Valuable Partnerships

The Catanella Institutional Consulting Group in Philadelphia, a member­ of UBS Institutional Consulting, used to employ traditional prospecting methods to find new clients, says Ken Catanella, senior retirement plan consultant. “A lot of us started in the business 10 to 15 years ago and remember what the model was to drum up new business,” he says. “It was cold calling, flyers and letters.” Then, retirement plan advisers began establishing centers of influence by creating “seminars, inviting the attorneys and the CPAs [certified public accountants] and hoping they would invite their ­clients,” he adds.

Catanella tried those methods but found “the quickest way to become successful in this business, hands down,” was partnering. “In our world working for a large, global firm such as UBS, it has proven to be successful.” In fact, he says, this model has succeeded in attracting $1 billion in new client assets to his group in the past three years.

What Catanella means by partnering is turning to the complex manager at UBS to ask for the names of private wealth managers who do that business exclusively—no work on 401(k) plans. Catanella says these advisers have a minimum account balance of $10 million to $25 million.

“The idea is to cultivate relationships with 10 to 12 financial advisers who don’t do retirement planning,” Catanella says. “They could be specialists in other areas, such as wealth management, private wealth, small plan business, Taft Hartley, foundations or defined benefit [DB] plans—but they don’t do, and want nothing to do with, the 401(k) business.”

To begin establishing a relationship in this way, Catanella says, make a wealth adviser well-aware of your qualifications. “Help him understand why you are the person he should be dealing with,” he says. “You have two clients here. You have that partner and the potential client, and you really have to sell both of them, not just one. Even if you lose the potential client in a finals presentation, or you don’t even get there, you want to do a good job, because the next time the wealth adviser calls, it could be to your advantage.

“He has to be aware of your experience—that you specialize in this business and your history of success, especially with other partners,” Catanella continues. “You want him to call up your partners and know your reputation and any awards you have won, such as the PLANSPONSOR Retirement Plan Adviser of the Year or the myriad others, not only outside the firm but inside the firm—that you have that recognition.”

Your potential partners in wealth management are unknowledgeable about the retirement plan business because they do not practice in it, but they likely know it is very specialized, he says. By reassuring them of your specialist skills and statistics—e.g., how long you have been practicing, the average size and tenure of clients, your fiduciary expertise and the percentage of your business that is institutional retirement plan consulting—and that you can answer any question a potential plan sponsor client asks, you can make them feel comfortable about starting a relationship.

What he does next is explain to these advisers that if they give him referrals and his group is successful in attracting new clients, it will share its fee with the wealth adviser for a period of time, Catanella says. He adds that these arrangements vary, but that wealth advisers are generally more than happy to receive the annuity stream.

Building trust with the advisers is also key, he adds. “We do zero individual business. No rollover business, no one-on-ones. ‘That’s all yours, my partner, and we want no part of the split.’ That’s important because we have seen teams on our side of the business that try to do everything—including wealth management, rollovers and estate planning. As a fiduciary, we view that as a conflict, and we do not think it builds trust.”

As a further way to win UBS private wealth managers’ trust, Catanella assures them that he will not pitch any UBS products or services.

Additionally, he tells the managers they will be invited to conduct “seminars with us, by themselves or with the recordkeeper. That will help them create a deeper relationship with the company because, by bringing us in to manage its retirement plan, it will lower the company’s liability and increase the private wealth manager’s value with that client.” By being present, the wealth managers can potentially pick up large participant accounts, if they are interested.

Catanella then asks the wealth advisers for the names of three to five companies where they “have a connection with someone of influence, such as the CEO, the chief financial officer [CFO], the head counsel or the head of human resources [HR].” The key, Catanella says, is getting to the right potential plan sponsor.

“We then look at the public data from the Form 5500s on the company to determine if it’s a possible candidate for our 401(k) consulting services,” Catanella says. Specifically, he is interested to see whether the plan has automatic enrollment and automatic escalation; whether it has the right share classes and what the investment lineup is; and whether it is working with an adviser or consultant. “Once you have done that, you look for what I call negative markers—things such as proprietary fund lineups, expensive share classes, no adviser, an adviser not acting as a fiduciary, low participation, no auto-enrollment and no auto-escalation,” he says.

Once he has done that, he writes a summary of his analysis of the retirement plan, which he gives the wealth adviser to go over with his client. He also asks the adviser to send the client his bio, to stress that he is a retirement plan specialist. “We want the adviser to tell them they are not going to be speaking with a generalist adviser but a very successful expert in this field who can give them some insight into their plan,” Catanella says.

If the client indicates that it wants to speak with the Catanella Group, the practice then sets up a conference call with it, where introductions are made and Catanella offers to send a free benchmarking report. Once he has that report in hand, for which the team contracts an outside firm, he schedules a face-to-face meeting to go over the findings.

Catanella says that, for retirement plan advisers working at large wealth management firms such as UBS, this approach is consistently successful. But, he adds, “the key ingredient is trust. It begins with building trust in the relationship, trust in the experience of the partner, trust in the process and trust in the guidance of the partner. If you do those things and you do them in steps, you will find that, over time, you will be successful.”

Art by Summer Lien