desire for cold calling. I know of abuses over the years committed by unscrupulous lead firms and their sales people.  But several Advisors have told me that although each lead doesn’t pan out, they have had enough success to continue to order leads.

I personally do not believe that it is necessary for Advisors to purchase 401(k) sales leads. My opinion is based on the minimal amount of time it actually takes Advisors to systematically approach plans and the additional benefits they receive.  To start with owners like talking with owners.  Advisors may uncover additional opportunities and they can brand their firm with the prospect with each attempt to speak with them.

Most Advisors I work with spend no more than 3 to 5 hours per week calling and dropping by plan prospects. I don’t believe any appointment service can match the passion and experience prospects hear in their words.  Dr. Amy Cuddy is a Harvard Business School professor and she and her colleagues have been studying first impressions, or in the context of growing a 401(k) business, the initial contact with a cold plan prospect.  Dr. Cuddy and her colleagues have found that when you and your plan prospect first meet over the phone or in person, they are going to quickly ask and answer to themselves two questions.  1) Can I trust you? and then 2) Can I respect you?

Focus on the few prospects that make sense for your business. Be responsible for the first impression with the decision maker.  Open a line of communication to serve their company retirement plan and any other company or personal financial issue they may have.  Save your money for other meaningful business building initiatives.

March 27th, 2017

Are You Ready To Answer These 8 401(k) Plan Fee Questions?

Are You Ready To Answer These 8 401(k) Plan Fee Questions?

“Prepare for adverse weather conditions”

A football coach of mine uttered as part of his pre-game pep talk, “prepare for adverse weather conditions” as we faced a weather quagmire. He wanted to encourage us to understand our obstacle and to stay focused on the task at hand.

Below is a list of eight questions focused on how much money you may make and possible perks of the 401(k) profession. A prospective or current client could ask these and more.  Are you ready to answer them?  Are you ready to explain and defend your answers?

  1. How much money will you make in a fee or commission if we select you and your recommendation?
  2. How much will you make as an ongoing fee or trailing commission?
  3. Is there a bonus you are eligible for that comes as a result of our selection of your recommendation?
  4. Are you earning more from this recommendation than you might from putting us in a similar product from a different company?
  5. Is any company that is part of your recommendation running any contests that might lead you to getting a free trip if we select your recommendation?
  6. Do any of the companies that are part of your recommendation offer “due diligence” trips or provide you with other forms of payment, say in points that you might redeem for merchandise?
  7. Do any of the companies that are part of your recommendation provide free food or tickets to sporting, concerts or other social type events?
  8. Finally, does your firm stand to collect any fees that you yourself will not share in as part of your commission because they have favored one product or another or limited their platform to certain products and locked out others?

Your answers can vary based on if you are serving as a Registered Investment Advisor or Registered Representative. The first two questions can be verified via fee disclosure forms.  All questions posed by plan sponsors and plan participants need a clear and concise answer.  You may believe that your responses will upend the sale.  You’ll see otherwise when you deliver honest and complete answers.  Prepare yourself for anything and stay focused on your task of managing and growing your business.

*Questions adapted from, “The 21 Questions You’re Going to Need to Ask About Investment Fees”, Ron Lieber, NYTimes.com 2/14/17

March 2nd, 2017

Strengthen and Build Your Bench of 401(k) Plan Advisors

Strengthen and Build Your Bench of 401(k) Plan Advisors

I work with TPAs and Advisors every day, assisting them to do more business together. I believe TPAs and Advisors are natural partners.  Here are a few ideas to strengthen relationships and grow sales with 401(k) Advisors.

  • Be a consultant to their business, a member of their board of directors. You witness many Advisors in the marketplace and are a good judge of best practices vaigeneric.com. Offer to review the Advisors acquisition and service activities with your knowledge of other Advisors. Assisting them to refine their acquisition and retention activities will promote their productivity and referral opportunities for your firm. Memorialize your work together in a joint business plan.
  • Advisors need to be confident with your firm’s “story” and you need to be confident in the Advisors. Each should provide to the other marketing materials that they can use to convey the story to plan sponsors and any other that can influence the joint sale.
  • Add to your annual Advisor service model a “State of the Industry” presentation delivered at their office. Keeping them up-to-date will promote their confidence in you and your firm, and perhaps give them a sales idea to share with their prospects and clients. Discuss a case study or two and perhaps jog an opportunity they may have but didn’t look at it until you introduced the idea through the case study.
  • Create a joint service model which outlines a timeline of activities that each is expected to deliver to the plan sponsor and the plan participants. The joint service model can increase sales and retention of plans for both the TPA and the Advisor. The better you and the Advisor can communicate your partnership and shared responsibility to serve the plan, the easier the plan sponsor can decide to hire you.

When I work with Advisors I remind them that they cannot be everything to everyone and that they have to be choosy as to which plans they pursue and partnerships that they enter into. I encourage you to do the same.  Focus on the few Advisors that you want to grow your business with and assist with their development.  Strengthen and build your bench of top Advisors and grow your sales.

February 22nd, 2017

Experience Is A Great Ally

Experience Is A Great Ally

Remember when you were first starting out in your financial sales career? Of course you do. All I wanted in the first days, weeks and months was experience. I wanted clients. Heck I even wanted to grow a mustache to look older. But with continued prospecting activity I obtained experience and clients and the opportunity to continue to grow. The mustache was never a good idea.

I work with Advisors that want to launch their 401(k) business and I work with top Advisors that have +$100 Million AUM in 401(k) assets acquired over several decades and they want to grow. I remind these experienced Advisors that they have become what they wished for when they were first launching their business. They have great experience, clients and the accompanying success. And they can use all of that as advantages over the majority of their competition.

These top Advisors will organically grow their 401(k) business just like the Advisor who is launching. They will cold call into a focused database of plans that make sense for their business. Their number one activity after dialing will be leaving voice mail after voice mail with each cycle through their database. To these cold prospects they will demonstrate their persistence, confident valuable message and courage as they keep calling month after month. All of these are characteristics admired by plan sponsor prospects and can be the bridge to building rapport with them regardless if they are a new or experienced 401(k) Advisor.

But it’s the experienced Advisor that can make cold prospects take their call earlier than solely with persistence, confidence and courage. Experience can immediately be communicated by the top Advisor in their opener, “My name is ______ with ______. For the past _____ years I have been working with local employers like you to improve their company 401(k) plan…..” Stated years of experience can be immediately recognized and respected by plan sponsor prospects. Persistence, confidence and courage take time to demonstrate.

The prospect is more confident about taking the experienced Advisors call because, like them, they have developed an expertise over a long period of time. What a great ally experience is for top 401(k) Advisors.

January 6th, 2017

The Ghosts of Business Past, Present and Future; 401(k) Advisor Year End Reflection

The Ghosts of Business Past, Present and Future; 401(k) Advisor Year End Reflection

Perhaps you’ll find a little time over the next several weeks to reflect upon how you have progressed over the years. You can summon thoughts of your past and present activities and use them to alter your future business.

Here are a few questions to structure your thoughts and help make 2017 what you want it to be. Think of it like Scrooge’s journey reflecting Christmas’s past, present and future as you interview yourself.

  • Thinking back to the early days of building your business, what would you do different? What should you continue doing?
  • How do you answer the prospect plan sponsor’s question, “Why you. Why are you different / better than our current Advisor and all others prospecting us?”
  • What do you want to improve about your business in 2017 and beyond?

Scrooge found the collective experience life changing. I suspect the impact can alter your business for the better.  No humbug here.

Happy Holidays and Continued Success in 2017!

December 15th, 2016