403b Summit: Vendor Selection: A New Opportunity?

That’s because decisions made now about the number and selection of vendors give 403(b) sponsors the chance to revisit broader plan design issues. They can then re-examine how well proposed vendors fit into the type of retirement savings program the organization wants to offer under the new 403(b) regulatory scheme, said adviser Blake Thibault, vice president at Heffernan Financial Services, an NRP member firm.

“Now is an opportunity to find out which providers are committed to the 403(b) space and find out whether (vendors) can do multi-vendors or a single vendor,” Thibault told attendees at a Summit discussion group.

Adviser Jeb Graham, a retirement plan consultant with CapTrust Financial Advisors, said a 403(b) sponsor “has to figure out what it wants” and then benchmark potential vendors’ ability to provide that product or service. “There are a lot of differences between what is delivered and what is marketed on the provider side,” Graham argued.

Thibault asserted that providers should be benchmarked against other providers and plan design issues should be benchmarked against plans from other similar sponsors. “A lot of plans don’t know how to measure success in retirement plans,” he said. “What is that mechanism?”

He urged attendees to consider issuing a periodic request for information from vendors to keep up with what’s currently available in the marketplace. “A lot of time,” Thibault said, “(sponsors) don’t know what they don’t know.”

Thibault pointed out that the vendor selection process can take longer in a non-profit environment because many of those organizations and more heavily culture driven than other employers; the process there can take anywhere from six months to two years, he said.

Brent Littleton, vice president and chief technology officer for se2, a technology provider, told the group that his company had developed a recordkeeping system that can easily handle data from multiple 403(b) vendors for a plan.