3 easy steps to tap into the tax-exempt market

Only 49.4%1 of tax-exempt organizations have an advisor.
More than half of tax-exempt plans don’t. And they can use your help. So how do you stand out?

1. Prepare yourself for the conversation

Find out what makes tax-exempt plans different. Learn what types of questions to ask in your discussions with plan sponsors.

 

What should you ask?

Use these questions to start and guide your conversation. They’ll help you demonstrate your value.

Q1: Governance & responsibility as fiduciaries

Do you and other management and/or board members feel confident in the plan’s governance and responsibility as fiduciaries?
Often times, the management and board aren’t aware they’re fiduciaries. Do they understand their role?

Q2: Fiduciary due diligence

Who helps with your fiduciary due diligence?  Do you have a documented process in place?
Most tax-exempt plan sponsors are focused on their organization’s mission, they’re generally not fiduciary experts. Many believe their service provider is handling it.

Q3: Fee policy statement

Do you have a fee policy statement and review process in place?
It’s important to document guidelines for managing and allocating fees and expenses, and to consider whether the fees and expenses are reasonable.

Q4: Multiple service providers/legacy assets

Does your plan use multiple service providers or have legacy assets (assets held by former providers) with multiple providers? If yes, how do you coordinate administration?
Consider things like loans, hardship distributions, qualified domestic relations orders, small amount force outs and beneficiary designations.

Q5: Investment policy statement & review

Do you have an investment policy statement and review process in place?
We believe this is a fiduciary best practice, but many organizations don’t have an investment policy statement or a review process.

Q6: Education policy

Do you have an education policy in place?
Do you review it often and measure its effectiveness?
Is the plan sponsor consistent in providing direction? Having a policy is important, but it’s also important to make sure it’s working the way it should be.

Q7: Measuring success

Are you consistently measuring the success of your plan? How?
Generally, the goal of a retirement plan is to help employees get retirement ready. Does the plan sponsor know if the plan is helping employees achieve that goal?
12017 Plan Sponsor Council of America (PSCA) 403(b) Plan Survey

Who should you target?

Remember to speak their language.

Don’t call them companies, call them organizations. Or, in the case of private schools, call them institutions.

Next: Identify tax-exempt opportunities >

2. Identify tax-exempt opportunities.

Have you considered?

 

Hover here to see the opportunities

Have you considered?

  • Making connections from your current book of business
  • Using your knowledge and local contacts to make connections
  • Using LinkedIn to help you find prospects
  • Pulling 5500 reports and looking for key things that are specific to tax-exempt plans
Learn more in this 3-minute prospecting video:
Next: Approach the prospects >

3. Approach the prospects

Now that you're ready, request a list of prospects in your area:

Request a list of prospects
Once you've requested a list of prospects, see these other resources:

Use this template to send an email or call your prospects today.

Request survey results from the PSCA 2017 403(b) Plan Survey to get deeper insight into the issues your clients and prospects are facing.
Visit the tax-exempt benchmarking tool and use it to let your clients know where they stand - and what they'd need to do to measure up!

Important Information

The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment advice or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.
Insurance products and plan administrative services provided through Principal Life Insurance Co., a member of the Principal Financial Group®, Des Moines, IA 50392.  Certain investment options and contract riders may not be available in all states or U.S. commonwealths.
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