Eight in 10 requests for proposals put out to advisors to defined contribution and defined benefit plans resulted in the new hire of a plan advisor, according to data from In Hub, a company that provides an online RFP platform for institutional investors and plan advisors.
The company, founded by two former plan advisors, was launched in 2014. In the short time since, more than $10 billion in retirement plan assets have been represented in the RFPs processed through the platform.
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The company reviewed a segment of recent RFPs. Its data shows that it's not only large plans that are shopping for new advisor talent; asset size of the analyzed RFPs included plans with as few as $1 million in assets, up to plans with as much as $5 billion.
Median plan size was $35 million.
Sponsors indicated that a reduction in proactive service and poor response rates experienced with incumbent advisors and consultants motivated the solicitations.
They also cited "outgrowing" of the incumbent advisor resources and expertise as a primary motivator.
Most of those RFPs—90 percent—were soliciting the services of 3(21) investment advisors.
All of the requests required at least two in-person meetings a year with investment committees. The survey also said most required participant education capabilities, but In Hub didn't break that figure out.
Advisor responses were on an invite-only basis for all of the RFPs. Between five and 11 advisors were typically invited to submit proposals. Typically, three to six advisors were considered for the final round.
All of the sponsors included investment policy statements and solicited reviews from prospective advisors. Most of the 401(k) plans also included a summary plan description and recent fee disclosures.
In Hub's founders, Ariana Amplo and Kent Costello, both once worked for Morgan Stanley's institutional arm, Graystone Consulting, where they worked with retirement plans ranging in size from $20 million to $1 billion.
The Chicago-based firm derives its revenue for fees it charges sponsors. Advisory firms don't pay a fee to bid on a plan, but do pay 25 percent of first year revenues to In Hub if it successfully secures a new relationship through the platform, according to reporting in ThinkAdvisor when the company was launched last year.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
