If you’ve built your retirement plan practice servicing defined contribution clients, you may not feel compelled to add defined benefit (DB) plans into the mix. After all, understanding the nuances of a new type of plan can be a lot to take on. But when it comes down to it, advising defined contribution (DC) and DB plans aren’t all that different.
You don’t have to be an expert
One of the most common things I hear from advisors is they’re not an expert in DB. This is exactly why it can be a great opportunity — there aren’t a lot of advisors working with DB plans so it’s a chance to differentiate yourself. And, we’re here to help you dive in.
My team’s job is to help you take that expertise in 401(k) plans and apply it in a little different way for the vast amount of opportunities that exist in the DB market to help potential clients. Listen as I explain more about leveraging your defined contribution value proposition in this short two-minute video.
Similarities between DC and DB
If you find the DB market a bit daunting, check out these similarities in broker responsibilities:
- Overseeing fees (often from multiple providers) to keep plan costs reasonable.
- Collaborating with the client on setting risk tolerance.
- Managing the investment portfolio for both plans and providing ongoing reviews.
- Building an asset allocation roadmap into the client’s investment policy statement.
- Encouraging a holistic participant experience. (This is especially valuable for active DB plans because it helps participants see both plans on the same website and in the same statement.)
Keep in mind, managing risk is a much bigger deal when advising a DB plan because the employer carries the market risk (investment or interest rates). For example, a one percent change in interest rates can have an impact of ten to fifteen percent on assets. You can help potential clients properly plan and strategize for this risk.
Grow your practice
Here’s the thing – while fewer employers offer pension plans, you might be surprised to see how many of your DC clients still have a DB plan in place (whether active or frozen) and are looking for help. That means a chance to grow your practice in a way you haven’t before with the clients currently on your books.
Discover how you can bring more value by skimming this article. Then get in touch with your Principal® rep to find out more.