Pat Schmidt, Senior Analyst, Compensation and Benefits, JTEKT North America, suggests plan sponsors and advisers start with a meeting with ERISA attorneys to go over plan documents. This can help sponsors understand all the things the plan really needs from providers. Advisers and sponsors also may learn in the process that problems with plan administration could be caused by limits within plan terms, not that a provider is being difficult, according to Schmidt.
Randy Long, Managing Principal, Sage View Advisory Group, also suggests establishing a committee that includes someone from payroll, HR, and treasury; someone in the organization that has DC industry expertise; and someone who hears what participants want in addition to members of the benefits committee. Other than identify plan and participant needs, a meeting of this committee could also identity problems that are not provider-related, but may be caused by in-house technology or staff, notes Barbara Best, Principal, Capital Strategies Investment Group.
Best says the committee should talk about the goals of the request for proposals (RFP) process – does the sponsor want more technology, more hands on from the provider, to improve automation, or to improve fees, for example. Identifying goals will also help in determining to whom to send the RFP.
Long adds that in the discovery process of what is broken and what are the issues, sponsors will learn whether they really want a change or whether they should just do benchmarking. In addition, identifying the problems will determine what RFP question responses will be weighed more heavily in the final analysis.
While some sponsors have their advisers perform the RFP process then present responses to them, Schmidt says sponsors should be involved in the process. Advisers can help by offering their own template for the RFP or knowing where to find one, she says. Best adds that advisers can help sponsors understand the strengths of potential providers and differences between providers.
Schmidt says a template is a good starting point, but sponsors do need to customize RFPs to their specific plan and problems. Questions about specific services should only be asked if participants will really use it and/or if in house staff can handle it or will use it – will it add value to the plan. Best adds that the RFP should ask questions that are specific based on what issues the plan is having and what matters to the plan sponsor – spell out certain scenarios and ask how the provider would handle it.
Long says the RFP should also ask questions that would relate to matching the cultural fit of the provider and sponsor. The RFP should also ask about the providers’ future business plans; sponsors want providers that will grow and stay in the business.Audio of the panel discussion is here.