Tom Johndrow, Director Retirement & Relocation, Monsanto, said to first decide who is part of the team that will handle the search. This may differ according to plan size. For Monsanto, which is a $2 billion plan, the team includes up to 12 members from various groups such as HR, treasury, legal, and finance.
For medium sized plans, Jania Stout, VP, Retirement Plan Consulting, PSA Fiduciary Consulting Group, said it is usually the retirement plan committee that handles the search. William S. Van Ess, Financial Advisor/Employee Benefits Specialist, Spectrum Insurance Group, who advises small plans under $10 million, said for small plans the team may only consist of the owner and HR manager.
Johndrow said the team should set up guiding principles on what the sponsor wants to achieve, and refer to them at every step of the process to keep on track. The team should know why the sponsor wants the move, what it wants to achieve for the plan or business, and what it wants to get for participants.
Stout advises sponsors to make sure they stick to their goals. “Your priorities might be ‘x’, but providers may feature something that will get you off track,” she warned.
Van Ess suggests the team first consider what’s working and what’s not; how effective is the plan, is there good participation and good education.
Johndrow said when Monsanto set out their guiding principles, it limited them to 10 and ranked them in order of importance. If there was a conflicting plan and participant goal, the search team went to the retirement plan committee and asked it to flesh it out. Sponsors should ask the retirement committee what’s important to them.
Van Ess agreed with Johndrow that sponsors should definitely have a reason to move before starting the search process because it is a long, complicated process.
Jonathan L. Gomes, Manager, Retirement Strategy & Compliance, Family Dollar Stores, Inc., which has a $125 million plan and recently did a search, engaged a consultant to run the Request for Proposals (RFP). For smaller plans, Van Ess noted the adviser usually handles the whole process. Johndrow said Monsanto used an HR and systems consultant to help find a recordkeeper because it was having systems needs with its prior recordkeeper, but medium to small plans would probably use a traditional consultant.
Stout said with her middle market plans, they might start with a Request for Information (RFI) and narrow it down for an RFP process. She’s not a fan of big, bulky RFPs, but concedes that many may need to use one already set up if they don’t have adviser to help them craft one. Either way, she says sponsors should use some custom questions in the RFP process to differentiate between providers.According to Gomes, the number of questions in the RFP depends on how knowledgeable the retirement plan committee already is about providers. For example, if they already know a provider has a backup system and recovery plan, they don’t have to ask. He says it is possible to get the RFP down to 20 questions.
Johndrow suggests having a bidder’s conference early in the process to express the company’s needs. When it comes down to the final decision, the sponsor needs to have a site visit to see where the plan will be serviced and meet the team that will be servicing it. Sit down with them and tell them what you expect and see how they interact with you, Johndrow says.
Stout adds that sponsors should keep finals presentations to an hour and a half; it’s hard to present in an hour. The search committee should design the presentation agenda so it the potential provider doesn’t waste time on unnecessary information. For large plans, providers should definitely let sponsors interview Relationship Managers to determine who they want to work with. She also says site visits really help when it’s a tie; committees that go on site visits always come out knowing which they want.
Gomes contends that a bidder’s conference call lays the groundwork for the relationship with the potential provider. He also notes that as a medium sized plan, he was able to interview relationship managers and people that might deal with plan day to day.
For smaller plans, Van Ess says whether there’s a finalist presentation depends on what the business owner wants. The adviser often does the analysis and recommends the best providers; if the owner wants to see the top two, the adviser will have them come in. Also for smaller plans, often the adviser does the site visit and relationship manager interviews for the plan sponsor.Audio of the panel presentation will be available at https://s3.amazonaws.com/si-interactive/prod/plansponsor-com/wp-content/uploads/2017/05/25041240/Multimedia.aspx_.jpg.