The Benefits of Adding 401(k) Plans to Your Practice

The convergence of wealth management and retirement planning is reshaping the financial advisory industry. Driven by the SECURE Act, state retirement mandates, and consumer demand for bundled services, many advisors are switching to combined or hybrid wealth/retirement business models to stay competitive.

Integrating retirement services into your business model doesn’t mean you have to overhaul your entire practice. Simply adding 401(k) plans to your portfolio can be a great start to expanding your assets under management (AUM). It can position your practice for stable growth, create a pipeline of prospects through one plan, and open the door to cross-selling opportunities. In this article, we’ll show you how.

Build a More Resilient Practice

Offering 401(k) services can help “economy-proof” your practice because retirement plans have limitations on when participants can cashout. Client retention is high, and market demand remains constant. Here are some of the benefits for your practice.

• Penalties and increased taxation provide built-in barriers to “cashing out” the plan, so plans remain relatively untouched for long periods of time.
• Clients tend to stay with their advisor for the life of the plan, making it difficult for competitors to poach your business.
• Employer-sponsored retirement plans consistently attract participants: 49% of all private industry workers participate in a defined contribution plan.¹
• The retirement market is in continuous growth mode, and that isn’t expected to change any time soon. Since the 1980s, the number of participants in employer-sponsored, defined contribution plans has surged from under 19 million to nearly 88 million.²

Grow Plan Assets Over Time

401(k) plans help grow an advisor's AUM because they create long-term recurring capital, compounded growth, and high-value rollover opportunities.

Unlike individual accounts, an employer-sponsored 401(k) captures multiple participants and their cumulative retirement plan assets, all in a single place. Depending on business size, this can mean dozens, if not hundreds, of potential new client relationships.

Market appreciation also contributes to growth, while regular employee deferrals and employer contributions bring fresh capital into the plan every pay period. Rollovers provide added opportunities for advisors. As employees join or leave the company, you can guide them on strategies to roll eligible legacy savings, such as retirement plans or rollover IRA assets, into the plan.

Turn Your Existing Business into Plan Opportunities

Where should you start prospecting for retirement clients? Look no further than your current client base. Since 401(k) plans are ideal for small businesses, your local community is also a good place to start. Be on the lookout for businesses that are having problems retaining employees or need to attract new hires. 401(k) plans are popular with employees and can be powerful recruitment tools.

When talking to prospective retirement clients, be sure to highlight major business benefits, such as tax savings and SECURE Act tax credits for new plans. Also overcome the common perception that 401(k) plans are difficult to administer by emphasizing payroll integration and providers that handle administration.

If your clients may have retirement plans managed under a different advisor, you be able to win new business with a more competitive plan. Offer them a plan benchmarking consultation to give them a full picture of their current plan and uncover potential weaknesses.

The Impact of State Retirement Mandates

More than a third of U.S states now mandate that businesses provide a workplace retirement savings program. If businesses don’t comply, they can be at risk of fines in some states. This is thought to be a major factor driving the surge in 401(k) adoption by small businesses.

If you have clients or prospects operating in mandated states, this presents an opportunity to be a trusted resource in helping them comply and avoid penalties. 401(k) plans satisfy state law and have advantages over state-facilitated IRA programs, such as SECURE Act tax credits, higher contribution rates, and employer matching.

To find out which states have mandates and what their requirements are, check out our state mandate retirement map.

Expand Your Practice with Paychex

You don’t have to be an expert in retirement plans to add 401(k)s to your practice. As a leading provider of 401(k) plans, Paychex will provide support for you and your clients from setup, to administration, to compliance. We also offer a complete suite of financial advisor tools to help you grow your business. We can even help you get retirement leads when you bring us new plans through our Advisor Referral Network.

Contact us to learn more about how to grow your practice by offering retirement services.

¹ U.S. Employee Benefits Summary, September 25, 2026.

² Ibid, Celebrating 50 Years of Protected Retirement Plans, March, 2024.