I asked NewsDash readers, “When was the last time your company performed a benchmarking for providers, and did you find something that led you to make a change?”
The vast majority of respondents (84.8%) work in a plan sponsor role, while 6.1% each are advisers/consultants and TPAs/recordkeepers/investment managers. Three percent are attorneys.
Nearly half of responding readers (45.7%) reported that the last time their company issued an RFP or RFI just to benchmark a plan provider was in the past one to two years. Twenty percent reported that it was more than 10 years ago. Slightly more than 17% indicated the last time their company issued an RFP or RFI just to benchmark a plan provider was in the past three to five years, and 5.7% said it was in the past five to 10 years. “We never have” and “Don’t know” were each selected by 5.7% of respondents.
More than one-third (34.3%) said their company found something in the RFP or RFI responses that led to a change in providers, while 40% did not. For 14.3% of respondents, the question was not applicable because they’ve never benchmarked a provider, and 11.4% indicated they did not know if their company found something that led to a change in providers.
Based on verbatim comments by respondents who chose to do so, issuing an RFP or RFI is a great way to get current providers to negotiate fees. Fees were also a key factor in deciding to change providers. One respondent pointed out that aside from fees, issuing an RFP provides little opportunities to change as “It’s a lot like buying eggs.” Editor’s Choice goes to the reader who said: “I learned at the 2016 PSNC that we could be doing better… in terms of fees. We may be issuing our first RFI since 2000 in the coming year.”A big thank you to all who participated in the survey!
Despite that we are completing an RFP process as we consider combining two plans into one.
Led us to make some modest adjustments around the margins. Worthwhile exercise!
We made no changes and the process was well worth it, our current provider reduced our expenses significantly.
We were planning to make a change then, and did so, consolidating two providers for three DC plans into one, and greatly improving service and investment offerings. I learned at the 2016 PSNC that we could be doing better, though, in terms of fees. We may be issuing our first RFI since 2000 in the coming year.
It's a painstaking process that's best left to those that do this on a full-time basis.
We found out that our fees were too high and promptly changed providers.
Eliminated half the funds, reorganized the remainder into a tiered structure, and defaulted those holding the eliminated funds into TDFs
Doing a benchmark allowed us to negotiate lower fees with the recordkeeper.
We did an RFI for benchmarking, which led to the decision to put out a full RFP and switch to a zero-revenue-share model.
We review everyone associated with our plan every 3 to 5 years, including recordkeeper, consultant, and ERISA attorney.Prior to doing an RFP, we conducted an online survey. Based on the answers received, we elected to conduct an RFP, inviting new providers as well as our current provider. Based on the interview and the findings from the survey, we decided that switching providers would better meet our needs and the needs of our employees.
We benchmark our provider regularly for services and fees by using surveys, adviser recommendations and generally available information. We would not issue an RFP unless we were serious about making a potential change. We don't do fishing expeditions. It's not fair to the staff who have to do it or the providers responding.
RFP done by a third-party consultant
Our current recordkeeper reduced their fees to remain competitive with the marketplace.
Can't wait to see the results as we are very overdue on this (I'm new; I can say this). So many new laws, rules, technologies—we all need to push the providers to step up.
I have not done a formal RFP, but have looked at other providers and gotten their fee schedules. Our financial advisers do a fee review every two years for us too.
Other than fees, the RFI provides little opportunities to change. It's a lot like buying eggs. Find the size you want, open the box, make sure there are no broken eggs and head for the checkout. With the DC, we find the administration features we want, make sure the fees are competitive and move forward. As long as the administrative features are working, the incumbent has a tremendous advantage in retaining the business.
Lower fees, better service and better technology were the reasons we changed providers. It also helped that the new provider had the advantage of being local.
Benchmarking empowered us to renegotiate fees with our current provider without changing providers.
Due to significant administrative issues with our previous provider, we did not ask the prior provider to participate in the benchmarking/RFP process. We knew we had to make a change.
In the current highly competitive vendor market it's nice, that, in this circle of life, the shoe is on the other foot.
We perform independent benchmarking every 12 to 18 months and perform an RFP/RFI every 3 to 5 years. Our goal is to verify the current provider and not make changes but sometimes change is inevitable as companies mature.
NOTE: Responses reflect the opinions of individual readers and not necessarily the stance of Strategic Insight or its affiliates.