Benchmarking Vs. RFP: How Often Should You Conduct One?
When it comes to benchmarking vs. conducting an RFP, the frequency of conducting these evaluations can vary depending on several factors. It can indeed be confusing due to various reasons such as evolving industry trends, changes in organizational needs, etc. The frequency of benchmarking and conducting an RFP (Request for Proposal) can vary depending on various factors.
Here are some general guidelines:
Benchmarking: It is recommended to perform benchmarking periodically, typically every one to three years. This interval allows you to assess the performance, fees, and services of your current service provider in comparison to industry standards and similar providers. Regular benchmarking helps ensure that you are getting competitive pricing, quality service, and value for your organization.
RFP: The frequency of conducting an RFP depends on several factors such as the complexity of your services, the size of your organization, and any significant changes in your needs or the market landscape. A common timeframe for conducting an RFP is every three to five years. However, if there are significant changes in your organization’s requirements, dissatisfaction with the current provider, or substantial industry shifts, you may consider initiating an RFP sooner.
It’s important to note that these are general recommendations, and the actual frequency of benchmarking and RFPs may vary based on your specific circumstances. It is important to assess your organization’s evolving needs, industry trends, and any significant changes that may warrant an evaluation of your service providers. Regularly reviewing and reassessing your provider relationships through benchmarking and RFPs helps ensure that you are maximizing value and staying aligned with your organization’s goals.
At the conclusion of The Plan Sponsor University (TPSU) Fiduciary Education Program in Baltimore, Maryland at Loyola University, Founder and CEO Fred Barstein spoke with Adjunct Lecturer Chip Merrick, C(K)P, a member of RCM&D’s Retirement Services practice where he works with a variety of retirement plan types. Chip addresses the importance of not just benchmarking your record keeper, but also doing an RFP every few years.
Read the Full Transcript Here:
Fred Barstein:
Fred Barstein with 401k TV, where we just completed a TPSU Program here outside of Baltimore at Loyola University, and I am pleased to have our adjunct lecturer advisor, Chip Merrick, join us. Welcome Chip.
Chip Merrick:
Thank you, Fred.
Fred Barstein:
Okay if we ask you a few questions?
Chip Merrick:
Absolutely.
Fred Barstein:
So, Chip has been a lecturer for TPSU in the Baltimore area now, in Richmond before. He’s an industry veteran, a CKP, works for a risk management firm. It’s located from Philly to Richmond, with headquarters in the Baltimore area. RCM and the, the and is very important on that, and he and his colleague Rob Kotler run their retirement group, which is really one of the largest in the area and growing very, very quickly.
So Chip, one of the things that you brought up during the lecture and running the program, and thank you for your support in that, it’s very important. What we’re doing is talking about the value of doing a record keeper RFP, and if you could explain that and explain why it might be important to do that versus just doing benchmarking.
Chip Merrick:
Absolutely. Thank you, Fred. Yeah, so what we do is we always recommend benchmarking and the RFP, and they’re two kind of different items, although a lot of people see them as the same.
Benchmarking is great to do on an annual basis, we do it quarterly as part of our view process. And it really focuses on the fees, the fees you pay, the investment management fee, the fees you pay the record keeper, and the fees you pay the consultant and the advisor if you have one. And it does it against your peers and kind of what the peer group’s charging and so on and so forth. But we think every three to five years, really every three years, that an RFP should be done. And that really is a little bit more of an intensive process than just doing a fee benchmarking. We put the plan out for a live bid and we really see what the record keeper is, not just what they’re charging, what are the services you’re getting for what they’re charging. It’s really one of the first things we do when we engage a client, a new client, is we do the RFP process. We are not looking to move the plan per se. I would say 90% of the time we don’t move the plan.
Fred Barstein:
Right.
Chip Merrick:
We look at it more to make sure that the vendor that you’re currently with is doing everything they’re supposed to be doing, and that the fees are in line with what other vendors would be charging to do the similar sized plan. So not necessarily what your peers are paying, but what vendors would be charging you kind of to do that plan.
Fred Barstein:
And it also, it’s a time to reassess what needs, and the plan need, the company needs for their plan, right?
Chip Merrick:
Yeah, exactly. And we’ve had just recently with Wells Fargo and the PNCs getting out of the business or selling out of the business, when you get put with a vendor like that and you get put with a purchasing vendor, you don’t have the opportunity to go in there and really give them a choice to if they want to look at another vendor. And we think that’s really important nowadays, especially when all these acquisitions, and really the vendor world’s getting smaller, is a lot of times companies will just say, “Okay, well we’re going to this vendor because they just bought our vendor,” and that may not be the best vendor for you. So that’s another reason why we do that.
Fred Barstein:
You got to go through a conversion anyway, you might make it your choice.
Chip Merrick:
Exactly. And it really is about negotiating fees and services, that’s what it comes down to. Because as I said, we do not want to make a change if we don’t have to, but sometimes change necessitates a change.
Fred Barstein:
Very good. Well thanks for your time today, and for our audience, all that knowledge and wisdom, and thanks for supporting and being part of our two PSU lecturers.
Chip Merrick:
Thank you.
Fred Barstein:
And thank you for watching 401k TV, please stay tuned.
