Selling beyond the 401(k): three tandem plan types to help employers meet evolving needs
![Image: Selling beyond the 401(k): three tandem plan types to help employers meet evolving needs](png/thumbnail_selling_beyond_401k.png)
Did you know 94% of employers offer a 401(k) plan? Perhaps that's not surprising—they are one of the most popular vehicles for retirement savings. Yet as businesses face market volatility and intense competition for talent, many of them could be good candidates for other, sophisticated retirement plan solutions.
In a competitive financial advisory marketplace, you can't afford to wait for clients to ask about alternatives. Approach your small business clients now to explore their business, tax, and retirement planning needs—and proactively recommend options beyond their 401(k) plan. You'll build long-term relationships, produce happier clients, and fend off competitors, all while growing your bottom line.
There are many alternative plan types, but let’s look at three that could expand possibilities for your clients and prospects.
Cash balance plans
Cash balance plans, also known as hybrid plans, combine the high contribution limits of traditional defined benefit plans with the flexibility and portability of a 401(k) plan. Each eligible participant has an account that grows from both an employer contribution and a guaranteed interest credit.
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Employee Stock Ownership Plan (ESOP)
An ESOP gives employees an ownership stake in the company. The employer allocates a percentage of the company’s stock shares to each eligible employee. The distribution of shares can be based on the employee's pay scale, terms of service, or some other allocation.
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Nonqualified Deferred Compensation (NQDC) plans
NQDC plans are typically used by companies to actively retain and reward key employees, usually high-level leadership. There are four types of nonqualified plans:
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Start the conversation
Not all employers are ideal candidates. To find potential matches, evaluate your client roster and identify characteristics that match those above. Then, begin probing with some simple lead-ins to spark further conversation:
"I've heard from clients they are struggling to attract and retain employees. If you're experiencing the same thing, I have some ideas to help."
"Your 401(k) plan has been successful in getting all employees to save. I'd like to tell you about other retirement plans that can help owners and high performers save even more."
"I noticed many people in your 401(k) plan are maxing out—that's great! Did you know there are other retirement plans that allow certain people to contribute even more than what they put in their 401(k) plan?"
"I have several ideas that could offer tax advantages beyond what your company’s 401(k) plan can provide."
Get there with Ascensus
You don't have to be an expert in retirement plans to offer these solutions to your clients. Ascensus' independence, flexibility, and consultative approach make it easy to sell and implement these plans. We're here to support you in growing your practice, and we’d be happy to review your client lists to assess the best plan types for them.
Contact your regional vice president if you need any assistance.