Prospecting the Federal Form 5500 – Finding Your Target
January 14, 2019

Using 5500 Data for Offensive and Defense Business Development (Part 2): Finding Your Target

Now that the east coast is covered in snow, it’s the perfect time to continue my series on Prospecting the Federal Form 5500, this time focusing on how to find the targets you identified in the first post of this series.

With hundreds of thousands of plans out there, it can be hard to find those plans that are right for you to reach out to. Instead of spending time, effort, and even money contacting leads with little chance of conversation, you need to focus your attention on leads that would be more receptive to your approach.

WHAT ARE RED FLAGS?

Red flags are a series of indicators the experts at Judy Diamond Associates identified to aid in locating “in trouble” plans. These red flags not only identify a potential issue in a plan, they also act as tags which can be searched for. Which 19 separate Red Flags to choose from, it is easy to tailor one’s research. Included in our red flags are:

  • High Average Account Balance
  • Corrective Distribution Issued
  • Insufficient Fidelity Bond Coverage
  • Highest Admin Fees

For more on our red flags, check out Michael Iapalucci’s outstanding new series focusing on our Judy Diamond Associate’s red flags.

PLAN SCORES

Knowing how a plan stacks up against other plans in a state or industry can be critical in identifying trends in your market. Therefore, having access to tools that quickly aid in plan comparison is a must! Plan scores provide you with seven metrics by which a plan can be compared to other plans. Additionally, JDA includes an overall umbrella score for a more high-level analysis. These scores help you understand the landscape around the plan so that you are better able to develop your pitch, or guide your business development efforts.

ADVANCED SEARCH

Now that you know what your current clients look like, you can use the advanced search feature to find other companies that match! This may seem a challenge since there are over 450 fields of data in a 5500 form. There are many options including Participant or Asset Total, to specific Red Flags, to Broker or Vendor Names. However, the advanced search box allows you to quickly narrow the field of leads from hundreds of thousands to a more manageable number of perfect leads.

PERFORMANCE BENCHMARKING

Knowing how a plan performs against other plans very helpful. It is a good idea to research a plan to determine if they really are a good lead for you. Performance-based benchmarking is a great way to accomplish this. Identifying a plan that historically underperforms plans in your region or your own book of business helps you focus your attention.

 

THE JDA ADVANTAGE:

These are just a few of the tools within Retirement Plan Prospector Prospector Plus tool designed to bring the experience of the JDA Team to your office. These tools are easy to learn, quick to use, and, most importantly, they provide results. There is a reason our clients stay with us year after year.

Posted in: Blog
Red Flags – A Powerful Tool for Prospecting
December 24, 2018

 

In this post, we are going to focus on one of Judy Diamond’s proprietary data points – Red Flags and how to use them in prospecting.  Red Flags are an innovation pioneered by JDA based on 30 years of experience with the Form 5500.  The idea behind Red Flags is to identify retirement plans that have a noteworthy characteristic that is not entirely obvious.  While many of the Red Flags point to potential problems, whether it be with performance, plan design or administration, this is not always the case.

There are nineteen Red Flags identified as important relative to prospecting.  Over the coming months, we will focus on one or more of these flags to provide a more detailed explanation along with some tips on how to use them in your practice.  For a complete list of the 19 Red Flags, click here.

The first Red Flag we will consider is High Average Account Balance.

Most Frequently Occurring Red Flags

High Average Account Balance

High Average Account Balance is the most widely occurring Red Flag showing up in 401(k) plans.  This accounts for nearly 200,000 plans in the 2017 plan year.  This is not surprising considering the median number of participants (10) and the median participation rate (100%) for plans with this flag.  So what is going on here and is it good or bad when focusing on prospecting?

High Average Account Balance is an example of a Red Flag that can be considered a positive screen.   This Red Flag helps to find plans with few participants and participants with a higher than average 401(k) balance.  The average 401(k) balance is $106,000 according to USA Today.  Plans tagged with High Average Account Balance in the JDA Retirement Plan Prospector database have a median account balance of $182,778 – a staggering $77,000 more.

What Types of Plans Have this Red Flag?

What types of firms make up these plans?  Physicians, Lawyers, Dentists, Financial Advisers, and other professional services firms comprise the majority of these plans.  This includes wealthy professionals with small group practices or partnerships that are able to save the maximum in their retirement accounts.

Knowing how to find these types of plans can be helpful in two ways.  First, the business owners and participants are one and the same with these plans. As a result, it is much easier to get their attention regarding plan design or performance issues.  Therefore, whether it is high fees, poor fund selection or performance, you should be able to make a strong case to one of the business owners that it is in their best interest to meet with you.  Secondly, these companies and individual participants are not only valuable retirement prospects but can also be targeted for wealth management services.  As a result, since there are so many plans with this flag, it is relatively easy to find them in most geographic locations.

In future posts, we will take a look at some of the other most prevalent Red Flags.  These include Bottom 10% in Employer Contributions and Insufficient Fidelity Bond Coverage.

Posted in: Blog
Prospecting the Federal Form 5500 – Identifying your Client
December 17, 2018

Using 5500 Data for Offensive and Defense Business Development (Part 1)

This article is the first in a five-part series devoted to helping you more effectively use the 5500 for prospecting. By the end of this series, you will learn:

  • Steps to locate viable new business
  • Defense strategies for your book of business
  • How to approach your first meeting with a potential client

Identify your Clients

There are over 1 million ERISA qualified plans active nationwide each year. Nearly 800,000 plans in the retirement space alone. Finding the plans that fit well into your business model can seem like a daunting task. The first step in business development is often research. Here are 3 questions to ask yourself:

Who Are My Current Clients?

Knowing who you currently work with is a great indicator of where you should be looking for new business. Consequently, as no one knows your client’s as well as you, it is always a good idea to dig deeper and see if there are unifying traits that you may not be aware of. The 5500 form provides a ton of information that, when analyzed, can reveal trends and traits that may not have been uncovered by your face-to-face interactions.

What Are My Strengths?

Properly identifying your skill set is imperative when planning your prospecting. Perhaps you are a good educator and skilled at letting employees know the value of their plan. Maybe you are a data wonk and are skilled at identifying trends in large pools of data. You may have spent years in the 401(k) market and are known in your region for strong 401(k) performance.

Who Looks Like My Current Customers?

A good place to start are those categories of sponsors that are similar to what you work with and blend well with your strengths. Therefore, if you can find sponsors who resemble your client base, sponsors that also may have an unhealthy plan, you have yourself a beginning of a great lead list.

THE JDA ADVANTAGE:

The Retirement Plan Prospector database was designed not only as a lead generation service but as a tool to help you identify trends in large datasets.

 

Find the second post in this series Here!

Posted in: Blog