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Rollovers Can Only Be Retained at the Personal Level


ORLANDO, Fla. - As evidenced by advertising on the financial cable networks, financial services companies are eager to give retirement plan rollover assets a home, but effectively capturing those assets may not be so simple.

Fund companies, in particular, are dreading that 401(k) assets will migrate away from their complexes as rollover assets continue to skyrocket. In 2001, 401(k) rollover assets were $105 billion, and they are estimated to grow to $369 billion in 2011, according to statistics cited from Cerulli Associates of Boston.

Yet one rollover expert shared his tips from the trenches in "Positioning for Retirement Plan Rollovers," a breakout session at the Broker/Dealer Conference here sponsored by the Financial Planning Association of Atlanta.

Zoom in Past 10,000-Foot View

Scott Hanson, senior financial adviser at Hanson McClain Retirement Planning in Sacramento, Calif., said his firm has tapped into the rollover market successfully. Instead of trying to capture rollovers at the 10,000-foot view - including using technology to generate reports or marketing solicitations to rollover targets - fund companies should support financial planners at the game. After all, these are the people who have cemented investor relationships, Hanson suggested.

Plan providers have opened the rollover door but have done a poor job in holding onto assets - estimated to top $1.7 trillion by 2008, Hanson said. Currently, fund companies have kept less then one-fifth of rollover distributions from 401(k) plans, Hanson said. Fidelity Investments of Boston started stemming those losses last year with a program that involved training the call center staff, whom Hanson jokingly dubbed "trained militia people," how to respond to inquiries to roll over money. As a result, Fidelity retains 50% of the 401(k) assets that may have rolled over, in large part by asking investors if they understand the fees, expenses and commissions associated with broker-sold products.

Calling rollovers a decision investors can't procrastinate and most rollover assets up for grabs, Hanson said marketing and training is the key to this tremendous pool of money. Planners need to assume the role of trusted adviser with the potential client long before the rollover is imminent and to have already become an expert in rollover rules and penalties.

Existing Trust

Enterprising planners can find prospects in a plethora of places, but they should always keep a keen eye on the local papers. For instance, approach employees at a recently acquired company and offer a seminar on financial implications of the acquisition, Hanson recommended. When it's time for them to make a decision about their 401(k) or pension assets, the relationship already exists.

"The key is to get to these people before the forms hit them," Hanson advised.

While downsizing isn't good news to most people, it does represent an opportunity to brokers who specialize in rollovers, Hanson said. Planners should keep an eye out for plant closures, downsizing and companies that may offer early retirement to older workers.

As with many businesses, good word of mouth is the broker's best tool, as many people refer a good experience to co-workers and friends. Providing free advice without the expectation of immediate reward is the best way of establishing trust, Hanson said, adding that he has no qualms about recommending that a client delay a rollover for tax reasons. Although another broker would move the assets and collect a quick commission, by serving the client better, a planner can also engender loyalty and generate even more business through referrals.

All in all, Hanson recommends the rollover market because, he said, it's a great place for a smart broker to make money without trying to wrest assets away from another broker. "It's a very lucrative marketplace. The money is already flowing; your job is to stand underneath and catch some."

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