401(k) Specialist Issue 1 - 2018 - 22

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As an advisor, it's easy to watch the drumbeat of growth in
401(k) assets and plans without worrying too much about
" what's next? "
However, experts point to niche markets and their importance
in creating referrals and loyalty. How can 401(k) advisors
best target their resources and expertise to capitalize on
a particular segment, while also ensuring scalability?
Jairo Gomez says niche markets create a
special type of advisor-client connection.
As director of retirement plan services for
Hanson McClain, he's seen a " race to the
bottom " in terms of who's cheapest or what
they offer; however, a niche market creates
trust and loyalty not always seen with traditional
clients constantly on the lookout for
the next best deal.
Gomez is bilingual, which helped extend
his firm's services into a new market seven
years ago that includes not only Hispanic-owned
businesses, but also English-speaking
company owners who have Hispanic employees/participants.
He estimates that 35 percent
of his current business is tied to the Hispanic
community.
Understanding the niche demographic is
critical, despite what an advisor may think
he knows going into a particular market, says
Gomez.
" It wasn't a catch-all just because I was
a first-generation Hispanic from Colombia
who spoke Spanish fluently. Not only are
there different dialects between Puerto Rico,
Mexico, Spain, etc., these are different cultures,
which affect how they approach saving for
retirement. "
Gomez points to the wide variation where
some cultures may be more educated and
comfortable with financial markets. But in
other countries, they see corruption in banking
and financial institutions, and are therefore
understandably wary.
For every demographic, he says an advisor
must transition from perceptions to the goal
of how to help them save more. For some of
ISSUE 1 2018 | 401kSpecialist.com
his clients, a CPA might have directed them to
set up a retirement plan, but the client wasn't
always sure why. So, he starts with determining
the POP-or Purpose of Plan.
" The Hispanic community is very good at
saving, but many are not fond of government
or banking because of experiences in their
countries of origin. I had to work to make
sure that they feel comfortable with a particular
savings vehicle. For instance, credit protection
is huge to this community, because it
means no one can run off with their money. "
With any niche market, Gomez says it's
critical to recognize " who " they are.
" Whether it's Hispanics, or LGBT or attorneys...
what are their buttons? What concerns
them more than anything else? "
Gomez cites the personal touch, since
traditional marketing strategies like email
webinars often don't get traction in niche
markets because retirement outcomes can be
so different.
" In the Hispanic community, a participant
might eventually save $50,000 to $100,000 in
a retirement account. That's not considered
very substantial for some U.S. workers but for
them, they can take that and retire comfortably
in their home country. "
Scalability is as true with niche markets
as it is with a traditional clientele. Areas such
as education, administration, fiduciary and
liability are just as important, but advisors may
approach them differently based on client interest.
However, as long as you have processes
and procedures in place, says Gomez, you can
replicate everything across the board for any
market.
Some industry niches are obvious and
solidly in the professional, white collar arena
(think IT and medical practices). But others
require a bit more digging, like transportation,
leisure and hospitality and construction.
For these areas, as many advisors are aware,
the participation rates are often affected by the
seasonality and sometimes transitory nature of
the work, which disqualifies some workers but
still, they're markets that deserve attention.
" Transportation is rife with inadequate
contribution and deferral rates, " says Jamie
Linkowski, president of Pittsburgh's PRIMESolutions
and a financial advisor to the industry
for more than 30 years.
He says that while truck driving is the No.
1 occupation in 40 states, and in the top three
of the remaining 10, its employees have a lower
than normal retirement savings rate-just
54 percent, according to ADP's Retirement
Savings Paradigm study.
He notes that it has been " notoriously "
lacking in retirement benefits and that participation
is consistently low.
To illustrate, Linkowski describes what he
calls an early " oh no moment " with a truck
driver.
" The driver had to quit his job just to
access his retirement savings, and we did a root
cause analysis, " he says. They found there was
a scarcity issue on top of a lack of retirement
readiness-a situation they soon discovered
was prevalent across the trucking workforce.
He points to general data that shows that 57
percent of Americans don't have an emergency
account and half can't afford a $400
immediate expenditure.
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401(k) Specialist Issue 1 - 2018

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