RFP request for porposal

When Did You Last Conduct a RFP for Your Plan?

If you’re unsure when you last conducted a RFP on your corporate retirement plan, it may be time to consider doing just that.  It’s important to hire your plan’s service providers in a proper manner, and to document the process and decisions made.  Conducting a Request for Proposal (RFP) can provide proof of the prudent selection of your plan’s service  providers. 

Tips from the Department of Labor

Selecting and monitoring competent service providers is one of the most important responsibilities of a plan fiduciary.  In fact, it is so important that the Department of Labor (DOL) has created a list of issues plan sponsors should consider when selecting and evaluating service providers.  The List entitled Tips for Selecting and Monitoring Service providers for Your Employee Benefit Plan can be found on the DOL website at www.dol.gov/ebsa/pdf/fs052505.pdf.  

The two-page guide offers twelve tips to help you ‘Get It Right’.  The twelve items include defining what services are needed, understanding the fees involved, procedures to conduct an unbiased request, reviewing required licensing, verifying any complaints pending, ensuring proper bonding, and reviewing all contracts and agreements.  The ninth item on this list suggests you prepare a written record of the reasons for your selection of a particular provider as well as documenting the process you followed in reviewing the potential service providers.  

Proof why a RFP can be important

The importance of this documented process is highlighted by the case Chesemore, et al. v. Alliance Holdings, Inc. et al., 2012, where the individual Trustees were found liable for fiduciary breach and prohibited transactions by failing to follow plan documents and following direction of an improperly appointed consultant.  In this case, the Court ruled Trustees were liable, not the consultant, because the consultant had not been properly appointed. It is imperative to be able to prove the due-diligence process which guides your selection.   

How to get your RFP process started

Even though there are significant benefits for conducting a RFP for all your plan’s service providers, the method in which you do so can impact your results materially.  The first step is to hire the right independent investment fiduciary as the plan’s advisor.  The Retirement Advisor Council offers a Retirement Plan Advisor Search Protocol with a sample RFP questionnaire which you can download from our website by filling out the form to the right.  Determine what is important to your particular plan and its participants and then ask focused questions in the RFP to address your specific needs.  Once you hire the right advisor, he or she can help facilitate the remaining RFP projects such as the plan’s record-keeper, third-party administrator (TPA), and investment managers for the plan. 

Critical questions to ask advisors in your RFP

  • Are you independent?

  • What resources will you provide?

  • Do you have any conflict of interests?

  • What makes you unique?

  • Will you document your fiduciary role?

  • What is your investment process?

  • What are your credentials and experience with similar plans?

  • Will you provide non-discretionary or discretionary investment services?

  • Will you provide appropriate references?

  • What is your fee structure?

  • How much contact will you have with us?

  • Why do clients leave you?

Benefits of conducting a RFP

Conducting a RFP produces many benefits beyond fulfilling your fiduciary obligations such as benchmarking your plan’s fees, investment performance and participant behavior, as well as empowering you with the knowledge needed to create an effective retirement plan.  All of these benefits can help promote corporate wellness when employees are able to reach their goals for a successful retirement.