- 8,707
Just as a way to add more info. You do not need a securities license to set up a 401K..There are a couple of carriers that offer non-registered Group Variable annuities for 401K and 457s.
Just as a way to add more info. You do not need a securities license to set up a 401K..There are a couple of carriers that offer non-registered Group Variable annuities for 401K and 457s.
- 393
Curiosity, how big of a group does this take to make worth your time? Doesn't fit into my niche regardless of if I can sell it or not but would like to know.
thx
- 2,455
I would think the fees on group variable annuities would be on the high side.
- 10,589
Its state specific.
- 393
I wouldn't see marketing 401k's to a small group in todays market making any sense. Most if they have had one are getting horrible participation unless the employer is dropping and in my experience sitting down with owners when we even bring up the word 401k they usually cut me off to tell me they have absolutely no interest in that....which leads into my presentation for annuities/UL list bills even better!
I just couldn't imagine wanting to market this licensing requirements right now, you cant have that much demand to throw money into a burning fire!
I just couldn't imagine wanting to market this licensing requirements right now, you cant have that much demand to throw money into a burning fire!
- 10,589
They are. I just recently dealt with a group that was paying 2.5% plus investment related fees; I have seen fees as high as 3% before on group variable annuities.
Compare that to a 401K which would be around 1%-1.5% depending on asset size.
If the employees ever saw a comparison chart of the same investment performance over a 20 year period they would be livid over not having the 401k.
Plus most group annuities do not have any riders available like an individual VA would; but you can put an individual VA with any rider you want on a 401k platform.
- 393
That's some hefty fees! Only winner in that deal is the ones collecting fees.
- 10,589
Actually I do very well in the small group 401K market.
I do a lot of NQ plans too, but mainly for the execs & key employees.
A 401K is more marketable, especially in the white collar market (which I mostly work); a group annuity or UL is harder to market to people who have had a 401k before.
Most employers are adverse to 401Ks because they know that their are admin fees to go along with it.
They also hear these "horror stories" about how the ERISA code is a nightmare and that its impossible to keep up with and comply.
There are also owners who believe that they have to contribute a match if they have a 401k at all.
All of this is BS.
If the advisor knows what they are doing its a seamless process most of the time.
To be honest there are a lot more restrictions with Group Annuities than there are with 401Ks.
If you go with a reputable carrier & TPA (and one that is competitive in the small asset market) then they will make staying ERISA compliant seamless as well.
Lower fees, more choices, more flexibility; its not a hard sell once properly explained.
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Thats what you get with group VAs; granted I have found plans with lower fees, but they are almost always higher than what a 401k could be.
You are just doing FAs & UL, so you dont have to worry about the fee argument, and in a way have an advantage when competing.
While on the surface, a start up 401k plan might seem like its not very profitable; but once you get into it you learn that it can be if worked correctly.
I usually load the comp up on the contributions and keep it small on the asset size. This creates better trails for me and still keeps the fees low.
I usually find that the owner & an employee or two have qualified assets sitting somewhere that can be thrown into the plan (which boosts comp).
On groups that size I always do the enrollment one on one with each employee. When helping them with asset allocation and contribution amounts I basically do a mini financial planning session with them; and most always get individual insurance business out of it.
And at least a few of these small groups will be big one day. And having a big group in 10 years is certainly worth a small commission and a small amount of time today.
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- 1,271
I see confusion going on here.
Hey COInsguy, do you even know what a group annuity is? Have you ever seen an actual group annuity policy?
401k is just an IRC. It can be funded with either mutual funds, group annuity etc.
Hey COInsguy, do you even know what a group annuity is? Have you ever seen an actual group annuity policy?
401k is just an IRC. It can be funded with either mutual funds, group annuity etc.
- 2,455
From what I gather, a group annuity is a single policy for a group. How it works I have no idear. What place it has in our work I also don't know. Wouldn't mind a simple explanation though. I'm here to learn.
