Are you looking for new clients? How would you like to tap into an underserved group of over 23 million people? Your next client may be someone you already know like your mail carrier, your local firefighter, or your child’s teacher. Public-sector employees are one of the largest groups of American workers underserved by financial advisors. A recent study by the TIAA Institute found that only 21% of state and local employees had met with a financial planner in the last 3 years.
There are almost twenty million state and local government employees, more than half of whom work in education, and more than four million federal government employees including civilians and uniformed military personnel.
These workers serve us and our communities every day, and they deserve the same high standards of care and advice offered to high-net-worth or private-sector employees. Reaching this unique population will require a unique approach grounded in specific knowledge. The attitudes and preferences of public employees can be quite different from those of their corporate counterparts—and government retirement plans are very different from typical 401(k) plans.
Here are eight suggestions for how advisors can attract and retain public-sector employees as financial clients while encouraging word-of-mouth advertising and referrals.
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- As an advisor, you first need to understand who public-sector employees are and how they differ from private-sector employees. Specifically, they often like the security of knowing they have a job. They tend to place a high value on job stability (and are willing to put up with bureaucracy in exchange for this security). Be aware of these values when you engage them as clients.
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- Provide a service and do not push too hard for the sale. Public-sector employees are often reluctant to work with for-profit companies. Be prepared to provide them with more than merely the products you sell. If you are pushing products, they will see you as a for-profit enterprise, which many government employees find noxious. Remember that the sale must be a solution to a problem. Be sure they understand the solutions you’re presenting.
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- Understand their pension system. Whether you are working with federal, state or municipal plans, you can differentiate yourself by first reading their plan documents—and you can become the person to whom they direct their questions. (Don’t worry, reading a plan document won’t kill you—I have an employee who has read hundreds of them and is doing quite well). Highlight the parts of the plan that are specific to retirement planning and be sure to memorize the key aspects. If you can answer their questions about their pension plan, they will know you are serious about helping them.
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- Know the nuanced differences between the defined contribution plans you will be working around (including 403(b) and 457 for state and municipal workers and the Thrift Savings Plan (TSP) for federal employees). On the surface, they make look like twins, but in reality, they are siblings with a strong resemblance.
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- Know the rules of access, which can differ by facility and are subject to change. The rules may be insurmountable, but understand they are posing barriers to other advisors out as well. Finding creative ways to work within the rules may give you a head start in connecting with hard-to-reach government employees. Find the gatekeepers and befriend them.
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- If you don’t serve any public-sector employees yet, consider beginning with direct mail marketing. You can find addresses through a public records request or online. Bring in an expert on Social Security (but be aware that some government employees do not participate in Social Security) or some other topic that will attract government workers.
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- Word-of-mouth advertising is golden, and this is especially true in close-knit government offices. Be sure to know your target market and their specific retirement plan. When you bring value beyond the products you are selling, the products become a solution to the problem. Public employees will appreciate the added value you bring to the conversation, and when they speak well of you it will result in referrals.
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- Your retirement illustration tools should include features tailored specifically to public-sector employees, including the ability to illustrate the benefits of their pension plans. Don’t make them go to a website to get a projection. Instead, aim to illustrate those projections with your software. This way, if they want to change their retirement date or otherwise adjust their retirement plan, you can illustrate it quickly.
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The Retirement Analysis Kit (TRAK) retirement planning software has unique solutions to help you serve federal, state and local government employees. With over 650 pensions plans (including pension plans for all 50 states and federal plans), TRAK can help you easily illustrate pension benefits along with TSP, 403(b), 457, Social Security and other assets. Don’t just take our work for it—hear from advisors already using TRAK with state and federal employees.
Our best wishes to you as you consider working with public-sector employees; they are a unique group who deserve quality retirement readiness education.
