Typically, in the arena of larger institutional retirement plans, more and more smaller plan committees are utilizing requests for proposal processes to perform the necessary due diligence when selecting a service provider such as a record keeper, adviser, TPA, or other. The RFP is a time-consumptive and demanding procedure — for both the questioner and responder. Having both written and answered a number of RFPs, I can attest to the depth that they can go into.
However, I would also argue that it is one of the most prudent ways for a plan sponsor to not only meet their fiduciary duties under the 408(b)(2) regulation for understanding fee “reasonableness,” but also allow them to cut through the noise of service provider features to identify the services that their plan and participants need. The process may be long, but when conducted in a thoughtful, formulaic manner, it’s very rewarding to plan success.
