401(k) Request for Proposal: Best Practice Q&A Column. To invite, or not to invite the incumbent to the finals presentation…
Question to an RFP Expert: Our committee runs a Retirement Plan Advisor RFP, as a matter of fiduciary responsibility every 6 years. We just did one and invited our incumbent (ie our current advisor), whose services we were happy with before we started the RFP. Should we invite the incumbent to the in-person finals presentation or no?
-Plan Sponsor to a $250m 401(k).
Ariana Amplo, from InHub. This is a great question and one we get asked all the time! Unfortunately, in this case, there isn’t a best practice. We think it is best for your committee (or the RFP sub-committee) to score all the proposals first, including the incumbent and see where the incumbent falls (for a sample Advisor RFP scorecard, request one here). You will probably feel differently about inviting them if they score horribly as opposed to near the top. Either way, make sure to document your decision-making process. Below are some things to consider:
Reasons to invite the incumbent to finals:
You learned new information from their proposal that you want to discuss further. It can be something good like they offer additional services you were unaware of, or it may be not so good like their fees were considerably higher than others. Either way, you’ll probably want to know more.
If you’ve had a good relationship with your Advisor, most committees won’t hire a new firm without first giving the incumbent a last chance to present. By inviting the incumbent to present, you allow a committee to be comfortable with their final decision often speeding up the decision process. You can always allot the incumbent a little less time to present than new groups since introductions obviously aren’t necessary.
Reasons not to invite the incumbent:
You are really confident you know them (and their proposal confirmed it), and it would waste both your time and theirs to hear them present. In this scenario, feel free to let the incumbent know that is the reason, and the lack of the invite wasn’t because you were unhappy with their proposal.
You would prefer to meet another group in person and open up that extra time slot for another firm.
For in-person finals presentations, we usually see committees invite 2-3 firms to present to the full committee allowing each 60-90 minutes (most common is 3 firms, at 90 minutes each with a 15-minute break in-between). Good luck and don’t forget to schedule a lunch break!
InHub is an online eRFP technology that has helped hundreds of Plan Sponsors conduct an Advisor RFP prudently, efficiently and online. Visit www.theinhub.com for a free demo, or check out more stories at blog.theinhub.com. Do you want to submit a question about an RFP? Visit 401ktv.com/erfp/.
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