Use a 402(a) Pension Fiduciary to Pick Up Affluent Business Clients Webinar—On Recording

If you want to go after affluent business owners, this is a webinar you’ll want to attend. To sign up, click on the following link:

Advanced Qualified Plan Designs (Super 401(k)™ & 401(h) Plans)
Webinar—On Recording

If you didn’t sign up for this week’s webinar on the Super 401(k)/401(h) plans (both tools to pick up AUM and sell FIAs), click on the following link:

ERISA Liability for Business Owners is Real!

Every business with a qualified retirement HAS fiduciary liability (imposed by ERISA). This liability usually falls on the business owners who don’t know they ARE 402(a) fiduciary(s) of the plan. Unfortunately, most plans are set up to violate this duty.

Indemnification for This Liability!

Business owners are NOT qualified to be 402(a) fiduciaries of a pension plan, but they are! Because of their lack of knowledge, they are putting themselves at risk to lawsuits by their employees.

Do you want to gain the trust of and pick up new business clients? Tell them that you have a pension company that will INDENMINFY them of this liability. That’s what the pension company owned by the speaker for next week’s webinar does.

Causes for Violating the Fiduciary Duty to Employees

1)  Failure to monitor and reduce plan fees—many of the top pension companies charge crazy high fees that many times are HIDDEN from the business owners (they are bundled and buried).

Here is one example of the record keeping fees given to me by next week’s webinar speaker:

Base per participant fee (0.047%), direct compensation fee (0.040%), separate account charge (0.45%), recordkeeping fee (0.22%), and compensation related fee (0.25%) 

Total record keeping fees: 1.007%

The average mutual fund expense in the plan was 0.90% making the total fees 1.907%!

FYI, in the last 25 years, the speaker’s firm has NEVER reviewed a plan they couldn’t save between 32%-65% in fees. Take that stat to your potential business clients!

2) Failure to prudently select and monitor plan investment options —this is a big one. Most pension plans fail this duty in one of two ways:

The plan offers 200+ mutual funds (this is faulty because all 200+ mutual funds are not worthy of being in the plan).

-The plan offers limited options that are mainly made up of “target date” funds. These funds, as I’ve talked about in past, are awful and do not provide good risk-adjusted returns.

Tactically Managed Strategies & Fixed Indexed Annuities

It is my professional opinion that there is a great argument that plans which do NOT offer tactically managed strategies (ones that are designed to mitigate risk) and FIAs violate the duty to prudently select and monitor investments.

  • FIAs are an asset class and a terrific alternative to bonds.
  • 3rd party tactically managed strategies should be an option for employees in pension plans.

Most plans do NOT offer FIAs or 3rd party tactical strategies!

You can offer pension plans with both FIAs and 3rd party tactical strategies

I’m super excited to tell readers that through next week’s speaker’s pension platform, employers can offer FIAs and 3rd party tactical strategies to employees as investment options!

As you may know, I’m a huge fan of Joseph Maas, CFA, CFP®, ChFC, CLU®, MSFS, CVA, ABAR, CM&AA, CCIM as a 3rd party manager. So much so, that he’s the CIO for our RIA Joe is a killer 3rd party manager and his strategies can be offered inside a pension plan.

Do you think employees would be interested in a combo of Joe’s Focused Growth strategy with say 30% FIAs? (example goes back 10 years ending on August 31, 2022)

The Calmar Ratio:

  • Focused Growth with 30% FIAs: 1.12
  • 60/40 stocks-to-bonds: 0.52

Twice as good from a risk-adjusted return point of view.

Bottom line… 100% of business owners who offer pension plans to employees have 402(a) fiduciary liability for those plans. The vast majority of pension plans are paying too much in fees and are violating their fiduciary duty to prudently select and monitor investments.

Advisors now have a real solution to approach those business owners to indemnify them from this liability, lower costs, and offer better investment options (including tactical strategies and FIAs).

Go get ‘em!