If you are a business owner or an HR professional, you know the letters RFP all too well. You may find yourself faced with the need to prepare RFPs, requests for proposals, for a number of things related to the business, including your company-sponsored retirement plan.

While the letters mean the same thing for any product or service you’re looking to secure, the process is very different when it comes to your 401(k) recordkeeper, administrator or advisor than it is for other types of providers. The process may equate to a quick internet search, three quick phone calls, or up to a year of analysis, interviews, follow-ups, board meetings, before you can finally arrive at a well-documented decision.

You read that correctly. 401(k) RFPs can take up to a year. That’s because business owners and HR professionals are busy people, wearing multiple hats, working long hours, and managing the business. This leaves limited time to manage a 401(k) RFP. There are also not many resources to guide you through the process. At Krilogy, our goal is to help business owners and HR professionals feel confident about your options and the decisions you are facing.

Step-by-Step Approach to Your Retirement Plan RFP

The process begins by assessing your specific situation and considering what you seek to address. Understand that there are several parties involved in your 401(k) or other company-sponsored retirement plan. That being the case, your first question is:

What retirement plan provider are you looking to replace?

• Your recordkeeper: If the purpose of your RFP is to hire a new recordkeeper, your advisor should prepare the RFP on your behalf. If this is your situation, call your advisor. There’s no need to read any further.
• Third-party administrator: Your advisor should also prepare the RFP if your goal is to replace your Third-Party Administrator. Again, the good news for you is that you can call your advisor and move on with your day.
• Your retirement plan advisor: You may find yourself in a situation where you either want to replace your current advisor or add an advisor to your plan. This is a bit more involved and is the primary reason we’ve prepared this article. With these insights, you’re ready to confidently establish and manage the process, and grasp a better understanding of what to expect.

The Krilogy team of retirement plan advisors has developed a roadmap you can follow to help you complete and document an efficient and successful 401(k) RFP.

1. Create a Retirement Plan Committee. Identify 2-3 people you want to be involved in this process. Your first committee meeting should follow a specific agenda which includes:
   • Determine what advisory services you believe your plan and its participants need. This can be accomplished through consultation with plan participants, professional contacts and research on qualified media sources. Examples that you may consider include fiduciary training, employee engagement, Investment Fiduciary, participant education, one-on-one meetings, financial wellness, and compliance support, among others.
   • Define the minimum qualifications for potential advisors. This will quickly separate the retirement plan specialists from the generalists. In an industry with increasing regulations and litigations, it is important to identify advisors who specialize in this area. Those with only limited experience and limited offerings will not have the knowledge to properly support your needs. We recommend qualifications such as:
     • Minimum of five years’ experience with 401(k) plans
     • Minimum of ten 401(k) plans under the advisor’s personal management
     • Minimum of $20 million of retirement plan assets under the advisor’s personal management
   • Identify a minimum of three advisory firms or advisors qualified to respond to your RFP. Because you’ve taken the time in the step above to outline very specific minimum qualifications, you will be able to narrow your search quickly.
2. Create your RFP. There are two sections that you will incorporate into your RFP to help ensure that important information is addressed:

• • Company Portion
    • Describe your company. Who are you, what do you do and why do you do it?
    • Describe the specifics of your current retirement plan. For example, outline details such as current recordkeeper, current TPA, total employees, active employees, terminated employees, total assets, employee contributions, company contributions, investments with balances, etc.
    • Describe the services of your current advisor (if applicable) and what services you would like to receive.
    • List the minimum criteria for advisors as identified above.
    • Include a requirement for the advisor to be specific in his or her response to this RFP, individually addressing the questions presented. You want to avoid accepting RFPs from advisors or firms who use a templated response. State that these types of RFP submissions will be disqualified.
  • Advisor Portion – This section will take a little time and attention. You can find advisor RFP questions online, from recordkeeping/TPA providers or even from a potential plan advisor.

• This section is normally divided into three parts: Investments, Plan Services and Participant Services
• Pick only the questions you really want answered and make them your own
• Less is more

3. Release your RFP. Specify a deadline of no less than 2 weeks and no more than 1 month for submissions to be turned in.
4. Review the RFP submissions with your committee. If you create a specific RFP, you will receive short specific responses, leading to a short review period. If your RFP is generic, you will face long generic responses, leading to a long review period
5. Select 2-3 retirement plan advisors/advisory firms to present to your committee. Schedule all of the presentations in one or two days. This will shorten the process and help to ensure that the information presented is top-of-mind as your committee considers the options.
6. Select a new retirement plan advisor. The committee should meet after the last presentation, but no later than 1 day following the last presentation to vote on and select a new plan advisor.
7. Thank All of Your Respondents. There is a good deal of work required for an advisor or advisory firm to prepare specific and thoughtful responses to your RFP. We always encourage employers to acknowledge this, thank them for their time, and notify them of your decision.

The RFP process can be quite smooth and easily managed as long as you are equipped with the knowledge you need. With this outline, you can feel confident about the steps you are taking to successfully complete your 401(k) RFP. If you have any questions, feel free to reach out to your Krilogy advisor and we are happy to guide you through the journey.

Important Disclosures