Managing the RFP Process

A provider search is often one of the most time consuming parts of a client relationship.
That was the counsel of panelists Mike Finnegan of Wachovia Securities, LLC and Craig Rosenthal, from PLANSPONSOR Pathfinder at the 401(k) SUMMIT last week.


The basic groundwork for a provider search is laid during the discovery process, when advisers gather information about the plan, its features, and the plan sponsor’s need. This can be made much easier when advisers use forms and a series of questionnaires to ensure they gather the proper information about the client. “This is where your expertise in the industry is valuable,’ Rosenthal said.
The discovery should be properly documented, so that later in the search, if a plan sponsor asks why you are looking at a particular feature, the adviser can reference those early discovery notes, Finnegan commented. During this process, Finnegan said advisers should engage the plan sponsor to give examples of how they may have tried to address plan issues previously.

The Search

Once an adviser is hired to do a search, it is vital that the process is handled effectively. That was the counsel of panelists Mike Finnegan of Wachovia Securities, LLC and Craig Rosenthal, from PLANSPONSOR Pathfinder at the 401(k) SUMMIT last week.
Once the discovery is over, it is time to begin the search. Finnegan suggested that before getting started on a search, every adviser should know what his “walk away” is; how much money is too little or time too much that this isn’t a profitable venture. That decision needs to be based on the size of the plan, as well as the methodology for the search and the adviser’s personal revenue needs. When originally pricing the search, Finnegan said, it is important try to leave some leeway, because inevitably things will come up and often you will be asked to do more than you anticipated.
There are many tools and instruments available to help with the RFP process, but the most important thing is that no matter what an adviser uses, the process is properly organized, Rosenthal said. Before evaluating the possible plan, advisers can review with their client the criteria that will be used in completing the search process, Finnegan said.
An adviser can draw up a contract with the plan sponsor that details a timeline that will affect for the plan sponsor and the provider. Finnegan suggested using a double barrel timeline, that has one column of when something is supposed to be completed and by who and then a second column that shows when that task actually was completed.
Sometimes searches are done just to benchmark where a plan is in relationship to others, or perhaps just to see if the fees are fair and advisers will want to be able to offer data about other plans or information about how plans like their client’s are faring in the marketplace, Finnegan said. This is often an area when advisers might want to examine the investments in the plan as well.

Committee Presentation

At the end of the process, an adviser should be able to present the plan sponsor and plan committee with an inverted pyramid that shows how the process started by examining a large group of providers and what was done to end up with those that made it to the finals or the one that was selected as the new provider, Rosenthal explained.
When presenting to the plan committee, quite frequently there will be people with whom the adviser has not worked during the search process, like the CFO or President, present, Finnegan said. They often just want to be heard, he said, so he reiterates the search criteria that was decided at the beginning of the process and ask if anything else needs to be considered before presenting the findings.
Frequently, the provider who wins the bid is not selling, Finnegan said, but is able to convince the plan sponsor they will be a help in running the plan, something that is also often true of plan sponsors selecting advisers to help with the RFP process itself.