Listen in as Sharon Pivirotto shares with us strategies and insights for getting started and succeeding in the 401k market. Also learn about Sharon's website 401kBestPractices.com and the excellent resources it has to offer. Sharon is a veteran with 25+ years experience in the finance business. She has a passion for research and helping advisors in the 401k marketplace.
Ed Dressel 0:08
Welcome everybody again to another session with RetireReady Solutions, "Grow RetireReady Clients." I'm excited to have in Sharon Verado with us today working in the 401k world. Sharon, welcome. Nice to have you.
Sharon Verado 0:21
Thank you. It's so great to be here.
Ed Dressel 0:23
Pleasure to have you. You have a little bit of a different approach to the 401k market and help in the marketplace. Before we get there, why don't we let people know how did you get to where you are at today? You're helping advisors but tell people kind of the path of getting where you're at?
Sharon Verado 0:38
Sure. Absolutely. I started in the financial industry as an Edward Jones broker knocking on doors to open up my first office. It was pretty exciting. And I can't say that I miss it--the knocking on doors part anyway. But after about seven years with Edward Jones, I left because I wanted to move more on the education side of the financial industry than the sales side. As an investment broker, obviously, there's a lot less education that goes on. And so I ended up, shortly after leaving Edward Jones, teaming up with a 401k advisor in the south side of Pittsburgh. And it didn't take long actually, after working in his practice for about a year. I realized that there is so much that advisors need to understand on the 401k side that I've personally had no knowledge of, or no training of. Edward Jones was fantastic on the investment training--one of the best firms out there my opinion on on sales and investment training. But at the time, they had zero training on how to sell or service 401k plans. And it's a whole different animal, regulated by a whole different set of compliance and regulations that you really have to know. So what we ended up doing was forming a separate company called Financial Service Standards. And in that company, the whole purpose of it was to teach advisors that might not understand the regulations around 401k plans, how to sell and service properly the qualified plan market. So that was hugely successful. We created a training program that we had accredited through Robert Morris University in Pittsburgh, just right down the road. And we offered several classroom training programs eventually put it online and offered some templates and tools practice management type documents to help them in building out a solid service process. And in 2013, we sold that to FI 360, a local Pittsburgh competitor. A lot of that information was actually built around to the regulations that they teach so well in their training programs. So that's kind of three quarters of my journey. The last quarter is because after I sold to FI, 360, I started my own blog, basically 401kbestpractices.com. And on that website, I continue to help other advisors that are new to the business, or at least kind of getting started in the 401k market, how to understand the sales cycle, the marketing aspect of it, and more importantly, in my opinion, the service side of it.
Ed Dressel 3:05
So when you're talking to a 401k advisor, and you've highlighted a couple of things, what are some of the key differences that you see in the 401k marketplace that an advisor newer to it may not get or they need to be aware of before they start moving forward in the industry?
Sharon Verado 3:21
ERISA. The Employee Retirement Income Security Act. I mean, it's it's a pretty hefty piece of legislation that gives any company that wants to set up a retirement plan some pretty detailed guidelines for how that plan needs to be set up and managed. And if an advisor doesn't understand that, if all the training that they've had up till that point is on the investment side, they can actually be a detriment to the plan sponsor. Understanding what those compliance rules are for setting up a plan, for monitoring service providers investments for participant communications--all of that is extremely important. And so I always typically tell plan advisors in that 401k space just getting started to please, please, please start with education. There are so many training programs out there for advisors. And in fact, there is a retirement planning advisors training, certification and designation guide that I put together. I've updated it three or four times over the years as new programs come available. I believe at this point, there's probably 26 or 27 different programs out there that will help an advisor understand what the regulations are and how to really properly service the 401k market.
Ed Dressel 4:32
Are there a few things that that when you look at the industry and see what advisors are doing you go, "They need to get educated before they get involved"?
Sharon Verado 4:39
I know in prospecting and whenever I was prospecting and we'd go into a plan that had an absent advisor--an advisor that hadn't helped a committee set up a proper investment policy statement. They didn't have a compliance file in place. Wasn't teaching them about fiduciary regulations and documentation for how they selected their service provider--there are so many things that you can see an advisor does wrong--when they simply don't understand what the regulations are and how to best help plan sponsors. So I don't know that there's anything specific that stands out as a key thing advisors are doing today. I think it's just in general, an advisor that's not educated on the complexities and the regulations around managing a plan. It's evident when you walk into a plan, if a plan sponsor doesn't have an advisor that's educated.
Ed Dressel 4:39
So tell me a success story of something you've seen where you've brought in and helped educate an advisor on how to beat work in the 401k world? How to address the ERISA requirements and what differences it made in their practice.
Sharon Verado 5:40
When we first created training and tools for advisors, way back in 2006, and a lot of the key concepts and foundation of this hasn't changed much. But we created a document kit called the 401k Service Solution. And really what it was was a set of education guides to go out and educate plan sponsors on their responsibility in six key areas. It had a set of worksheets with it to help them document compliance in those six areas. And a sample summary report that they could feed back to plan sponsors that says, "Here are the steps that you're taking in order to demonstrate a proven processes in place in each of these areas." And that was something that we submitted to the Profit Sharing Council of America back when it first came out. And we actually won an award for the effectiveness of helping plan sponsors meet their fiduciary responsibilities. In order to actually submit for that award, we had to have kind of a baseline assessment before and after of the knowledge level plan sponsors had surrounding the regulations and what they were required to do. And then after having gone through that program over the course of the year and implemented the proper documentation, they basically filled out the same assessment survey to get a better understanding of what compliance they had in place and their understanding of the regulations and ability to meet it. And in measuring that there was a 70% improvement in the score of how plan sponsors felt that they were prepared before learning the information and putting the documentation in place versus after. So winning a Profit Sharing Council of America award was, in my mind, one of those huge case studies, if you, if you will, on how effective it is to actually have education and documentation in place on the part of plan sponsors.
Ed Dressel 7:35
So you left Edward Jones, because you were passionate about education?
Sharon Verado 7:39
Ed Dressel 7:40
Pull that apart a little bit. What aspects of education? What were you looking for? What did you see as missing in the industry? I mean, you took a big risk, you're probably doing okay. And starting in a new sector that doesn't have a lot of emphasis, starting a new business. That's a big risk. What were you so passionate about?
Sharon Verado 7:58
Well, it's funny when you think back on your early years and in your career, and how you might have done things different. I remember every client that walked into my office, I had them sit down, and I pulled up the whiteboard and drew the pyramid. And I probably spent more time going over the different types of investments risk and reward and all of that, than we ever spent talking about, you know, the actual investing component to it. Because in my mind, and I think this really goes back to, Ed, the reason that I got into the financial industry, what got me into the financial industry in the first place. When I was stationed over in Kuwait as an active duty soldier in the army, I read a book called Wealth Without Risk by Charles Givens. A great book at the time, not 100% of the information in that book is sound. I would say there were some insurance concepts he taught that, that were really not great. But 90% of what was in that book was just so enlightening to me as an 19 year old. I said to myself, "When I get out of the military, I want to devote my time helping other people understand some very basic concepts as it relates to investing that can make a huge impact on their financial life, on their financial future." And so Edward Jones was the firm that I sought out after doing a lot of research. And they hired me and it was a fantastic firm to work for. But at the time, there was a lot of emphasis on specific types of investments that we wanted to offer clients, and not so much the holistic approach to financial planning. And that's really kind of why I ended up leaving because I wanted to take a more holistic approach to being able to talk about a wider range of products and topics rather than simply the specific investment part of it.
Ed Dressel 9:49
So when advisors think about educating participants today--I literally over here have a five inch stack of papers on participant education. Various articles have been written in the industry and it is all over the map. It's amazing what gets talked about in this industry. When you think of participant education, what are some of the key elements that somebody should bring to the room when engaging participants on a group level or on an individual level?
Sharon Verado 10:13
Yeah, that's a great question. I think one of the key things advisors need to think about is the demographics in the room. I just read an article recently by Bernstein that talks about different personas that a lot of participants have. There's the capable or competent investors, there's the eager or young kind of unaware participants. And there's the more conservative or cautious savers. And I think in educating each of those different personas, you really have to take a more targeted approach. While everybody might be in the same plan working at the same company, not everybody's going to resonate with the same type of education or topics or need the same thing. And so being able to go in with targeted communications, with specific communications, this is going to help them understand where they're at, and where they need to be going forward. I think that's what I've seen and found to be the most effective is really kind of drilling down to the, to the numbers to understanding risk to understanding how inflation impacts your investments. And then, you know, having personal conversations with participants. Not just in mass--I mean, it's great to have a group employee meeting, but being able to sit down one-on-one with participants and really address their questions, has been what I've seen to be the most effective at really moving the needle for participants.
Ed Dressel 11:36
How do you see the industry moving forward with all the moving parts today?
Sharon Verado 11:41
Well, on the participant side, I think it's more and more important that plan sponsors look at offering advice or access to advice. A study I read recently by Charles Schwab talked an awful lot about how the confidence level of even the most sophisticated investors is not as high as it used to be. And in this economy, I mean, you can't, you can't really blame them, right? I think everybody's a little on edge and a little uneasy, and having access to advice is one of those central things that I think plan sponsors need to give serious consideration to.
Ed Dressel 12:15
For a seasoned 401k advisor, do you see places where the services you provide would help them?
Sharon Verado 12:23
Yeah, for a typical advisor, I would have to move away a little bit from the participant side of it. But one of the things I find a lot of advisors look for--or lack--so to speak is on the marketing side. For example, a solid drip program, because we know that the sales cycle for getting a new 401k plan is a long one. It's--relationship business plans don't make decisions overnight on this and having something to be able to drip on them or keep in touch with them and communicate regularly, specific to 401k plans, is essential. And there's not a whole lot of that out there in the industry right now. So on the 401k Best Practices website, there is material to help even the seasoned advisor keep in touch with prospects that they bring into their pipeline. It's called the prospect drip program. So that's just one example of some of the material that's available on my site to help advisors that have been in the industry and new to the industry as well.
Ed Dressel 13:24
So you mentioned in the opening, you have a blog, Sharon. Tell me a little bit about the blog you've published and highlight a couple items out of that.
Sharon Verado 13:32
Yeah, sure. On the blog, there's, there's really kind of three areas to 401kbestpractices.com. One is articles that are published pretty regularly, and the majority of them help advisors on the marketing and the sales side. I think that's one of those things with social media being an ever evolving and ever changing concept. There is always new developments and new things that advisors can learn on how to position themselves as a 401k specialist and bring in leads proactively and passively as well. So there's a lot of free content on how to grow a profitable 401k practice. There's also a lot of content on how to service properly your 401k practice from, you know how to run an effective annual plan meeting, quarterly meetings, building a unique service process, and how to manage your practice through efficiencies. So it's kind of a labor of love. As I hear advisor feedback and questions come through, I try to tailor the content for that. There's also a resource section that advisors can sign up for that gives them some case studies and worksheets and downloads and things that they can access to use in their practice. And for those that don't necessarily have access to a robust set of services through their broker dealer there's also a template library with some practice management templates advisors have found helpful In servicing and growing their practice as well.
Ed Dressel 15:03
So you give a lot away for free on your blog. What are you selling?
Sharon Verado 15:08
Yeah, I think well, I give most of it away simply because it's kind of the nature of how I was raised. I think my former partner used to say stop giving away the farm. But yeah, the things that I'm selling, they're really, that's the practice management templates. I have trademarked the term for 401k Quarterback. And so I have a 401k Quarterback subscription program. Anybody that joins that subscription program becomes an official 401k Quarterback. It's a great little marketing term they can use as well, but it gives them access to a full library of social media, email, blog posts, one sheets, worksheets, templates, checklists. If you can imagine it on the sales and marketing side, or the service side is probably in the library. So that's really the only product that I have on the side is that template library.
Ed Dressel 16:01
Well, I wish that library was available for my business. I think that would be would help me with a lot of things that I have problems with. And that's like, get the message out, but not having a library to do it. So that's wonderful. So, anything else?
Sharon Verado 16:15
The only thing I can really think of that I offer on the blog is kind of a resource review. I tend to be one of those people that spend a lot of time online, looking to understand what's out there. And more so from the side of being able to answer questions for advisors. So when advisors come to me and say, "Sharon, what resource should I turn to for RFPs, for benchmarking, for investment analytics, for targeted communications?" I'm able to point them to a resource review where I've done an interview and learned about that product and can give them kind of an independent, objective opinion. For example, the the interview that you and I did, where we talked about the TRAK resources that I thought was so fantastic. I've shared that link to that several times since we did that interview. But that's just kind of my way of one, keeping up with the market and two, being able to add value to advisors that are looking for help.
Ed Dressel 17:10
Well Sharon, I appreciate you taking the time today. It has been great to interview you. For those people that didn't write it down 401kbestpractices.com. I think it'll be a page that I look at quite often. And I wish you the best in your endeavor to help advisors help participants towards retirement readiness.
Sharon Verado 17:27
Ed, thank you so much for having me. I really appreciate it.