June 11, 2012 (PLANSPONSOR.com) - Working with a consulting firm and planning a request for proposal (RFP) far in advance can help plan sponsors land the best service provider fees.
At the 2012 PLANSPONSOR National Conference, Paul Manning, compensation administration manager at Caterpillar Inc., described the RFP process his company recently went through. Manning emphasized the importance of planning the RFP well in advance because it is a “whirlwind of a process.”
Manning said his company planned the RFP for six months. The entire RFP process from start to finish took 13 to 14 months, and Caterpillar also hired a consultant to help. According to Manning, planning and hiring a consultant helped the company negotiate a better fee deal than it would have landed on its own.
Manning said an outside consultant can bring market intelligence, thought processes the plan sponsor lacks, and awareness of incentives in the administrative services agreements and “buried” fees.
It is important to choose a credible consultant, added Michael Kozemchak, managing partner at Institutional Investment Consulting. “Having a consultant who is credible with vendors will help improve outcomes,” he said.