Retirement Plan Business
22 MIN PODCAST
Greg Mendoza saw the opportunity in retirement plan consulting at the start of his career 20 years ago, when he was one of more than 100 candidates in his training class. “What differentiated me is everyone else went to the phone book,” he said. “I went to business owners.”
It wasn’t only that he disliked making cold calls to homeowners. Most importantly, he noted that everyone else was focusing on them. So where his classmates zigged, he decided to zag. “Business owners were everything I hoped they would be,” he said. “They have all the needs in the world and really no time to help themselves.”
Today, Mendoza runs a successful wealth management practice and also specializes in the retirement plan business, serving about 80 401(k) plans in 250 households, representing a total of about $5 billion in assets at UBS in Hartford, Connecticut.
He encourages other advisors to consider the retirement plan business. Mendoza says resources such as accountants, third-party administrators and others can help advisors immerse themselves in the lexicon of retirement planning. “There’s a misconception that someone needs to go into retirement plans and immediately be an expert,” Mendoza said.
In this podcast, Mendoza shares how he got into the retirement plan business, how the wealth management business helps grow the retirement plan business (and vice versa), and how a Pink Floyd lyric describes why advisory practices need to be efficient.
Speak the language
Anytime you venture into new territory, your experience is greatly helped by knowing at least some of the local language. “It starts with trying to understand the vernacular or jargon that’s unique to the 401(k) space,” Mendoza said.
Then, knowing what a 401(k) consists of, as well as who your record-keepers and administrators are and what they do, helps provide what he calls the “primary ingredients” in retirement planning. Over time, an advisor can identify what strengths or weaknesses those parties have, and whether there is a potential opportunity to make a conversion.
Mendoza began by targeting businesses in a dozen ZIP codes in the Hartford area. “I would start my initial phone call with, ‘Listen, I’m a retirement planning consultant. … May I conduct an analysis for you?’ Most people would say yes.”
HR’s virtual arm
Company human resources representatives often welcome assistance, Mendoza said. “So, we’ll tell them, ‘We’re going to be a virtual extension of your HR organization. We’re going to help you. Consider us an advocate of yours, and we can liaison between all your plans’ parties.’”
Mendoza says his firm then sets about providing white-glove service that helps HR throughout the lifecycle of a company’s 401(k), the changes to that plan and communications to keep employees informed along the way. “And once the client is on-boarded, we provide quarterly reviews, investment monitoring,” he said. “We provide fiduciary education, participant education, and provide them a year in review.”
In its wealth management business, Integrated Wealth Management follows a 12-4-2 service model. That’s 12 monthly calls and four quarterly reviews (with two reviews being in person). “We find there’s a common element in our most successful relationships,” Mendoza said. “Our best relationships are managed because expectations are known upfront, and then can be continued to be met on an ongoing basis.”
That formula came out of its work with Supernova Consulting and underpins the firm’s overall focus on efficiency and productivity. “We use mutual funds, ETFs and a handful of stock sleeves,” Mendoza said. “We try and keep it relatively simple … because you can know your funds and your vehicles very intimately.”
He also suggests that advisors avoid confusing activity with efficiency: “In the immortal words of Pink Floyd, ‘How can you have your pudding if you don’t eat your meat?’”
The chicken and the egg
When Mendoza was calling those business owners in that first batch of ZIP codes, he realized that, over the long run, these same clients would not only need 401(k) services, but that they could also need wealth management services. “To me, that was utopia,” he said. “So, whether you have the chicken (which is the client) on the private client side, or you have the egg (which is the 401(k) plan), there’s a lot of opportunity to go back and forth and develop additional business opportunities.”