At a recent conference, I heard TPA firm owners and managers lamenting the fact that, though they were adding plans at their normal rate, they were terminating/losing the same number or more. Their concern was that, overall, the number of retirement plans was decreasing and they attributed this decline to their net zero growth. But is this assumption true? Analysis of the 2015 and 2016 5500 filings shows that approximately 85,000 plan sponsors checked the box indicating an initial filing, while only 70,000 checked the box for final filing. In addition, the filing levels show that net growth of 5500 filings has been steadily increasing since 2011. So, why are so many firms “stuck in the mud”?
Selling is all about knowing your prospective clients and referral sources and maintaining a robust pipeline of opportunities from which to close new business. But how many TPAs do more than simple proposal tracking? While proposal tracking is certainly important, servicing your existing base of referral sources is the easiest way to maintain a steady level of new business. Since many firms rely on referrals from the investment advisor community, a community that is prospected heavily from many sides, it’s critical to stay visible to firms and to differentiate yourself from other TPA’s. So, stay in touch and be sure to add referral source servicing as an active responsibility in your firm.
Next, understand who influences your business. Would it shock you to know that a financial advisor that has 10 plans with your firm, hasn’t done a proposal in two years? What if there is an accounting firm that provides tax services to 10% of your client base that you have never visited? In PensionPro, we use an Influencers Dashboard to show the number of plans, participants and assets associated with a contact, be it a financial advisor, CPA or any other role associated with a plan. For those that use our sales tracking software (SalesPitch), we additionally show the contact’s related proposal activity. We are not trying to seem ungrateful for past business, but an advisor who did 15 proposals last year and has eight plans with you is just as important as the advisor who has 20 plans, but no proposals in two years. Tying the two sides of your firm together, pre and post-sale, is key to understanding who influences your business.
Proposal tracking is something that most TPA firms maintain. It’s typically in spreadsheet form, unsharable and unrelatable to whatever software tracks the post-sale customer side. But regardless of what you use to track your proposals, follow up is key. So, be sure to attach a blast email component for easy and CONSISTENT follow-ups. Just the simple process of consistently reaching out, not just to existing proposals, but to your referral sources, will net new business for your firm.
But what if the pipeline isn’t full, or isn’t as full as you would like it to be? Since many TPA firms have grown through relationships with investment platform wholesalers, most have never learned how to prospect. Having implemented SalesPitch with over 100 firms, we know that most TPA firms believe that prospects and proposals are one in the same. They are not. In 2009 and 2010, after the financial meltdown, I noticed that not only was I terminating a large number of plans in my TPA firm, my new business pipeline had dried up. My wholesalers had very few referrals to pass along and not at all to the level that I was used to receiving. So, now what do I do? Well, I learned to prospect.
So, what is prospecting? Let’s use a fishing analogy to explain. The fish you caught and have in the boat are clients or existing referrals sources. The one on the line you are wrestling to win is a proposal. The ones still swimming and eyeing your bait, or the ones on the other side of the pond that don’t even know you are fishing, are prospects. Nothing will increase your potential for closing more sales than broadening your focus to include prospecting. For example, a financial advisor, Jill, invites you to present a proposal to a plan sponsor. Jill is obviously an existing referral source (in the boat) and the plan sponsor is a proposal (on the line). But what about the other FAs in Jill’s office? Just jot down the names of every FA in the firm and add them to your prospecting list. How about buying a list of financial advisors in your area? If your firm’s referrals have been mostly advisor based, why not collect the CPA contact information for all your clients and introduce the services of your firm? How about circling back to advisors who proposed your services in the past but you didn’t win? The list of opportunities is endless, or so it seems through the eyes of a good salesperson.
Consistent net plan growth is important to any firm. Though many TPAs talk about the new plans that were won last year, maybe part of the conversation should be about the number of fish you have added to your prospecting pond and the number of new referral sources that were opened for potential new business.
