Plan advisors are finding that more and more plan sponsors are using requests for proposals (RFPs). It's a trend that's here to stay.

RFPs offer an opportunity for plan advisors to show sponsors how great they are. But there are certain things advisors need to know up front to avoid making some big mistakes.

NAPA 401(k) Summit speakers Greg Middleton of CAPTRUST, Laurie Coleman of Spencer Fane LLP, Cindy Degulis of Retirement Playbook, and Matt Hawes of Morgan, Lewis, & Bockius LLP offered views from, respectively, advisory, HR, advisor liaison, and attorney perspectives. They discussed how to navigate the RFP process and offered advice about what works and what doesn't.

4 key things advisors need to know and accept about the RFP process

Advisor RFPs are here to stay as part of the sale process.
RFPs are “a detail-oriented exclusion process” — don't give a committee an excuse to boot you.
Before you walk into the finals, the committee has been doing their homework for the last 12 weeks.
Getting hired comes down to fit — it's one part meeting a plan sponsor's scorecard, one part effective communication, and one part gut instinct on the part of the committee.

How the RFP process works

Generally the process begins with a kickoff meeting where the plan sponsor committee, and any helping intermediaries such as attorneys or advisor liaisons go over objectives. If an attorney is assisting with the process, he or she might make sure the committee is considering what kind of relationship they want with an advisor, whether it's a fiduciary one or not, and review and document the RFP process.

A list of potential advisors to consider is created, or sometimes an advisor liaison or assisting consultant will provide a list of vetted advisors. The incumbent advisor, if there is one, should generally be included.

The RFP is created, proposals are gathered and evaluated, and a small group of finalists are asked to present in person to the committee. Then a choice is made.

The timeline can vary but typically it is around 12 weeks, from kickoff to selection, the panel said.

Tips for advisors when they receive the RFP

1. Understand the timeline and honor the deadline — and remember there are usually multiple deadlines.
If the RFP lists a contact person for questions, only go through that person, even if you are acquainted with someone on the committee or see them on LinkedIn.
Be sensitive about offering details and ensure your message doesn't get lost in unnecessary details:

a. Some plan sponsors want a high level for the RFP and will expect more details in the final presentation.
b. Some plan sponsors enter RFP responses online into a grid to do a side-by-side comparison of features and fees, so don't overwhelm with too many details.
c. One area where details are important for many is that of fees — state your annual fee and list what is included so the committee understands your fees.
d. If an RFP asks for a calendar snapshot of what the plan sponsor can expect over 12 months of working with you, offer it.
e. “If they want a ham sandwich, don't give them the world's greatest chicken sandwich,” said attorney Matt Hawes.

4. Realize that every RFP is unique, depending on what plan sponsors are looking for.

Tips for advisors making a final presentation

You made the cut and now you've been invited to give a presentation to the committee. What should you keep in mind?

Here are some tips from the panel:

Ideally, you should get an agenda to follow for the presentation. This is important for customizing your presentation and also seeing if any focus areas shifted for the committee during the process. “If no agenda is offered, you can ask for one. If there is none, you can start your presentation by saying 'here's the agenda we will follow,'” said Laurie Coleman.
When you get into the room, know that the committee has done a lot of research. “If you're just recapping what's in your RFP, you're probably not going to make the cut,” said Matt Hawes.
Make it all about the client — research them, know their culture, know what they value, know their pain points and talk about how you helped clients in similar situations. “Engage the committee rather than just present at them,” said Cindy Degulis.
Know how you're different from the competition and be able to differentiate yourself, but avoid frequent comments that compare and contrast to the competition — even if you don't intend it, your tone might be read as snarky.
Show up with the team that will be serving the plan sponsor in the foreseeable future. “More is not better — make sure everyone has a role in the meeting and isn't just sitting there,” Cindy Degulis said.
Demonstrate strong communication skills and make a connection — there can be some back and forth with the committee rather than a lecture.
Tailor your message to who is there — find out who will be in the room, if possible. Remember that not everyone (or sometimes anyone) on the committee is a financial expert.
Be sure to engage with everyone on the committee — a plan sponsor who heads an HR department mentioned in another NAPA workshop how annoying it was to have prospective advisors talk only to the CFO, ignoring him and others on the committee.

Instant Insights /

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