Michael Kozemchak, Managing Director, Institutional Investment Consulting, an NRP member firm, told attendees at the recent PLANADVISER National Conference, that they first should determine who the plan decision makers are. Advisers should educate this committee about the task they are undertaking.
They should first identify the goal of the process and the sponsor’s preferences, according to Kozemchak. It will also help to identify political connections. For example, if the CEO knows someone at the provider or prefers a certain service, it will save time to include them from the start.
Kozemchak says the committee should determine whether it is just benchmarking–in that case performing an RFI–or if it is actually prepared to change vendors, requiring an RFP. If issuing an RFP, committee members should set a timeline for a decision from the start.
Matthew A. Savage, Senior Business Development Manager, Strategic Insight, an Asset International company, says sponsors and advisers should have an open mind and be prepared for an unbiased evaluation. A provider that didn’t work five years ago may work out now.
Who you send the RFP or RFI to will depend on the plan type and size, according to Phil Senderowitz, Senior Plan Consultant, 401(k) Advisors. Advisers should determine which providers serve the plan type and size sponsored by their client. Savage notes that RFI and RFP questions will change with the latest trends and the latest regulations. He adds that the best way to understand the culture of a provider is with onsite visits as well as peer referrals.
Senderowitz says advisers can use a standard online RFP provided by an entity such as SPARK, and add specifics for the plan and pricing requests when doing a search. Kozemchak also suggests using PLANSPONSOR’s Pathfinder, a database of approximately 130 providers that can be narrowed down based on inputs of what the sponsor is looking for.
Savage adds that with Pathfinder, advisers and sponsors can weight the importance of specific questions and the system will score accordingly. In addition, Pathfinder will show why certain providers didn’t make it to the finals.