PANC 2018: Responding to RFPs

It has become more common for plans with upwards of $20 million in assets to go through a formal RFP process to find a new adviser, but it can be a cumbersome process to respond.

Day two of the 2018 PLANADVISER National Conference in Orlando included a frank and wide-ranging panel discussion on the timely topic of responding to requests for proposal (RFPs).

Panelists included Brian Hanna, senior plan consultant with Everhart Advisors, and Jason Chepenik, managing partner of Chepenik Financial. Their consensus was that the use of formal RFPs for the adviser search are clearly moving down market. Liability and litigation risk are driving this trend, but more plan sponsors are also doing RFPs to help improve participant outcomes.

Both panelists agreed that, as a growing advisory business, knowing when to respond versus not respond to a given RFP is an art form.

“When you are first starting an advisory business, you feel the need to say yes to everything, to respond to every seeming opportunity that comes into your mailbox,” Chepenik suggested. “As your business expands, this will help you to learn when to say yes and when to say no. These days, I’m lucky that my firm can be more selective about who we respond to. First and foremost, we like to see plan sponsors with clear goals and objectives.”

Hanna agreed, warning that, even for mature retirement plan advisory businesses, responding to the wrong RFP once in a while is inevitable, and it can burn up a lot of valuable time.

“I would even encourage you asking frankly, what is the purpose of their RFP?” Hanna said. “Increasingly these days, RFPs are in fact just a due diligence process aimed at documenting a decision the potential client has already made—namely, keeping their current adviser.”

Another consideration shared by both panelists is that a firm will see much more success in the process if they have some type of advocate or center of influence within or around the employer conducting the RFP.

“Frankly, if there is just an RFP coming out of the blue and we have no connection or center of influence we can rely on, that makes it very tough,” Hanna explained. “When we hear from an employer just through an RFP who has never contacted us otherwise, or who we don’t know through another center of influence, this makes it seem more like a due diligence process rather than a real honest RFP that we could win.”

Chepenik said one potential way to sort out the “honest RFPs” is to try to get in touch with the recordkeeper relationship manager. They might be willing to offer some guidance about where the plan sponsor stands and what they are attempting to accomplish via the RFP process.

“Ideally, you will already know this person and you can ask them, is this a real process or is this due diligence?” Chepenik said. “After you have done enough you will start to quickly see the similarities and differences in RFPs. Because so many are so similar, I’d say we will already have 80% to 90% of our response ready to go. But that 10% or 20% specific response is what will get you through to the finals presentation.”

Hanna went on to emphasize that “words really matter in this process.”

“If the company calls their people associates or team members, don’t sit up there and talk about employees,” he warned.