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Plan Sponsor Prospecting:Outsourced vs. In House Models

2626 Howell St. Suite 700 Dallas, Texas 75204 Main 214.871.7500 Fax 214.871.0011 www.lgt-cpa.com

If your practice wasn’t on track to accomplish its new business development goals for 2012, then you need to make some adjustments for 2013.

The 401(k) business is rather straightforward when it comes to acquiring new clients, essentially boiling down to two necessities: a compelling value proposition and enough new prospects to whom you can present that proposition. For most practices, the big challenge is the latter.

Excluding working “centers of influence” and existing clients for referral business, there are three primary paths to new client acquisition:

• The “do it yourself” prospecting model• Hiring an in-house cold caller or developing a junior associate• Outsourcing to a third-party appointment setting firm

This article examines the advantages, considerations and potential of each.

Do-It-Yourself Model

Many advisors believe the primary challenge with the do-it-yourself prospecting strategy is time — or more precisely, the lack thereof. The mere idea often invokes negative visions of strapping yourself to a phone and pounding out 100 cold calls per day. However, having trained numerous advisors on the process, I know this perception is false — likely borne from the lack of a good “game plan” and lack of confidence or comfort with the cold calling process.

In reality, with a well planned strategy, reasonable phone skills, and a compelling argument as to why plan sponsors should meet with you, making about 40 calls to new prospects per week, three weeks per month, should result in three to six new prospect appointments monthly.

First, offering a compelling reason to meet which transcends a discussion along the lines of “are you happy

The power of the right people beside you TM

FINANCIAL FOCUS

Your Accounting for a New Economy

2626 Howell St. Suite 700 Dallas, Texas 75204 Main 214.871.7500 Fax 214.871.0011 www.lgt-cpa.com

with your current plan?” or “are you interested in changing plans?” is important. Secondly, the key to an effec-tive campaign is to make your cold calls as warm as possible. Small steps like sending an introductory letter to selected prospects in advance of your call can have a substantial impact on results. And lastly, it is essential that you’re thoroughly prepared to handle the questions and objections you will be confronted with.

Here are the key considerations:

• Advantages: Produces high-quality prospects and is the fastest way to build a pipeline of potential clients.• Strategy: You need a good game plan, practice and the ability to stick with the plan. Count on five to eight hours per week for three weeks each month.• Potential: three to six appointments a month.• Costs: $300-$500 per prospect.

In-house Telemarketer or Junior Associate Model

There are two main challenges to hiring a professional in-house cold caller:• Time to hire and train a capable producer• Compensation and retention

Many advisors erroneously believe that a professional cold caller, with training, will produce qualified appoint-ments for about $12-$15 per hour. In reality, if you are fortunate enough to find a talented caller capable of keeping your pipeline full, it won’t be long before they will recognize their true value and seek greener pastures unless you pay them well. Finding, training and retaining a quality telemarketer is a tremendous challenge!

Developing a junior associate can reap great rewards, but has similar pitfalls. Primarily, most juniors have grander aspirations that don’t include spending their career on the phone setting appointments. All the same, these obstacles can be overcome if the associates are compensated fairly and you deliver on promises of career development and upward mobility.

One key to successfully hiring a professional telemarketer or a junior associate is to always conduct your first interview on the phone. Just because a candidate seems razor-sharp during a face-to-face interview, that doesn’t mean they will be effective as a telemarketer.

Here are the key considerations:

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• Advantages: A full-time professional caller will generate more high-quality prospects.• Compensation and retention: Count on substantial training time. Compensate hourly during training, but transition to a salary/bonus incentive bonus model as soon as they demonstrate proficiency. This will help with retention.• Telemarketer: $35,000 – $45,000• Junior Associate: $40,000-$80,000 depending on other responsibilities.• Potential: Six to ten qualified appointments per month.

Outsourced Appointment Setting Model

Some advisors have built their practices using third-party appointment setting services, while others report having no success at all. While I won’t endorse any particular service, I can say that over the years I’ve trained many telemarketers for these firms, and still do. Most third-party appointment setting firms really work hard to provide a high-quality service for their advisor clients.

The key to success when using appointment setting firms is to thoroughly understand the model they use to set appointments with plan sponsors and to make sure that model is consistent with how you sell. If the plan spon-sor has certain expectations established by the appointment setting firm and you deliver a different value propo-sition during the actual appointment, you won’t be successful.

The other key is patience. Don’t expect a high volume of appointments in this model.

Here are the key considerations:

• Advantages: View third-party firms as supplemental to your own efforts. They can often get you in front of opportunities you wouldn’t otherwise land yourself.• Costs: Average $1,200 per appointment, depending on assets in the plan or established hourly rates.• Potential: One to three appointments per month.

Marcus Chandler, author of this article, is the founder and principal of Sell401k, an independent marketing, branding and sales process development consulting firm specifically focused in the retirement plan marketplace.

2626 Howell St. Suite 700 Dallas, Texas 75204 Main 214.871.7500 Fax 214.871.0011 www.lgt-cpa.com