“Going out to [request for information (RFI)/request for proposals (RFP)] is part of your fiduciary responsibility. It’s incumbent upon you to truly make sure you are evaluating your service providers, said Julie Doran Stewart, SVP, retirement plan advisory, Sentinel Benefits & Financial Group, to attendees of a panel discussion at the 2019 PLANSPONSOR National Conference.
At the same time, she said, be sure you speak with your current providers and ask them what is new, what other clients are doing, how else you should invest in the plan.
“Sometimes relationships get stale and it’s important that you remain vigilant. Make sure you hold providers accountable to bring in fresh ideas. Maybe they have other things to bring to you but they aren’t presenting to you at an RFP finalist presentation. Make sure you are asking for what is new as you go,” Stewart said.
How do you narrow down the pool of providers to cull down to the right number of parties?
The quest for the best recordkeeper leads down a path well-traveled by sponsors and their advisers or consultants. But it can be hard to identify clear areas of differentiation among the leading providers of recordkeeping services. “There are a lot of recordkeeper features that are commoditized,” according to Dave Hulsen, chief operating officer, RFP360. “Initially you have to make sure the provider’s base capabilities are good enough for you, and if so, you can jump right in with all of the great qualitative questions.” And by doing a quick RFI or doing some market checks through a third party you can check a lot of qualifications and move from a large vendor pool to a smaller pool.
To Jason Chepenik, managing partner, Chepenik Financial, there are several ways to narrow the search down, but if plan sponsors are really shopping, they need to get the prospective providers in the room and have some way to differentiate them. “Get them in the room and interview them—that makes for the most successful match,” he said.
It’s the people that make a difference when comparing providers, he added. “Whether it’s an advisory team or a recordkeeper, it’s the people that make a difference and you cannot always tell that on paper. You can’t tell how many accounts or how complex the accounts are of the person who will be your contact. And if they have 20 accounts, they’ll give you more attention than 100 accounts. And always document how you narrowed down the list.”
Stewart added that requesting a case study brings tremendous insight. “You want someone who understands your goals and objectives. Ask the provider how they have done something similar for another client maybe someone of a similar size or industry, for instance.”
Mike Lulofs, human resources director, Sumitomo Machinery Corporation of America and a 2019 PLANSPONSOR Plan Sponsor of the Year finalist said, “We’ve had the same recordkeeper and relationship manager for 18 years—though we have put out many RFPs. This ongoing relationship has helped us considerably as far as keeping new things working in the plan.”
“Because of the relationship we have with recordkeeper Principal, we learn about changes as they come to market—we don’t wait for an RFP. They know us so well and we know the capabilities they have and that helps us feel that we’re on the front edge of new things as they are made available,” he added.
How do plan sponsors use some of the new tools that help support a plan’s search?
Chepenik said he values tools such as RFP360. These tools really help with documentation and organization.
He continues, “On the recordkeeper side, your adviser should be able to tell you which are a good fit for your plan. Based on industry demographics, complexity and environment and that’s going to be seven or eight. Even with advisers, you can start with a list of seven or so and narrow it down to three or four. To go to 15, is too much. The person receiving it may be less interested in working with a client that sends out an RFP to too many providers and asks too many questions.”
Hulsen interjected that if an adviser recommends a short list of recordkeepers, for instance, plan sponsors should ask why those providers were chosen “If they can’t give you good, solid evidence, it makes me feel concerned. I’m not comfortable with an adviser suggesting a recordkeeper that they may have an exclusive relationship with,” he said.
What does a plan committee want to see their plan look like in the future? What drives you nuts about the plan currently? What’s working and what’s not? Stewart said, “Make sure you are baking that into the plan requirements. This is what I’d like to see in the future.”