Growing Your Advisory Practice with Micro and Small Business 401(k) Plans

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As a financial advisor or tax professional, prospecting small business owners can seem like more work than it’s worth. Much like yours, their calendars are full—and they might not be prepared to learn about 401(k) plans and the added administrative tasks involved in sponsoring one. However, the small business market is not only underserved when it comes to retirement plans, but it’s become a focus for legislation aimed at helping provide employees of these businesses with a vehicle for retirement savings—so it’s definitely worth including in your sales strategy. There are more than a few reasons to make small business 401(k) plans part of your action plan for growing your client list this year.

Reasons for advisors to prospect small business 401(k) clients

Employees of small businesses lack access to retirement plans

The most popular form of retirement savings for US workers is through employer-sponsored plans like 401(k)s and IRAs. Yet small businesses and their employees are often lacking in the tax-advantaged retirement plan department. Many Americans who spend their careers working for small businesses are unable to stop working when they reach retirement age or can’t afford their well-earned years of retirement.

The passage of SECURE 2.0 and other recent state legislation requires many employers take steps to set up an alternative qualified plan or select a state-run IRA—and many small businesses need to consider sponsoring a retirement plan for the first time. This could make expanding your client base into the small business 401(k) market a timely and beneficial win-win for you and potential or current clients.

Read more: Growing Your 401(k) Business: Writing Effective Prospecting Emails


Partnering with the right 401(k) plan recordkeeper can help grow your business

You may not be a 401(k) expert, but working with the right administrator and recordkeeper means you shouldn’t have to be. Some recordkeepers do most of the heavy lifting when it comes to getting clients set up and running their plan. By advocating for a tax-advantaged plan, you can give many small business owners a head start in exploring how a 401(k) plan might benefit them more in the long-run compared to other options or not offering a plan at all.

Partnering with the right plan administrator and recordkeeper can make it easy to learn more about the specific aspects of the small business 401(k) market, and online resources can help you to be the guide your clients need to get started. The right partner will ensure the plan’s administrative tasks are handled with your client. 


Use retirement state mandates to have timely discussions with clients about starting a plan

With all the recent changes in legislation and many more states taking steps towards setting up their own retirement state mandate, you’ll likely need to spend less time drumming up interest in sponsoring a retirement plan. Instead, you can focus on targeting potential clients who have employees and help them understand the many ways their business and their employees may benefit more from a 401(k) plan.

As an advisor, you can cover how 401(k) plans not only offer more plan features, but also feature several different ways for both employers and their employees to contribute to the plan. And with overall financial wellness becoming a focus for employees who prioritize more holistic benefits packages, you’ll be able to offer the more flexible 401(k) plan as a solution to state mandates—one that also offers employers and their employees more benefits than they’d have with an IRA.

To learn more about the states that are mandating retirement plans, and to keep up-to-date on upcoming deadlines and changes to the list of states passing legislation, visit our State Mandates Resource Center.



View State Mandate Resources


401(k) plan options for small businesses

When talking with micro to small-sized business owners about sponsoring a retirement plan, you may run into the argument that their business is too small—but the missing piece to the puzzle is a 401(k) plan designed specifically to support the needs of small businesses. Larger companies with 100+ employees may have the budget and staff to tackle the wide range of administrative functions and more complex day-to-day plan tasks due to their size and number of participants. In contrast, many small businesses avoid sponsoring a 401(k) because they feel they simply don’t have options that make sense for their smaller scale.

You might also be interested in: Five Ways to Prospect 401(k) Clients

The key to expanding your book of business with smaller and even micro-sized businesses is partnering with a plan administrator and recordkeeper that understands and supports the unique aspects of working with smaller companies and their employees. At Ascensus, we’ve been partnering with financial advisors to bring retirement savings solutions to clients for more than 40 years. With a wide variety of retirement plan options available, our goal is to help more savers save more by connecting clients of all sizes with flexible plan options that fit their needs.

If you're ready to start growing your book of business with 401(k) plans for micro and small-to-midsize plans, we offer valuable resources for you to use in conversations with prospects and clients. Visit our Advisor Toolkit to find downloadable PDFs with more information about growing your book of business, as well as a blog full of educational materials for advisors and business owners alike.



To speak to one of our small business 401(k) plan specialists, give us a call at 833-893-3233.