Fred’s Take: No doubt that employers sponsoring a defined contribution (DC) plan like a 401(k) or 403(b) should be benchmarking their advisors annually and conducting full RFPs at least every five years but should plan sponsors use customized or template RFPs. Arianna Amplo, co-founder of InHub which helps plan sponsors through the process extolls the virtues of customizing advisor RFPs. There’s help out there including an “Advisor RFP” resource on 401kTV which leverages the online tools and help provided by InHub. So should you go the extra mile and customize or just use a standard template like to one published by RAC?
Arianna Amplo, Co-Founder, Inhub
We recommend that you don’t use a template RFP – customize it! Creating a customized RFP enables you to review your plan background, participation, issues, goals, and company culture. Responses from advisors can be enlightening as they explain how they would help you handle certain issues, what you should be considering and aren’t, what’s working for their clients. It is a fun process for the committee if the right groundwork is laid out.
This is your chance to get custom advice and pricing for the marketplace. It gives you the opportunity to ask for what you want including:
- Do you want 31 days of on-site participant education?
- Do you want quarterly, 3 hour meetings to hash out every detail of the fund lineup and performance?
- Do you want ideas for how to increase your participation rate by 20% in the next 2 years, while spending less than $50k on fees?
Key to this process is making sure to give enough information so you don’t get ‘general ideas’. Explain your workforce, and culture, how many locations and investment savvy, and preference for learning, especially when you are making a replacement or hiring for the first time.
The RFP process can actually be fun and enlightening if you’re doing it right and have help, and it’s a great way for the committee to get back on the same page about important goals. If you don’t customize it, you’re just going through the motions, and it’s a pretty pointless and time wasting exercise.
