One of your most important jobs as an employee benefits financial professional is helping clients choose a new retirement plan service provider. It can be a complex undertaking—part art, part science.

However, the process offers a great opportunity to build on your relationship with your clients, further understand their needs and help them—and their participants—make the most of this valuable benefit.

A standard RFP is a place to start—not finish

Clearly, no two clients are exactly alike. Yet many provider searches rely on pre-formatted online request for proposal (RFP) forms. While these templates may provide a good starting point for a provider search, they shouldn’t be the only information used.

After all, templates often focus only on standard services that are already made available by most providers these days. And typically, templates don’t capture important qualitative information—including an assessment of each provider’s ability to meet the needs of all employees, from the youngest workers to those preparing to retire.

Explain the sponsor’s needs in the RFP

As you customize a client’s RFP, it’s a good idea to outline the factors that are driving the search and the selection criteria. The risk in withholding this information is that the providers’ RFP responses may feature the wrong aspects of their strengths. Stating the objectives of the search upfront and asking questions specific to the plan and participants’ needs can help produce more useful and meaningful responses.

Ask questions that assess the sponsor/provider fit

In their paper, “Finding Best Fit in a Retirement Plan Provider Through the RFP Process,”[1] Harry Koolen and Jim Reed identify what they call the “3 P’s of Fit,” which they’ve determined to be essential to successful sponsor-provider relationships. The “3 P’s of Fit” are:

Philosophy fit. There should be an ideological match between the provider and the plan sponsor.
Product fit. There needs to be an alignment between the mix of products available and the actual needs of the plan participants.
Personal fit. The final piece in establishing a “fit” is a willingness on the part of each party to build a working relationship.

Assessing “fit” goes back to outlining the plan sponsor’s selection criteria in the RFP. Ask providers to explain capabilities, services and possible solutions that can help the plan sponsor achieve their unique goals and objectives. For example, how will the provider support plan participants in making their decisions on distribution strategies? This is the type of help that an experienced, dedicated provider will generally be eager to provide.

Next step: Meet face-to-face

After you and your client whittle the candidates down to the finalists—based on written responses to the RFP—it’s time to schedule meetings. A scorecard of some kind will help the group evaluate each provider’s presentation.

The scorecard should rate products, participant education, fiduciary support and online capabilities. It can also help you compare responses as you look for an understanding of the plan sponsor’s concerns by the provider giving the presentation. Finally, make sure your client understands how the provider makes its money and how they keep plan costs under control.

The final decision

When it comes to making a decision, revisit the plan’s goals with your client. The chosen provider needs to be willing—and able—to assume those goals as their own.

Look beyond the quality of the materials and presentation binders, and focus on the actual services and possible solutions available to help your client—and their participants—meet their goals. Independently verify what was asserted and what was promised.

Then look at the cost. Benchmark it to the current plan expenses and then to the industry’s. This will help ensure that expected costs are competitive.

Success is in the details

A successful provider search rests on the details. That’s why the search process needs to be more multi-dimensional than a standardized questionnaire and a canned sales presentation. To learn more about creating a successful service provider search process, read the white paper from The Principal^®, “Making it Personal When Conducting Provider Searches for Plan Sponsor Clients.”

Instant Insights /

The art (and science) of retirement plan provider searches

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