John Hancock Financial is trying to help itself do better with 401(k) plan advisers by helping them keep the assets of retirement-minded baby boomers.
Participants in Hancock 401(k) plans regularly call the Boston company to ask how to close and roll over their qualified plans into individual retirement accounts. Under a new program called Rollover Rewards, Hancock phone representatives switch these callers to a "rollover center," where a phone rep informs participants they can continue using the adviser of record for their 401(k) plan.
"We say, 'We can make that same adviser available to you on a one-on-one basis,' " said David Longfritz, a senior vice president at Hancock and the general manager of John Hancock Retirement Income and Rollover Solutions.
Mr. Longfritz said he has spent hours listening in on calls to Hancock's "participant services" center. Forty percent of these calls, he said, are "people saying, 'I just left my job. Can you help me?' "
"In the past, we haven't really had a response to them," he said. "Now, participant services says, 'Let me forward you right now.' "
Retirement rollovers to IRAs have risen nearly 40% since 2004, according to a report by Spectrem Group. The Chicago research firm also found that 67% of those who rolled their assets into an IRA got help from a financial adviser.
Hancock, which launched Rollover Rewards this month, is one of several insurer-owned companies focusing on the 77 million baby boomers preparing to retire.
Others include Massachusetts Mutual Life Insurance Co., which started a retirement income unit this spring, and Jackson National Life Insurance Co., a subsidiary of Prudential PLC of London. Jackson, of Lansing, Mich., started a retirement and wealth strategies group in the fall of last year.
Hancock, a unit of Manulife Financial Corp. of Toronto, formed its retirement income and rollover solutions business unit in February. It has four phone representatives dedicated to 401(k) rollover referrals and expects to double that team by the end of next year, Mr. Longfritz said.
If the client has at least $75,000 in his account and indicates he wants to retain the adviser, Hancock calls the adviser to pass along the referral. Then, it ascertains from the adviser that $75,000 is an appropriate threshold, and agrees on how to pass along future referrals, Mr. Longfritz said. "Then the machine is oiled," he said.
Hancock set the default account size at $75,000 because it was afraid advisers might not follow up with account holders who had less than that, Mr. Longfritz said.
The rollover representatives will offer to help investors with less than $75,000 in their 401(k) plans get that money into self-directed IRAs using John Hancock mutual funds, the company said.
Adam Honore, a senior analyst at Aite Group LLC, said the program would be ideal for advisers who work with small and midsize businesses. Larger businesses might have too many employee accounts for an adviser to juggle, he said.
John Hancock is known for its strength in the market for small plans with fewer than 100 employees. It has more than $50 billion of 401(k) funds under management; Manulife had $386 billion of assets under management at midyear.
At stake for an adviser are the fees to be earned off of the rollover assets. A modest $100,000 retirement account could yield revenue of at least $1,000 a year, assuming a 1% management fee.
The program was created to help advisers rather than to gather assets for Hancock, Mr. Longfritz said. "We will get some assets, but this will not be a big business in the Hancock world," he said. "We want be a more preferred 401(k) provider than we are now."
