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Advisor RFP Process Daunting for Plan Sponsors

How do you know when to conduct and advisor RFP (request for proposal) and what’s the process? The Senior Director of HR of a not for profit attending a TPSU program at the University of Georgia reviews the process her 125 organization undertook and why.

The HR director had been with the organization for over four years and realized that they had not conducted an advisor RFP. She was also concerned that they were not getting all the benefits for their employees based on their feedback so she started the process of creating an RFP by reaching out to several firms. After creating an RFP on their own, they received five responses hoping to meet with two in person after comparing the various advisor groups with a focus on:

  1. Better education
  2. Financial literacy
  3. More diverse funds

It’s hard for smaller firms to create an advisor RFP and conduct the process on their own which is why, according to a soon to be released TPSU/NAPA Survey with plan sponsors, 39% use a 3rd party to help.

More and more 401k and 403b plan sponsors are conducting RFPs for their advisor, just as they do for their record keeper, to get a true picture of the costs and services available. More than half conduct an advisor RFP every three years according the TPSU/NAPA survey with 35% relying on an RFP to benchmark their advisor – 44% of plans over $50 million. Most telling, 59% of plan sponsors indicated that they would use an RFP to source a new advisor with 84% of plans over $50 million indicating that they would this process.

Record keeping RFPs are more common than advisor RFPs because a plan’s advisor can help with the former but is conflicted with the latter. Some CPAs, TPAs and even advisors focus on helping plan sponsors with advisor RFPs and there are independent 3rd parties like InHub.

Advisor RFPs are becoming more common and are a critical fiduciary process which can lead to better results for the company and their employees but it can be daunting without outside help.

Fred Barstein

Fred Barstein

Founder & Editor-in-Chief at 401kTV | TRAU | TPSU
Fred Barstein is the Founder & Editor-in-Chief of 401kTV. Fred is also the Founder and CEO of The Retirement Advisor University (TRAU), a collaboration with UCLA Anderson School of Management Executive Education and The Plan Sponsor University (TPSU).Mr. Barstein was also Founder and Editor-in-Chief of NAPA Net.
Fred Barstein
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