Retirement plan advisers can add value for their clients by reviewing plan providers regularly. Through this practice, they can make sure a provider meets all the
needs of the plan and its participants, plus maybe find an
opportunity to negotiate plan fees. In the process, they may
learn things that help their own business model, as well.
Kathleen Kelly, managing partner at Compass Financial
Partners, in Greensboro, North Carolina, says her firm takes
a disciplined approach to provider reviews.
“We do an annual fee benchmark for all clients. It vali-
dates that fees are in line, reasonable and commensurate
with services provided,” she says. However, fees are only
half the conversation, so Kelly also looks at how well the
plan design and provider suit the plan’s demographics.
Plans have changing demographics, she points out. “We
look at doing a request for information [RFI] or request for
proposals [RFP] even if things seem fine,” she says. “It helps
plan sponsors understand what is available in the market—
services and deliverables that have changed over time.”
Compass recommends a formal review of recordkeepers
every three to five years. “Obviously, if there are issues
or challenges with services or fees, we look at the market
sooner,” she says. Corporate changes such as a merger or
acquisition may also drive a more frequent review.
Kelly says her firm works with close to 20 providers.
However, most of its clients are concentrated among half
of those. “While we remain agnostic and don’t change new
clients’ recordkeepers for the sake of placing them where
we have a larger relationship, the bell curve of our clients’
recordkeeping relationships is similar to [that] of the market
in general,” she says.
She adds that having clients with different recordkeeping partners provides leverage for negotiations, along
with improving her firm’s understanding of available capabilities and resources. Compass can then better advocate
on clients’ behalf, as well as better identify the “best-fit”
partner during a recordkeeper search. “We regularly parlay
experiences with one vendor to [help us problem-solve with]
another—a recent example is a large recordkeeper that
had moved away from paper enrollments. We had on-site
education planned for a client’s manufacturing facilities
where web usage is very low. Due to success we had with
Non-cookie-cutter plans require non-cookie-cutter services