Speaking during a panel at the PLANSPONSOR National Conference, Anthony D. Agbay, senior vice president of Investments at The Agbay Group, said it is good practice to benchmark plans every three years in addition to benchmarking providers by issuing a request for information (RFI) or request for proposals (RFP). “It will either validate your decision to keep a provider, or show a reason to change,” he told attendees. According to Agbay, plan sponsors need to know what else is out there, and whether another provider can meet their plans’ needs better. “Is another provider a better match for business and participant type or plan size?” he queried.
Michael W. Kozemchak, managing director at Institutional Investment Consulting and moderator of the panel, said the panel identified poor data, inaccurate processing of transactions, inaccurate information from the call center, testing issues, late Form 5500 filings, not getting a real person, antiquated systems and time of response, and people problems as common complaints leading plan sponsors to change providers. Shelley Weiner, VP, regional director of Institutional Markets at Transamerica Retirement Solutions, added plan document issues to the list; the provider’s plan document may not fit the plan’s processing needs. From the investment side, Agbay said, often plan sponsors are concerned with inflexibility in proprietary funds and inability to offer custom target-date funds (TDFs).
According to Weiner, plan pricing is a mostly fixable problem; providers want to keep the business, so plan sponsors have some leverage to negotiate. In addition, relationship issues are fixable; she suggested plan sponsors ask if they can meet other team members at the provider and find a better fit. Agbay added that issues such as consistent call center problems are usually not fixable.
Before making a move to change providers, though, Stephen Popper, managing director at Sage View Advisory Group, suggested plan sponsors look at themselves to see if they can do better. "Is data integrity your fault; is payroll done well?" he queried. One of the things plan sponsors struggle with is who owns what, and whether they or their payroll teams are responsible for the failure, Popper said. He reminded plan sponsors that they own their plan and should feel comfortable making decisions about whether a service provider is meeting their needs. "There needs to be a justification for all role players supporting a retirement plan; what is their value add?"
If a plan sponsor decides to stay with a current provider, a targeted renegotiation is in order, according to Popper. He warned that the relationship manager is not the best person with whom to negotiate pricing. Plan sponsors should leverage the provider's sales approach. Kozemchak said: "If you ask for a new sales person to renegotiate, and they don't give you one, take it as a no bid and tell them you plan to move on. Of course, the provider will come back and say they will do it."
If a plan sponsor decides to change providers, it can expect the conversion to take 12 weeks, according to Weiner. "Two things that can tie up a conversion are not having the fund lineup finalized early on, and the person who is authorized to sign documents not being around," she said. "Have a couple or three people who are authorized to sign off on things," she recommended.