The white paper discusses the need for plan fiduciaries to select providers prudently and examines the stages of the request for proposal (RFP) process including preparation of criteria and minimum qualifications, construction and customization, evaluation of vendors, selection, and contract signing.
Offering a case study of the 2012 $35.2 million judgment against ABB Inc. for breach of fiduciary duty (see “Employer to Pay for Failing to Monitor RK Costs”), the paper outlines best practices for an organization to protect itself from similar situations. The paper illustrates how fiduciary prudence is not a one-time decision, but an ongoing practice as plans evolve and change, and how utilizing the RFP process to evaluate vendors is an important aspect of that practice.
“The RFP process is designed to insure that providers offer the optimal level of service for the price being charged. Periodically conducting an RFP process to evaluate providers is not only a best practice to demonstrate fiduciary prudence, but more importantly, it is in the best interest of the participants,” said Scott Dunbar, Arnerich Massena’s managing director of advisory services.
The benefits of the RFP process are explained in detail, including maximizing cost savings for plan participants, providing documentation of the execution of prudent fiduciary practice, and gathering information useful for leverage in renegotiations. The white paper can be downloaded from https://www.am-a.com/company/research.htm.