Easiest Group Type Plan to Get Your Foot in the Door With?

[AlTheGud1sRtakn]

So I've had a lot of luck leading with one product then cross-selling with individuals. For parents, 529 plans have been a good way to get myself into the household. No one else seems to be going for them as the pay is almost non-existent and it's a great product for a lot of families so it's an easy introduction. Older clients, medicare supplements are great, etc. You get the idea.

I really want to break into the group market more. I have access to a great 401k platform, group life, group DI, several great options for Simple IRAs and group health, etc. I'm life, health, p&c, and securities licensed in MD, VA, and NC. I'd like to focus on middle-market local businesses, not massive multi-state/nationwide firms. I'm thinking shops 100-500 people.

I know group takes longer and is harder to get started in, but is my old approach of using a loss-leader to get in the door then cross sell feasible? Is one of these products slightly easier to market for? Should I just keep my marketing efforts geared towards individuals and keep my eyes open for business owners? Smaller startups seem largely overlooked. Would I be better off focusing on them and growing from there? Would my 529 plan work well for employer-sponsored 529 plans then cross selling from there?

Any advice would be appreciated.

 

[kgmom219]

I have no idea what your brokerage looks like, but a few things to consider:

1. Businesses with 100-500 employees have HR people and CFO's. Those are the people you need to get in front of
2. Large Brokers (Lockton Dunning, Holmes Murphy, etc) work in this market, so that's what you are up against. Large staffs and glossy reports
3. At about 250 ee's, its time to go self-funded, which is a whole different ball game. Is that in your quiver?
4. There's one set of rules for 50 and under ee's. Then there is over 50 ee's. BUT in 2016, ACA is supposed to have the small group rules be at under 100. (Unless its changed again. That policy has changed 3 or 4 times). Some states already made the shift to 100. No clue on your particular states.
5. Some small businesses want to keep group plans. Some moved to indy with ACA. Being able to do either (no one knows what this looks like in 2018) is a great business plan.
6. You need to be able to sell and/or explain SHOP. (I think SHOP is crap, but they've all heard about it and you need to understand why it does or does not work)

I would go after small business owners, with less than 50 ee's.

 

[scagnt83]

I have access to a great 401k platform,

Dont you work for NWM??

 

[AlTheGud1sRtakn]

Dont you work for NWM??

Oh god no. .

 

[scagnt83]

Oh god no. .

Ok. Not sure why I thought that... lol.
Thats good though because they have a pretty crappy 401k platform.

So are you independent? You make it sound like you only have access to a single 401k platform...? Which one are you speaking of?

KGmom gave you some really good advice on the health side. Large groups often mean larger competition. It also means needing to have even more clubs in your bag to get the right fit. Self funded is getting more and more popular, especially with large groups. I even have some carriers pushing it for the 20-50 emp group size.

Small businesses are best imo. Shorter decision making process with less people involved. Also, there are just a lot more small firms out there vs. large firms.

Small white collar firms will be much more likely to have or want group health vs. blue collar. The supplement market is viable for both though.


401Ks are a totally different animal. There is a huge learning curve if you are new to them. What platform are you planning to sell?
Does it offer plan level 3(21) or 3(38)?
Does it offer participant level 3(38)?
Does it offer a QDIA? Is the QDIA a 3(38)?
Is it open architecture? Does it use proprietary funds or require them?
What type of platform is it? GVA? GFA? NAV?
Bundled or Unbundled? Do you have a TPA to partner with?
If Bundled does it offer 3(16) services?
Does the provider offer benchmarking services?

If you dont know the answer to all of that then you had better find out before you are in a competitive situation.

There is a lot to learn with 401k plans. I also recommend that you have more than one provider to use. They all have their sweet spots as far as assets/contributions/bundled vs. non/etc.

If you are serious about learning the 401k world I would suggest you take the 401k Coach program.


But if you plan to focus on the 100-500 emp size business. You have an even steeper learning curve and an even longer road to making sales. I would highly recommend you focus on groups that are 50 and under to cut your teeth on. For 401k plans id focus on plans under $5m in assets. Learn the ropes first, then move into the mid plan market. Once you get to the 200 emp / $10m-$50m range it is a whole other ballgame for 401k plans. You are dealing with investment committees who are the decision makers for the plan. And you are competing with large national firms who specialize in the large plan market.

 

[AlTheGud1sRtakn]

Thanks, lots of good info!

I'm with MOO, so kinda captive, but not quite. My 401k options are captive, most other group products are more open. They've recently re-done their 401k platform and it seems very competitive on several levels now and it's pretty flexible and they've hired lots of new people who specialize in that to help agents land the business as well.

Starting with smaller plans to get the experience sounds like a good path. I'm thinking small clients are my way into the industry rather than finding a product that's the way into the client.

 

[scagnt83]

Thanks, lots of good info!

I'm with MOO, so kinda captive, but not quite. My 401k options are captive, most other group products are more open. They've recently re-done their 401k platform and it seems very competitive on several levels now and it's pretty flexible and they've hired lots of new people who specialize in that to help agents land the business as well.

Starting with smaller plans to get the experience sounds like a good path. I'm thinking small clients are my way into the industry rather than finding a product that's the way into the client.

MOOs 401k is a GVA (Group Variable Annuity).
It is geared towards the small/micro plan market ($5m-$250k). The good news for you is that most plans fall in that category.

I have not looked at the new version yet. But going on 1 or 2 year old info it does use some proprietary funds but they arent that bad. I think mostly just the Target Date funds and Indexed funds are proprietary.

It does offer plan level 3(21) and participant level 3(38)/QDIA through Stadion. (at least it used to be stadion)
Stadion has not had that great of performance over the past 6 years. But plenty of small market plans still use them. If the market takes a big dip they will look good again.

They offer a Bundled and UnBundled platform. Their TPA services are pretty good. Often they will waive the TPA fees for plans over $1m and with enough contributions.


One thing I dont like is that their guaranteed account has (or had) MVAs...
That is a very little known fact about it... at least the old platform. Not even my regional guy knew that. So be careful putting the MOO guaranteed account on the plan. Opt for a Money Market or Short Term Treasury fund instead.


In my area the regional wholesalers have always been a good resource. Id strongly suggest that you contact yours, tell them you want to be in this market, and ask them to give you a crash course.

To summarize, their 401k is decent. Not the best, but certainly not the worst. You can definitely gain business with it.