Making the 401(k) Business Scalable & Profitable

For Producer/Broker use only. Not for use with the general public.866.390.7268 | www.GuardianRetirement.com
The Guardian Insurance & Annuity Company, Inc. 7 Hanover Square, New York, NY 10004-4025 www.GuardianRetirement.com
This document is not intended by The Guardian Life Insurance Company of America, The Guardian Insurance & Annuity Company, Inc. or any of its employees or
agents to be considered investment, tax, or legal advice. The Pension Resource Institute is not an affiliate or subsidiary of The Guardian Life Insurance Company of
America (Guardian) or The Guardian Insurance & Annuity Company, Inc. (GIAC).
Jason C. Roberts, Esq.
CEO, Pension Resource
Institute
®
Leveraging Service Providers:
Making 401(k) Business Scalable and Profitable
GUARDIAN RETIREMENT SOLUTIONS™
Small business 401(k) plans provide a unique platform for financial
professionals to increase revenue, diversify their client base and establish deeper,
more rewarding relationships with business owners, company executives and
other plan participants.
Plan sponsors are increasingly looking for assistance in selecting retirement plan
products and services that will lessen administrative burdens, manage risk and save
the business owner valuable time and resources. Employees need help understanding
the benefits of participating in the plan and education to help evaluate their
retirement goals and the savings rates required to meet their needs. Participants
may also need assistance with their investments held outside of the plan, including
potential IRA rollovers.
Financial professionals, even those who do not specialize in the qualified plan
business, have individual clients that own small businesses or are decision-makers
regarding their company’s retirement plan. Leaving 401(k) business on the table
opens the door to competitors, who may use the 401(k) plan as an access point to
your individual clients.
Qualified Plans are the Tip of the Iceberg
Relationships are key. While you may not need
to understand all of the components of serving
401(k) plans, retirement products have
evolved significantly in recent years. If you
work with appropriate service providers
that deliver turn-key solutions for your
clients, you may be able to shift many
of the technical and time consuming
activities to professional retirement
plan service providers, leaving you
to focus on what you know best —
helping individuals, plan participants and business owners save for retirement.
401(k)
Products
Rollovers,Mutual
Funds andAnnuities
Long-Term Care Insurance,
Disability Insurance,Life Insurance
Highly Compensated Employees,
Other Plan Participants
THIS GUIDE WILL CONSIDER
THE FOLLOWING:
1. Identify 401(k) Opportunities
2. Myths vs. Realities: What Do You
Need to Know?
3. Determining Your Role
(Risks and Rewards)
4. Evaluate and Leverage Service
Providers Effectively

2
1. Identify 401(k) Opportunities
a. Understanding Compensation
Some financial professionals may have the misperception that time spent servicing
a 401(k) plan is disproportionate to the compensation available from the plan.
Profitability, however, is a function of your revenue less expenses, and it is possible
to increase your revenue opportunities and lower your expenses if you understand
a few basic concepts. Revenue is based upon the scope of your services. If properly
structured, financial professionals can be compensated in two ways:
• From the plan (commissions and/or 12b-1 fees); and
• From participants individually (who seek out additional products and
services for assets held outside of the plan or through IRA rollovers —
assuming the financial professional is not acting as an ERISA Fiduciary —
see discussion in section 2).
b. Plan Opportunities Are Significant
More than 50 million Americans now participate in employer-sponsored
401(k) plans with assets totaling roughly $3 trillion. By 2015, total 401(k) assets
are expected to reach $4 trillion. The majority of opportunities lie with small
businesses:
• 90% of all 401(k) plans are small businesses with less than $10 million in
total plan assets;
• 80% of all 401(k) plans are in the micro market, holding less than $2.5
million in assets
Plan
Participants
Plan Sponsor
and/or Senior
Executives
Financial
Professional
Earn compensation
on plan assets
Engage
Plan Participants
Retirement
Plan
Engage Senior
Executives
Source: Abstract of 2010 Form 5500 Annual Reports, http://www.dol.gov/ebsa/PDF/2010pensionplanbulletin.
PDF, (Nov. 2012)
WHY 401(k)?
• Jump start referral opportunities
• Scale client prospecting and gain
access to highly-compensated
employees
• Grow your revenue while
outsourcing day-to-day duties
• Assist individuals with retirement
income planning and IRA rollovers
• Deepen and protect your client
relationships

3
For Producer/Broker use only. Not for use with the general public. 866.390.7268 | www.GuardianRetirement.com
Recent downsizing and layoffs affecting large corporations have led to a surge in
small business start-ups and additional opportunities for financial professionals
servicing micro to small 401(k) plans. Many small business owners prefer to work
with someone they know. When screening financial professionals to help with
retirement plans:
• 81% of plan sponsors rely upon referrals from colleagues, peer organizations
or service providers; and
• 60% cited “personal fit/sales process” as the determining screening factor.1
Whether you currently specialize in sales of life insurance products or another
area, you likely have clients that need help with their company’s 401(k) plan. If
you focus on serving a particular type of client (e.g., doctors, women, etc.), you
may have relationships with peer groups or professional service organizations
that can lead to referral opportunities. Your personal fit with influential “retail”
clients and associations can enhance your chances to successfully prospect in the
401(k) market.
c. Participant Opportunities are Significant
With the growth of participant-directed individual account plans, there has
been an increasing recognition of the importance of delivering education to plan
participants. Indeed, the Department of Labor (DOL) has identified at least five
areas where financial professionals can make a difference:
• Understanding the impact of fees on retirement savings;
• Combating poor strategies when participants trade too frequently or at the
wrong times;
• Enhancing diversification;
• Alignment of risk tolerance; and
• Increasing tax benefits and savings.4
At the same time, many participants are still left to go it alone and do not have
access to professional guidance. If you are capable of assisting with these basic
concepts you can deliver valuable investment education to plan participants and
help them with retirement income planning.
In addition to helping participants understand how to maximize their benefits
inside of the plan, you can also help participants who are leaving the plan. With
record numbers of 401(k) participants set to exit the workforce over the next
decade, there is an ongoing need for quality education as baby boomers begin to
shift from accumulation to distribution strategies.
1
See Proposed Rule – “Insights on Closing the Sale,” available at https://www.franklintempleton.com/retirement.
2
Cerulli Associates, titled “Evolution of the Retirement Investor 2012: Understanding 401(k) Participant Dynamics, and Trends in Rollover and Retirement Income.”
3
401(k) Rollovers A ‘Vast Opportunity’ For Financial Advisors; Financial Advisor Magazine, February 15, 2012.
4
Plan Sponsor Attitudes: Keys to Building Your Business, 2012 Plan Sponsor Survey, Fidelity Investments.
ROLLOVERS CONTINUE TO
OFFER OPPORTUNITIES
Last year, defined contribution
participants moved a record $315
billion into IRAs, and annual IRA
rollovers are expected to surpass
$450 billion by 2017.2
Nearly half of the
plan participants who are planning to
rollover money from 401(k) plans intend
to work with a financial professional.3
By offering your services as a non-
fiduciary to the plan, you can position
yourself to capture IRA rollovers when
participants retire or change jobs.

4
2. Myths vs. Realities:
What Do You Need to Know?
For too long, many financial professionals have avoided the 401(k) marketplace
for one reason or another. Not only does this lead to lost opportunities, you may
leave the door open to competitors and risk losing your clients to other financial
professionals that are working with their employer. The following illustrates some
of the common misperceptions associated with 401(k) plans and will help you
determine whether you may be passing up opportunities for the wrong reasons.
401(k) Myths 401(k) Realities
You have to be
a specialist or
an ERISA expert
Service provider support allows you to offer turn-key
retirement solutions to clients. Sales teams, relationship
managers and TPAs will help you navigate the technical
challenges and teach you what you need to know.
There’s too much risk Avoiding ERISA fiduciary status and presenting the
option of fiduciary support services from a third-party
to the plan sponsor may limit your risk. Many financial
professionals including registered reps, insurance
brokers, and benefit brokers service 401(k) plans
without acting as fiduciaries.
My clients
don’t need help and/or
they are already working
with another financial
professional on the
401(k) plan.
Many small business owners are currently underserved
and the financial professional who originally sold the
plan is not active.
Only 54% of plan sponsors feel they get good value from
their current financial professional.* The 401(k) plan
represents a way to protect your client base deepen
existing relationships by helping out clients who may
have been ignored on the 401(k) side.
401(k)s are
too much work
While there are a number of procedures and activities
that need to be performed, third-party service
providers who contract directly with the plan sponsor
can deliver most of the technical support.
3. Determining Your Role
(Risks and Rewards)
Revenue
First, revenue is based upon the scope of the services you provide. Competitive
pressures and breakpoints may limit your plan-level compensation; however,
any asset-based fees will continue to grow given the systematic nature of salary
deferrals and matching contributions that are made to the plan.
Second, participant-level services provided in connection with assets held outside of the
plan are subject to “retail” pricing schedules, and your revenue potential is determined
by the number and size of those accounts. At the end of the day, your revenue potential
is based upon the helping more participants save more for retirement.
ASSESSING YOUR 401(k)
PROFITABILITY
Profitability = Revenue – Expenses
• Revenue = (# of Plans X Size of
Plans) + Ancillary Services (IRA
Rollovers)
* Source: Plan Sponsor Attitudes: Keys to Building Your Business, 2012 Plan Sponsor Survey, Fidelity Investments.)

5
5
There are typically two ways that a financial professional may become an ERISA fiduciary: 1) by providing investment advice to the plan sponsor (e.g., helping nar-
row the universe of funds to make available a limited number of designated investment alternatives (DIAs) to participants); and/or 2) by providing investment ad-
vice to plan participants (e.g., providing ongoing, individualized recommendations to help a participant allocate among the plan’s DIAs).
6
See DOL Advisory Opinion 2005-23A.
7
For a detailed discussion, including examples, of what constitutes investment advice versus education, see DOL Interpretative Bulletin 96-1.
Profitability is also based upon the nature of your services, and your status
as a fiduciary, for example, may limit your ability to solicit IRA rollovers. The
most common way for a financial professional to be considered a fiduciary is by
providing individualized, ongoing “investment advice” that serves as the primary
basis for investment decisions for the plan or its participants.5
You may engage in a prohibited transaction under ERISA if you are found: 1) to
have used your fiduciary authority; 2) to cause a participant to take a distribution
from the plan; and 3) invest the proceeds in a way that pays you more (than if
than if the participant had stayed invested in the plan).6
If you plan to market IRA
rollovers, you should avoid providing investment advice to plan sponsors and plan
participants. You can do this by presenting the option of third-party fiduciary
support services that are provided by professional registered investment advisers to
a plan sponsor and/or the plan participants. You would then limit your services to
retirement income planning and education. 7
Least Risk
Proceed
with Caution Most Risk
Do you provide
investment
advice to the
Plan Sponsor?
No. Your role is
limited to investment
education, and the
plan sponsor makes
the decision to add
or replace investment
options under the plan.
Yes. You provide
investment advice to
the Plan Sponsor or
exercise discretion
over the plan’s DIAs.
Yes. You provide
the Plan Sponsor or
exercise discretion
over the plan’s DIAs.
Do you provide
investment
advice to Plan
Participants?
No. Your role is
education, and
the participants
direct their own
investments.
No. Your role is
education, and
the participant
directs their own
investments.
Yes. You provide
ongoing, individualized
Plan Participants.
Expenses
Expenses will be based upon your services and can be classified as direct or
indirect. Direct costs to provide fiduciary services, for example, may include
specialized training and tools necessary to deliver and document investment
advice. You may also need to engage legal counsel to avoid prohibited
transactions and purchase additional insurance when providing fiduciary
services. Additionally, you’ll need to check with your broker/dealer to determine
if you are allowed to act as an ERISA fiduciary.
Indirect costs include your time (opportunity cost) and risk. Investment
education, for example, can typically be provided in a group setting whereas
investment advice requires you to meet with each participant individually and
maintain detailed notes on the advice you provide. Fiduciary status also entails
greater risks, and the costs associated with avoiding those risks can be significant.
AVOID FIDUCIARY STATUS?
While it may seem counter intuitive, you
may be able to limit your risk, save time,
and increase your business potential, by
acting as a non-fiduciary. By presenting
the right options to a plan sponsor, it is
possible to deliver robust and effective
retirement solutions without incurring
many of the costs and risks personally.
ASSESSING YOUR 401(K) EXPENSES
Expenses = Direct + Indirect Costs
• Direct Costs: = Specialized Training,
Tools, Legal Fees, Etc.
• Indirect Costs: = Time (Opportunity
Cost) + Risk

6
4. Evaluating and Presenting
The Resources of Service Providers
a. Finding the Right Products and Services
A successful strategy in the 401(k) marketplace will require you to identify
products and services that fit your objectives and satisfy the needs of your clients.
The foundational services that are generally required to run a 401(k) plan are
trust and custody and recordkeeping and administration.
In an “open architecture” plan, these components are assembled piecemeal, and
plan sponsors will expect you to help select, monitor and replace the individual
service providers. While this approach may provide greater flexibility in terms
of investment options and plan design, the indirect costs for the financial
professional are higher — particularly when relationship management and
enrollment support are not included. Additionally, there is a greater risk you will
be deemed a fiduciary absent any third-party fiduciary support service.
If you are new to the business, you should consider working with a retirement
solution that is offered on a “bundled” or “unbundled” basis. The distinction is
based upon whether administration services (e.g., regulatory compliance, non-
discrimination testing, etc.) are provided by the entity that is the issuing the funding
vehicle for the plan or provided by an independent third-party administrator (TPA).
Understanding Service Provider Products and Services
It’s important to understand how different retirement solutions will affect your
business model.
Understanding Service Provider Products Services
Plan Sponsor
Need Product Service Solutions
Financial
Professional
Business
Considerations
Investment
Options
Open
Architecture
“Smart”
Architecture
(investment
selection is
narrowed at
product level)
Time and Risk?
TPA Bundled Unbundled Flexibility?
Fiduciary
Support
Services
No/Limited
Fiduciary
Support
Robust Fiduciary
Support Services
Risk to Plan
Sponsor and
Financial
Professional?
b. Evaluating Fiduciary Support
Because the definition of a fiduciary under ERISA is determined based on
the functional role that an individual has to the plan, fiduciary status may be
triggered inadvertently and apply irrespective of your title or any disclaimers
you may provide. The best way to avoid being considered a fiduciary is to work
TPAs CAN HELP
While there are some cost-savings and
synergies associated with a bundled
plan, you should be careful not to
overlook the value of a knowledgeable,
local TPA. Often times, the TPA will
be able to provide critical “boots-on-
the-ground” assistance to you and your
clients on the more technical aspects of
plan administration.

7
with a provider that offers third-party fiduciary support services at the plan- and
participant-level. If a plan sponsor uses the services, you will be less likely to be
considered an investment advisor and thus a fiduciary to the plan.
If you desire to avoid being considered an ERISA fiduciary, it is important to
ensure that:
1. the registered investment advisor/investment manager acknowledges its
fiduciary status to your clients in writing (many providers offer fiduciary
warranties or other investment-related support to plan sponsors that may be
beneficial in some respects, but they don’t proactively shift the fiduciary risk
away from you and your clients); and
2. the services are likely to be utilized (if fiduciary support is offered but not
utilized, your clients may look to you to provide investment advice).
Meeting Your Goals and Your (Clients') Needs
Your Goal/Need/
Preference
Plan Sponsor’s Goal/
Need/Preference Solution
You enjoy working with
participants and helping them
understand and reach their
retirement goals.
Help participants understand
their benefits and how to
become ready for retirement.
Provide education to
plan participants, leverage
educational tools, relationship
management and fiduciary
support services offered
by third party registered
investment advisers.
You wish to continue to
work with participants after
they leave the plan (e.g.,
rollovers, retirement income
planning, etc.).
Participants need ongoing
information and assistance.
Provide education, as above,
and do not offer investment
advice to the plan or plan
participants.
You are not qualified to
answer questions about
technical administrative issues.
Plan Sponsors want to work
with someone who is local.
Choose from a national
network of independent
TPAs.
You are not and do not wish
to be Series 65 or 66 licensed,
and you don’t want another
financial professional advising
your clients about the plan’s
investment options.
Plan Sponsor wants help
selecting and monitoring the
plan’s investment options.
Suggest the option of
fiduciary support services
that are provided by third
party registered investment
advisers.
You want to limit your
participant-focused services
and avoid fiduciary status.
Participants need help
allocating and rebalancing
their accounts.
Suggest the option of
managed account services
provided by third party
registered investment advisers
Summary
While it is true that there are a number of activities that must be performed
to run a successful plan, a good financial professional knows how to identify
products and service providers that will help deliver the majority of day-to-day
services without direct involvement of the financial professional. Tools and
resources available from these service providers may provide additional scale for
servicing plan sponsors and participants.
ACCESS TO TOOLS
AND RESOURCES
Products that provide you and
your clients with valuable tools and
resources can go a long way in helping
you deliver your services while keeping
your direct and indirect costs at a
minimum. When selecting a service
provider, you should consider the
following:
 Fiduciary support services at plan
and participant level
 Available network of TPAs in
your area
 Employee education and
enrollment support
 Dedicated customer service and
support
 Fee disclosure and technical
support
 A diversified line-up of investment
options
 Sales and proposal support
 Plan implementation assistance and
relationship management support

The Guardian Insurance
Annuity Company, Inc.
7 Hanover Square
New York, NY 10004-4025
www.GuardianRetirement.com
®
For Producer/Broker-Dealer Use Only.
The Guardian Choice®
group variable funding agreement and The Guardian Advantage®
group variable annuity contract are issued by The Guardian Insurance Annuity Company, Inc.
(GIAC), a Delaware corporation whose principal place of business is 7 Hanover Square, New York, NY 10004.
GIAC is a wholly owned subsidiary of The Guardian Life Insurance Company of America (Guardian), New York, NY.
Guardian does not issue the The Guardian Choice®
and the The Guardian Advantage®
and does not guarantee the benefits they provide.
Guardian Retirement Solutions™ refers to the administrative support services, including participant
recordkeeping as well as marketing, enrollment and educational materials, provided by GIAC
in conjunction with the individual and group retirement products issued by GIAC.
The Pension Resource Institute is not an affiliate or subsidiary of The Guardian Life Insurance Company of America
(Guardian) or The Guardian Insurance Annuity Company, Inc. (GIAC).
Contact Your Sales Team Today
Call: 866.390.7268 (option #2)
Email: 401(k)salesdesk@glic.com
Visit: www.GuardianRetirement.com
It’s About YOU
At Guardian Retirement SolutionsTM
it’s about you. We are dedicated to helping financial
professionals succeed in the retirement plan marketplace. Work with a trusted company that
provides you the freedom and control to do what’s right for your clients and your business.
Work with Guardian Retirement SolutionsTM
and you can:
3. Deliver Flexible and
Customized Solutions
to your clients
4. Rely on World-Class
Service and Support
for you and your clients
2. Grow and Differentiate
Your Business
1. Benefit from a Customer-Focused Approach to Retirement
5. Gain from Guardian’s more than 150-year Heritage of Promises Kept
GP016737 (05/13)
2013—5310

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