Plan Prospecting Tools only show you part of a Plan’s problem

As a retirement plan provider, tools like Brightscope, fi360, Fiduciary Benchmarks, and FRA Plan Tools among others, are great resources to prospect prospective clients.

Thanks to the information provided on the Form 5500, these tools can let you know about the costs of the Plan as well as many of the potential issues with the plan such as a low participation rate and whether the Plan has a proper bond.

These reports are not the Holy Grail; they are imperfect tools because all they report is what appears on a Form 5500. If there are issues with the Plan that don’t show up on the Form 5500, you won’t know about it.

I remember my old law firm scored an 85 with their 401(k) plan on Brightscope; it’s actually still the same score. The plan had low fees and it had a generous safe harbor/new comparability contribution of 5% to non-partners.  The eligibility was only 3 months. The problems with the Plan when I was there was that the plan had no financial advisor on the Plan. The plan’s investments weren’t reviewed for 10 years, there was no investment policy statement, and plan participants weren’t getting any investment education. So the major issues that the plan suffered from would never show up on any of these plan-prospecting tools.

These tools are like problems with a car, it only shows you what’s visible and if you really want to know what’s wrong with the plan, you will have to lift up the hood. So just stating to prospective clients that you’ll be cheaper than the incumbent provider, get the big picture from the plan sponsors and what maybe wrong. The only way you’ll find out the full story of what’s wrong with the Plan is when you have the plan documents, valuations, and fiduciary materials reviewed. Then you get the full picture and then you can hammer home the point why you are the right fit for a client.

Prospecting tools like Brightscope are like golf clubs. Consider them the driver, but you need woods, irons, and a putter to win the hole.

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