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Best Ways to Conduct an Advisor Search

Best Practices for an Advisor Search

advisor searchThese days, most defined contribution (DC) plan sponsors conduct formal request for proposals (RFPs) and benchmarking for their record keeper and investment managers but not their advisor. Though it’s required for all three, advisors usually manage the process for the 1st two but there’s an inherent conflict in advisors benchmarking themselves or conducting a search. So plans often put off a formal advisor RFP search as they are too busy or don’t feel qualified. Though there are independent 3rd parties emerging to help plan sponsors conduct an advisor RFP, an experienced plan advisor offers some helpful tips for plan sponsors that want to do it themselves.

The first piece of advice is not to send the RFP to every advisor you know – here, less is more with 3-5 recommended. By sending the RFP to too many advisors, plan sponsors give themselves too much work and may lose out on busy, good candidates that see very little chance of winning with 15 other competitors.

Send everything electronically for your sake and for the advisor’s and send a Word file so they don’t have to retype everything. It’s important to think of ways to make it easy for advisors to respond and give them at least a month, this will greatly optimize the Advisor search.

Become a more knowledgeable buyer and know what you want from a plan advisor. Make sure you understand the difference between a fiduciary advisor and broker especially with the new DOL conflict of interest rule effective April 2017.

Don’t hire the best sales team – make sure you meet with the people you will be dealing with day to day.

Finally, don’t conduct the record keeper and advisor search simultaneously. New best practices include starting with the advisor search followed by a target date RFP ending with the record keeper. If you start at the end, you might get charged an additional fee by the advisor whereas most full service advisor arrangements include record keeper and investment benchmarking and RFPs at no additional charge.

Happy hunting – selecting the right plan advisor is the first step in making your plan better and your life simpler.

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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