Most defined contribution (DC) plan sponsors offering 401k or 403b plans are satisfied with their record keeper and advisor not realizing that they may not be getting the best service or a fair price. But how do they know maybe not having an experience beyond the relationships they have? How do you know when and how to change your DC record keeper? A CFO for a small not-for-profit attending a TPSU program at the College of NJ explains the process she went through resulting in vastly improved service for the company and their employees for little or no increase in fees.
The process started when an advisor reached out to the organization about services and features they were not receiving and low participation rates. Typical of most DC plan sponsors they are, on the one hand, busy with many other tasks, and, on the other hand, don’t realize that there are better options. There can be a lot of fear and uncertainty when considering to change your DC record keeper. Evidently, the word got out and the organization was contacted by a number of advisors and record keepers offering vastly improved services with little increase in fees which was an eye opening experience.
The plan was struggling with having to do their own compliance as their old record keeper was mostly a self-service shop. Their new record keeper provides a complete suite of compliance services including testing and 5500 preparation as well as better features for employees.
Lesson learned? No matter how satisfied a plan sponsor might be with their advisor or record keeper it pays to periodically go to market with a full RFP (request for proposal) rather than rely on annual benchmarking. Why? Guess who provides that benchmarking? The record keeper and the advisor who has no interest in facilitating a change. And beyond getting better service, an RFP fulfills a plan sponsors duty to determine if fees are reasonable for the services received.
Because if you don’t ask, you don’t get. When’s the last time you conducted an RFP for your record keeper or advisor?
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