How one 401(k) adviser is successfully prospecting clients under the DOL fiduciary rule

The approach leverages relationships with property and casualty insurance brokers

Aug 9, 2017 @ 4:41 pm

By Greg Iacurci

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The Department of Labor's fiduciary rule is expected to create a bundle of client prospecting opportunities for advisers specializing in retirement plans, as less-experienced 401(k) advisers exit the market or employers ditch them for a more knowledgeable adviser.

One retirement-plan specialist, Nathan White, has successfully put this concept into practice, gathering roughly 120 employers as prospects from February through July. That's 20 new prospects per month, on average, based solely off one DOL-related strategy.

"The number of opportunities is tremendous," said Mr. White, managing principal at SLW Retirement Plan Advisors, which oversees approximately $750 million in defined contribution assets in roughly 100 plans. "That's a game changer for us."

The way Mr. White is prospecting may not be entirely evident to some 401(k) advisers: by leveraging brokers who sell property and casualty (P&C) insurance.

These brokers, who sell fiduciary liability insurance to business owners and executives, are already positioned to better understand the regulation, which raises investment-advice standards in retirement accounts, than other employer-facing insurance brokers, said Mr. White.

One of the challenges of the strategy is that the P&C broker can't receive referral fees without running afoul of the regulation. Without the financial incentive, the conversation has to be one of opportunity and threats.

The threat: P&C brokers could be vulnerable due to the forecasted upheaval among non-specialist 401(k) advisers due to the fiduciary rule. The brokers become susceptible to firms with both P&C insurance and 401(k) consulting divisions, such as Arthur J. Gallagher & Co. and Lockton Companies Inc. A newly hired 401(k) adviser from such a company may invite an in-house P&C team to review the company's coverage, and usurp the current P&C relationship, Mr. White said.

Nathan White
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Nathan White

So, a P&C broker introducing an employer to a specialist 401(k) adviser could help that broker keep his/her client relationship.

The reward: It could make the P&C broker look good in the eyes of the client if he/she points out potential areas of employer liability. P&C brokers can explain to clients that their current adviser may have a business model that's deemed "conflicted" by the fiduciary rule, potentially putting the employer at risk.

"P&C insurers still have clients with retirement plan problems," said Jon Chambers, managing director at SageView Advisory Group, whose network of advisers oversees roughly $70 billion in DC assets. "For advisers that can serve in a fiduciary capacity and who can figure out how to build partnerships that are compliant, they have the opportunity to replace the prior solution."

Mr. White starts by educating P&C brokers on the rule. He also provides talking points and communication to help the brokers explain the regulation to employers. This also provides brokers with an opportunity to review fiduciary-liability-insurance coverage with clients. This insurance provides financial protection for fiduciaries of employee benefit plans against legal liability.

Mr. White also offers to do an initial assessment of the employer's retirement plan, using data gleaned from the plan's Form 5500, a public document that can provide some detail on investment choices, plan providers (e.g., the record keeper) and adviser compensation. By presenting information on potential problem areas in the plan, the P&C broker again looks good to the client.

That often leads to an invitation for a client introduction via webinars, face-to-face presentations and seminars, for example. Sometimes, Mr. White will get a list of several clients' plans to research all at one time.

"I didn't expect, quite honestly, for the P&C brokers I work with to really open up about their clients very much," Mr. White said. "I expected it to take a lot of time, but it's taken no time."

And, the prospects range all plan sizes, from $10 million up to $800 million, he added.

However, not everyone has relationships in the P&C business, and getting access to these brokers and gaining their trust can be difficult, said Mr. Chambers, who doesn't employ this particular client prospecting strategy, but said it "totally makes sense."

Mr. White's business partners operate in the benefits world, and he has had an easier time than most because they have been able to introduce him to contacts in their network.

The fiduciary rule partially went into effect in June. All of its provisions aren't scheduled to come into effect until January, but the Trump administration, which is currently reviewing the regulation, has requested the date of full implementation be delayed until July 2019.


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