Finding the Right Plan Adviser

Eric Dyson, with RFP 401k Advisor, shares tips and a suggested line of questioning that could help sponsors of any plan type with the RFP process for a plan adviser.

Let’s face it, searching for an Employee Retirement Income Security Act (ERISA) adviser is about as enjoyable as finding a new cellphone plan or cable TV provider. Best practices suggest an adviser search be done approximately every three years. But doing something once every three years will make few people an expert on it.

The key to making this complicated process a success is asking the right questions. It’s to the benefit of both the adviser and the plan sponsor to be as transparent as possible. The plan sponsor’s fear is that with too much transparency, the adviser will simply say whatever it is the sponsor wants to hear. The adviser’s fear is that without enough transparency, it becomes a guessing game.

Here are some tips and a suggested line of questioning that will help with the request for proposals (RFP) process:

Core questions. Yes, there still needs to be a line of basic qualifying questions regarding experience, capabilities, assets under management (AUM) and company history. Include those questions, but quickly move on to those that help you differentiate.

Have a 30-minute request for information (RFI) interview with each advisory firm.  If there are six firms that you plan on sending the RFP to, then the 30-minute RFI, by definition, creates three hours of additional work upfront. Consider this “extra” three hours an investment of your time. You might find out very quickly that your personalities do not match. If you simply “don’t like,” one or more of the advisers, then save yourself and save the adviser wasted time. Don’t send the RFP to an adviser team where personalities don’t match. Your three hours invested will save many more hours later in the process.

Ask questions that require results-based answers. When evaluating most adviser RFP responses, it’s tough to discern differences. If you ask philosophical questions, you will get philosophical answers that might have limited practical application. Furthermore, such a line of questions doesn’t help you evaluate an adviser as a good cultural fit. Ask carefully worded, results-oriented questions. You need concise answers that demonstrate proven concepts for your plan and your employees.  

Sample questions that will allow you to differentiate between advisers:

  • How will you help employees to better understand the value and importance of the company’s defined contribution (DC) plan?
  • How will you help reduce employee financial stress and how will you measure this?
  • How will you measure the success of our plan?

Who is going to show up? Sometimes an adviser will provide an elaborate organization chart to let you know about all the smart people who work at the advisory firm. In many cases, it’s difficult to determine who you are going to see regularly at future committee meetings. In your RFP question set, ask a question in such a way that it is unmistakable. Ask who the “core team,” will be and who will be the supporting “subject matter experts.” The core team would be expected to attend each committee meeting, and subject matter experts serve in roles such as ERISA attorneys or employee communication consultants, used only on an as-needed basis.

Financial wellness is very hazy right now. Financial wellness is becoming more in-demand as an employee benefit. But defining “financial wellness” and a “financial wellness program” is still very nebulous. Be sure to distinguish between a financial wellness program, a wellness platform and wellness “apps.” Understand basic, generic possibilities for how your potential adviser could deliver a financial wellness solution. Ask the adviser how he will structure a wellness program within these options:

  • If your current recordkeeper provides a robust financial wellness program, the adviser may leverage tools from the recordkeeper;
  • The adviser may have an in-house proprietary wellness offering;
  • The adviser may conduct a search on your behalf of third-party financial wellness vendors; or
  • Any combination of the above.

How will your adviser assist you in monitoring him as a plan fiduciary? Best practice dictates that you periodically do a formal evaluation of your plan providers. This includes your adviser. A good adviser will provide you a recordkeeper benchmark annually. But how will the adviser help you benchmark his own services? Ask what reports the firm will provide and ask to see a sample.

Ask your adviser how he measures key performance indicators (KPI) for your employees and for his own firm. Your recordkeeper provides you KPI on participation rates, deferral rates, asset allocation and projected income replacement ratios. Ask your adviser how he will add value. If the adviser keeps referring to data that is readily available from your recordkeeper as the end data point, then what value does he add? It is possible, however, that the adviser will use plan data from your recordkeeper to then provide deeper insight.

The bottom line: Ask results-based questions to get answers that help you differentiate.


Eric Dyson is the executive director of RFP 401k Advisor.

This feature is to provide general information only, does not constitute legal or tax advice and cannot be used or substituted for legal or tax advice. Any opinions of the author do not necessarily reflect the stance of Institutional Shareholder Services Inc. (ISS) or its affiliates.