When I started my practice 3 years ago, I had a public relations director on retainer. He was a nice guy, but he was more interested in promoting himself than in promoting me (at least I thought so). He had a nice base of clients and one of his ways was to try to network clients amongst themselves. He did have a third party administrator on retainer, but he tried to have me network with attorneys who would never refer clients to me (i.e., negligence attorneys).
The first few months of starting my practice were not good. I had very few clients and very few legal bills to send out. A nice article in a business newspaper after I started my practice did nothing to generate business. The p.r. director also insisted that my dream about being in the Wall Street Journal would take time because I needed to build a reputation by appearing in other articles. The p.r. director did very little in getting me articles to appear in, he simply referred me to links from these websites that reporters use to get expert opinions.
I told the p.r. director things were not going well and he told me to take time off, which is not someone who has to pay a mortgage wants to hear. I was looking to trim costs and that $900 per month retainer that this p.r. guy was getting looked right for chopping.
I looked at the $900 a month and divided it by 30 days to get $30 a day. I asked myself whether the p.r. guy was doing $30 of work in promoting me every day. I determined that he really wasn’t. After reading a book on social media and talking with Mike Alfred of Brightscope (who suggested I post articles through LinkedIn), that I realized that the $900 a month was a waste. The p.r. director got fired and within two months, I was quoted in the Wall Street Journal because of something I posted on my blog (the power of social media).
Retirement plan providers need to look at their fees and determining what work they are doing for their retirement plan clients because like me, they may try to break down their plan expenses into a day rate and try to figure out what their providers do for them.
Value is one of the more important concepts in business and plan providers (thanks to the transparency of mandatory fee disclosure) are under pressure to show their value to plan sponsors. By showing value, plan providers have the power to dissuade plan sponsors from every contemplating someone else from taking their spot as a plan provider.
When I talk about the Retirement Plan Tune-Up (the legal review for plans for only $750, cheap plug here), I always talk about the client who asked me to do one for them. Plan was safe harbor 401(k) and administration looked good. On this $14 million plans, broker was being paid about 60 basis points, which was pretty high for a plan of that size. When I asked for any plan education materials, investment meeting minutes, or an investment policy statement, I was told that the broker never provided them to the client. Let’s just say that based on my advice, the broker was replaced by a 3(38) fiduciary for about half the cost. Needless to say, this broker didn’t show value.
Showing value is one of the most important concepts in retaining clients.