I prospect for clients in the individual-company 401(k) investment advice business. I don't have fancy PowerPoint presentations or glossy brochures. I don't even have a business card. I build my entire prospect presentation by using a company's 401(k) retirement-plan menu. Before I meet with the prospective client, I need two pieces of information:
One, a copy of the complete company 401(k) retirement-plan default menu of mutual funds is a must.
This information can be accessed by getting the login user name and password for the company 401(k) retirement-plan provider website from the prospect.
Second, a copy of the prospect's most recent company 401(k) retirement-plan account statement is required.
This information should be available on the company 401(k) retirement plan provider website. (You may have to request login assistance or get a statement from the prospect.)
My prospect presentation is built around the investment performance gap: This gap is calculated by measuring the difference in investment performance between two groups of company 401(k) retirement-plan mutual funds.
The first group is the default company 401(k) retirement-plan mutual fund menu options. The second group includes the mutual fund options that the prospect currently owns on that default company 401(k) retirement plan menu.
Fund Focus
Licensed investment advisors know there are only a handful of good mutual fund options on any default company 401(k) advice menu. But that is new information to individual company 401(k) retirement-plan participants.
Most individual company 401(k) retirement-plan participants I meet with do not own any of the best mutual fund options available to them.
Buy-and-hold, asset allocation, diversification, target term, life cycle, and auto enrollment continue to fascinate investment professionals. Individual company 401(k) retirement-plan participants don't have the time, expertise or the inclination to take advantage of these tools.
