National Brand, Local Identity

Finding clients for retirement financial services has never been easy. Even when most people were covered by defined benefit pension plans, they didn’t always appreciate what they had — until those precious DB plans began to disappear. When they found themselves having to grapple with the same complex issues of longevity, predictable income and market performance that pension actuaries got paid the big bucks for, they realized they needed expert help. The financial services industry grew rapidly to meet the challenge.

Now the balance has started to tip the other way. There are more and more advisors out there chasing the same or a dwindling number of prospects. So advisors are having to spend more time and effort — and money — just to stay in the game. They can use a little help, too.

Civilizing 403(b)

Veterans of the 403(b) business refer to it as the “Wild West,” that time when selling tax-deferred annuities to teachers was largely unregulated, transaction driven, and pretty much the only game in town. 

But times changed. New products and new regulations altered the 403(b) market. The attendant confusion Wild West model didn’t seem to fit the new paradigm. Many of the old-timers lamented the changes; a significant number left the field, others adapted, but some embraced the challenge. 

One firm in particular, PlanMember Financial, saw the new landscape as an opportunity to develop a business model that would bring both the image and the substance of 403(b) retirement plans into the 21st Century. The plan would bring best-in-class investments under an aggregated sales, support and communication model. The plan would offer advisors the chance to grow and compete in this new, more sophisticated market without giving up their independence. And it would give participants not only abundant choice but also education. 

Founded in 1992 by Jon Ziehl, a financial advisor and son of a school superintendent, PlanMember now has $6 billion in broker/dealer assets and ranks as number one broker/dealer in fee-based income as a percent of total revenue since 2004. In addition, PlanMember is an approved retirement plan provider in thousands of school districts across the country.

Co-Branding and Independence

PlanMember’s premise is simple: Find independent producers in designated areas of the country who have successfully established a significant book of business but who may be facing increased competition or consolidation in their territory. They may want to expand but are having trouble getting access. They may be looking for a way to pass their business to a successor when they retire. Or they may just want to be able to take a vacation once in a while without worrying about whether their business will collapse in their absence. These individuals targeted by PlanMember are presented with a unique business opportunity: become an affiliated PlanMember Financial Center.

The PlanMember Financial Center concept takes a successfully established practice and infuses it with new potential by co-branding with a nationally recognized organization. PlanMember Financial Centers gain approved- or preferred-provider access to an untapped supply of employers in their area, help in creating a plan to develop that business, assistance in recruiting top advisors, marketing and website development, quality training and education for both those advisors and their clients, all while maintaining the prospect’s own independence, identity and established local brand.

Schwab Franchise

Others in the industry have also noted the need to set themselves apart from the competition. In 2011, the Charles Schwab Corporation launched its Independent Branch Services franchise program. The main selling point of Schwab’s new program is the advisor’s ability to work under Schwab’s brand. This program is comparable to PlanMember’s plan to open and co-brand PlanMember Financial Centers with independent advisors throughout the country. Unlike Schwab’s program, PlanMember is offering advisors more of a partnership that allows the advisor to maintain their true independence. 

Under Schwab’s plan, according to a 2011 Investment News article, advisors are required to split their yearly revenues 50-50 with the company. In addition to sharing revenue, advisors will have to incur a long list of expenses under Schwab’s program, including: 

• Franchise start-up costs are estimated to be between $46,500-$109,910. 
• Franchises will pay for rent, facilities and technology, which will run $5,150-$13,750 per month. 
• Franchises will also be responsible for employee salaries.
• Franchises are given an initial set of established Schwab clients from which they can earn immediate revenue.
• Franchises receive a local marketing match program and extensive training.
• Franchise clients have access to financial planning, fixed-income investing, global investing and trading tools, as well as Schwab’s proprietary investment materials.

The cost of opening and running a PlanMember Financial Center is different from Schwab’s franchise plan. Some of the unique differences in the business model include:

• PlanMember doesn’t receive any of the advisor’s net revenue. PlanMember advisors and agents are compensated based on their contracted rate on any gross sales commissions, asset based 12b-1s and advisory fees. 
• PlanMember Financial Centers are responsible for their own rent or lease costs.
• PlanMember does not charge advisors for any set-up costs.
• PlanMember covers the Financial Center’s internal and external signage and technology assistance, and provides help with design of their interior décor.
• PlanMember also provides Financial Centers with support, educational programs and marketing allowances for top-down employer-group development and a cost-sharing agreement on any marketing or lead generation programs.
• PlanMember provides recruiting, training and sales management and practice management support.
• PlanMember hosts and maintains a Financial Center website and individual sites for all the Financial Center advisors.
• PlanMember provides a dedicated Business Development Officer, Business Development Specialist, Marketing Coordinator and Partner Development/Recruiting staff personnel.
• PlanMember provides economic considerations to support the growth of the Financial Center in the form of competitive payouts, forgivable loans based on AUM targets and AUM growth participation bonuses.

The PlanMember Financial Center program offers the best of both worlds: the PlanMember name and image and all that goes with it, as well as the ability to keep your own brand. “You emerge with a new, highly professional persona without losing your own unique identity as a local institution,” says Jon Ziehl. “But the PlanMember synergy isn’t just about brand and image, it also includes a whole toolkit of sophisticated support services designed to help you take your business to the next level by leveraging PlanMember’s organizational brand.” 

Steven Sullivan is a writer and editor in Baltimore.