The MEP Revolution

Corollary: Advisers and vendors who start MEPs and do a good job overseeing them will grow faster than the competition.

Roughly four years ago, an adviser friend became entranced with MEPs. He thought they sounded cool and that they should play a big role in the future of his business. He wanted help thinking through the business model, thus beginning a collaboration we have both enjoyed immensely. His central focus was finding ways to transfer labor and headaches from employers to his advisory firm, or to vendors; he had identified an unsolved problem and saw an opportunity in building a solution.

Fast forward to today: this adviser signed up nearly thirty new clients in the past six months using a handful of custom-built MEPs. The moral of the story is that MEPs are the real deal-they have profound advantages and clients instinctively like the sound of them, and because of their uniqueness, MEPs make the sales process easier.

Another anecdote: In 2013, an adviser engaged a marketing firm to make outbound telemarketing calls. This firm is accustomed to spending fifty hours per month generating four to six appointments for an adviser. But using the Pentegra story centered around multiple employer plans, the telemarketer reports spending 35 hours to generate six to seven appointments per month. That’s an 86% increase in the effectiveness of cold calling, and the marketer specifically indicated that the MEP component was the reason, saying, “The messaging is very different from what employers are hearing” in the steady bombardment of calls that every plan sponsor receives.

One more story: An adviser with a relationship with a non-profit association was able to move the association to sponsor a 403(b) MEP for its members (one of very few such plans in the U.S.-this is an exciting and completely untapped market). This arrangement is too new, so the jury is still out, but at a minimum it looks as though this adviser will have a ready base of customers who will adopt right away, and will enjoy a pool of warm leads for years to come. The worst case scenario is that he’ll pick up six clients using the same amount of effort he would normally spend to get ten. The best case is that he will have 100 or more new clients within five years.

MEPs have been around for years (Pentegra’s flagship programs for financial institutions go back to the 1940s) but the notion of applying them to the broader retirement market is relatively new and MEP growth is therefore in its infancy. MEPs fit employers of all sizes, but offer the greatest value boost for smaller employers-roughly 80% of all retirement plans in the U.S. Yet MEPs today have perhaps 2% of the market. Expect that to change. If my opening prediction is correct—that MEPs will grow faster than the rest of the industry—MEPs have the potential to explode in growth.

And those who start them, grow them, and serve them faithfully will prosper.

Pete Swisher is the author of “401(k) Fiduciary Governance: An Advisor’s Guide,” a textbook for the ASPPA Qualified Plan Financial Consultant credential, and serves as National Sales Director for Pentegra, where he can be reached at pswisher@pentegra.com. 

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.