Financial advisors who advise 401(k) plans can do a better job in that space by, well, doing a better job in that space. Might seem like a "no duh" comment, but a new study by Fidelity Investments states that advisors will strengthen their overall 401(k) practice by spending more time servicing existing plans and less time prospecting for new 401(k) business.

   Fidelity's report, Growing a 401(k) Practice From The Inside Out, consists of two independent surveys of 395 plan sponsors who use an advisor and 415 advisors who sell 401(k) plans. It concluded that advisors who develop strong relationships with existing 401(k) plan sponsor clients and generate customer service levels of "very satisfied" can grow their 401(k) revenue as much as 40% after 10 years, versus 18% growth during the same period with clients who are merely "satisfied," based on a model using various practice-related assumptions.

   Greater plan sponsor satisfaction can boost an advisor's business in several ways, such as longer plan tenure and more referrals for other plan sponsor clients. In addition, the report says that highly satisfied plan sponsors are more likely to let advisors solicit financial planning business directly from employees. Regarding the latter point, the report says that 50% of "very satisfied" plan sponsors would welcome their 401(k) advisor soliciting financial planning business from employees versus 31% for "satisfied" plan sponsors, 29% for "neutral" and 8% for "dissatisfied" clients.

   The 401(k) market is a competitive one for advisors serving that space. According to Fidelity, 93% of plan sponsors say they're solicited at least once a year by other advisors looking to grab the business. Almost 60% say they are solicited three or more times a year. More than half of plan sponsors surveyed (53%) are either "very satisfied" or "satisfied" with their advisors, but the other 47% were either "somewhat satisfied" or worse, suggesting there is room for improvement.

   According to the survey, sponsors were all over the map when it came to picking the most important service offered by advisors-investment knowledge (24%), retirement knowledge and employee education (both 22%), and objectivity (20%). The report says that the variety of number one answers means it may not be enough for advisors to focus on just one area. To differentiate their services and score points with plan sponsors, the report suggests advisors need to zero in on areas that plan sponsors consider important but which tended to elicit low satisfaction levels-employee communications, group investment meetings, proactive check-ins, and industry updates.

   Of course, advisors still need to deliver the goods regarding things like investment and retirement knowledge.

   For advisors, serving the 401(k) is a lot of work. But the gist of the Fidelity report's message is that advisors can be more time-efficient and profitable over the long haul by focusing on existing clients rather than focusing on trying to get as many 401(K) clients as possible. In other words, quality of service will most likely trump quantity of clients.