It is recommended that retirement plan sponsors benchmark their providers every three to five years by issuing a request for proposals (RFP) or a request for information (RFI). We asked NewsDash readers, “When was the last time your company performed a benchmarking for providers, and did you find something that led you to make a change?”
Nearly half of responding readers (45.7%) reported that the last time their company had issued an RFP or RFI just to benchmark a plan provider was in the past one to two years. Twenty percent reported it was more than 10 years ago.
Slightly more than 17% indicated that it was in the past three to five years, and 5.7% said it was in the past five to 10. “We never have” and “Don’t know” were also each selected by 5.7% of respondents.
More than one-third (34.3%) said their company found something in the RFP or RFI responses that led it to change providers, while 40% did not. For 14.3% of respondents, the question was not applicable because they had never benchmarked a provider, and 11.4% indicated they did not know if their company found something that led to a provider change.
Verbatim responses reflect the opinions of individual readers and not the stance of PLANSPONSOR or its affiliates at Strategic Insight.
“We found out that our fees were too high and promptly changed providers.”
“Eliminated half the funds, reorganized the remainder into a tiered structure and defaulted those holding the eliminated funds into TDFs [target-date funds].”
“We did an RFI for benchmarking, which led to the decision to put out a full RFP and switch to a zero-revenue-share model.”
“We review everyone associated with our plan every three to five years, including recordkeeper, consultant and ERISA [Employee Retirement Income Security Act] attorney.”
“We benchmark our provider regularly for services and fees by using surveys, adviser recommendations and generally available information. We wouldn’t issue an RFP unless we were serious about making a potential change.”
“So many new laws, rules, technologies—we all need to push the providers to step up.”
“I have not done a formal RFP but have looked at other providers and gotten their fee schedules. Our financial advisers do a fee review every two years for us too.”
“In the current highly competitive vendor market it’s nice that, in this circle of life, the shoe is on the other foot.”
“Other than fees, the RFI provides few opportunities to change. It’s a lot like buying eggs. Find the size you want, open the box, make sure there are no broken eggs and head for the checkout.”
“Lower fees, better service and better technology were the reasons we changed providers. It also helped that the new provider had the advantage of being local.”
“Benchmarking empowered us to renegotiate fees with our current provider without changing providers.”
“Due to significant administrative issues with our previous provider, we did not ask [it] to participate in the benchmarking/RFP process. We knew we had to make a change.”
And the Editor’s Choice goes to the reader who said, “I learned at the 2016 PSNC [PLANSPONSOR National Conference] that we could be doing better … in terms of fees. We may be issuing our first RFI since 2000 in the coming year.”