• Microplan advisers typically want to stay in that space
because of its many upsides, including less competition and better client retention.
• The fiduciary rule may prompt many micro-plan
sponsors to seek out an adviser for the first time or an
adviser that offers fiduciary services.
• Micro-plan advisers can grow by creating efficiencies
via bundled solutions and technology, among many
other possible strategies.
such as a $50 million or a $100 million plan and were to lose
their business, his bottom line would be more drastically
affected. “I would rather have 10 $1 million plans than one
$10 million plan,” he says.
Advisers can also make more of a difference for smaller
plans, Sampson says. Traditionally, “the folks servicing
these plans, many of them brokers, are typically doing
nothing for them because they are not focused on 401(k)s,”
he says. “I bring high-touch fiduciary services you would
generally get at a larger company. We see that as a very
large competitive advantage.”
Indeed, advisers who specialize in micro plans say
the Department of Labor (DOL) fiduciary rule is creating
tremendous opportunities for retirement plan advisers, and
particularly those working with small plans, which most
likely have no 3( 21) or 3( 38) fiduciary services.
Harrison says he has recently turned his attention to
offering sponsors his fiduciary consulting services—
preferably his 3( 38) services—and that many of these projects
turn into ongoing advisory business. “This is another value-add that I can offer, because micro-market plan sponsors
aren’t aware this is available,” he says.
Jim O’Shaughnessy, managing partner and co-founder
of Sheridan Road in Northbook, Illinois, says he is working
with a select number of recordkeepers to create a bundled
solution that includes 3( 38) services, for his smaller clients.
Currently, only 5% of these clients use this service, but he
expects it to grow to 10% in the next six months and to 35%
within two years. Among new micro-plan clients, 50% are
coming on board for 3( 38) services, which O’Shaughnessy
attributes to growing awareness among plan sponsors.
“With this DOL regulation now taking hold, the number
of plan sponsors looking to hire an adviser for the first time
or that are looking for a fiduciary adviser and reach out to
us has dramatically increased,” O’Shaughnessy says. As a
result, Sheridan Road expects its current base of 300 clients
to expand to 500 by 2019.
Other Avenues for Growth
Other ways retirement plan advisers focused on the micro
market are looking to grow their business include creating
efficiencies in order to increase scale. “To create efficiencies, we are creating bundled solutions and leveraging technology,” O’Shaughnessy says.
“There are hundreds of service providers that serve
the micro space, as opposed to only a handful that serve
larger plans,” he says. “We go to the smaller employers, tell
them what they need and make specific recommendations
on who they should work with and how they should design
their plan. What we can now do for a $1 million plan is what
we could only do for a $10 million plan three years ago.”
It is also important to educate existing clients on all of
the services your advisory group offers, including fiduciary
services and financial wellness, he says.
Bank of America Merrill Lynch is finding financial well-
ness programs in demand with sponsors of micro plans,
says Ulian. “With the unemployment rate at 4.3%, compa-
nies are looking for ways to differentiate themselves, and
one is through financial wellness programs,” he says. “That
is a sea change happening not just among mega plans but
down-market, even at a $5 million plan.”
Jamie Greenleaf, principal and lead consultant at Cafaro
Greenleaf in Red Bank, New Jersey, says she now offers
financial wellness programs to her clients, who find that
these help retain employees longer.
Advisers focused on micro plans also discover that
offering other services, such as third-party administra-
tion (TPA), Certified Public Accountant (CPA) and actu-
arial services, or advice on health care, can bring in
Steve Fraidstern, vice president at Associated Financial
Consultants Inc. in Fort Lauderdale, Florida, says the CPA
and actuarial skill-sets work particularly well in the micro
space. “Small business owners often have cash balance
plans or profit sharing and want help on their tax consider-
ations,” he says.
Likewise, Bukaty Companies Financial Services is part of
a larger organization that has property, casualty and payroll
divisions, which provide leads to the retirement plan advi-
sory group, Morris says.
Some micro-plan advisers are also actively marketing and
creating thought leadership centers. Obtaining plan sponsor
contact information from recordkeepers and other service
providers, Fiduciary Plan Advisors, in Baltimore, conducts
quarterly marketing campaigns centered on hot topics of the
day, says Jania Stout, practice leader and co-founder of the
firm. “When the lawsuits started coming out in the higher
education space, we knew that sponsors were keenly aware
of this, and we built a marketing campaign around it via
emails and webinars,” she says. “Our goal is to gain one to
two clients every campaign.” The cost of renting the names
is $10,000 a year.
Cafaro Greenleaf executives also attend networking
groups and conferences to give speeches and gather leads,
Greenleaf says. And, like advisers in other markets, those
in this one are looking to leverage leads from recordkeepers, mutual fund wholesalers, attorneys, CPAs, payroll
companies and business brokers. These advisers say the
micro market is very active and that it continues to provide
endless opportunities. —Lee Barney