With only 20 percent of small businesses offering retirement plans, financial advisors are missing out on a lucrative opportunity.
“Any universe where you have 80 percent that don’t have a plan and 20 percent that do, I believe that 80 percent is a great target market and a great opportunity. Don’t ignore it,” said Tom Donnelly, regional vice president of sales at The Principal Financial Group. “A well engaged, thoughtful, sincere advisor will dominate that other 20 percent. If an advisor knows what he wants, knows what he is looking for, knows what he is willing to offer, there is a ton of opportunity to talk to and the hit ratio is pretty darn good.”
Only 28 percent of companies with 10 to 49 employees offer a 401(k) plan, compared to 79 percent of companies with 200 to 499 employees, according to The Principal report. These companies offer 401(k)s, profit sharing plans, Savings Incentive Match Plan for Employees of Small Employers (SIMPLEs) and Simplified Employee Pension plans or SEPs.
According to The Principal Financial Group report, “Business Owner Market Study: A Balancing Act—Priorities vs. Plans,” 10 percent of small business owners plan to add a retirement plan in the next 12 months and over 48,000 small retirement plans are expected to change service providers.