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While the popularity of large Defined Benefit (DB) plans has waned since the 401(k) was introduced in the mid-1980s, DB plans continue to meet the special needs of some of your best clients: high income earners with self-employment income or small businesses. You've probably been hearing something about "Cash Balance" plans in the past 5 years — they count too as one type of Defined Benefit plans.

We have analyzed the DB and Cash Balance (CB) plans we opened in 2017 working with Advisors, CPAs and through direct sales to clients and were amazed by what we found.

Surprise #1

A significant percent of our clients (25%) for Defined Benefit and Cash Balance plans in 2017 came to us directly, without the support of a financial advisor. These are clients who contribute on average, $149,500 annually to these plans.

The Cash Balance + 401(k) contribution was higher at $276,500 as these companies generally had 2-5 employees. Even then, 85-95% of the contribution is on behalf of the owner(s). The Defined Benefit contribution, averaging $135,800 is generally for an owner-only or owner and souse. About a third of the time, these plan sponsors add a one person 401(k) plan (that contribution is not included in these numbers).

And, while 32% of these self-employed clients live in California, a leading “gig economy” state, 25 other states as diverse as Missouri, Wyoming, Georgia and New Jersey are all represented.

Do you know how to find these high-income clients in your community?

Surprise #2

The average contribution for all clients soared: Our Defined Benefit clients, whether brought in by advisors or who came to us directly or referred by their CPA, averaged $144,750. This compares to averages under $130,000 in the past.

Cash Balance + 401(k) programs across all clients averaged $228,600 which means clients who came to us directly for a Cash Balance plan, without an advisor, were actually contributing more than those with advisors!

Surprise #3

Maybe this shouldn’t have surprised us, but, the better the economy, the more diversity in who is making money and can afford to put significant money into retirement plans. We have found in good years and bad, medical practitioners and consultants rank high – high in earned income and high in surplus cash flow. But this year, these two occupational groups each accounted for less than 20% of our sales. IT/software showed growth, and Real Estate and Construction Trades were back to pre-2008 levels.

Follow Our 5-Step Sales Plan

1. Prospect for DB Clients
   We can help you identify prospects among your clients and in your community.
2. Begin the Conversation
   Make your case with the right sales tools: sample letters, presentations, brochures. Need training? Click here.
3. Present an Illustration
   Try a personalized illustration for one client right now. The tax savings will say it all.
4. Contact Dedicated DB
   Our defined benefit specialists can help close the sale.
5. Gather Assets
   Open plans now for 2018 tax savings. Gather up to 50% of the contribution right away.

QUICKLINKS

• Illustration Request Form
  Get a customized client illustration
• 5-Step Sales Plan
• Ideal Clients 
  Handy reference guide to typical client profiles
• Sales Tools
  Sales and marketing materials at your fingertips