other clients, we were able to persuade this recordkeeper to
come prepared with quick-enroll cards that required only
a participant signature to enroll in the plan, and it was a
tremendous success!” she says.
Kelly thinks a separate review of investment managers
is necessary. If investments are poorly performing, advisers
can help retool the plan’s lineup so plan sponsors have one
that is defendable. She suggests that, when searching for
a recordkeeper, plan sponsors should have the investment
lineup finalized. That way, when they go to market, they can
evaluate whether a recordkeeper can accommodate those
investments and price accordingly.
This also ensures that the choice of a recordkeeper’s
proprietary investment product does not skew fees, she adds.
It is somewhat common, she explains, for a recordkeeper
that is also an asset manager to provide pricing reflecting
inclusion of its proprietary investment products—e.g.,
target-date funds (TDFs), stable value funds, etc. This practice allows fees to be significantly lower, as the manager
benefits from revenue its investments generate in the plan.
“To ensure that all proposals are, in fact, ‘apples to
apples,’ ideally we prefer to have the request for proposals
[RFP] fees be reflective of a finalized investment menu, or at
least based on a completely open architecture lineup so the
recordkeeper cannot slot proprietary investments in order
to make its recordkeeping fee more attractive,” she says.
“It’s important for investment decisions to be independent
of recordkeeper selection.”
Plan Sponsors’ Unique Needs
Jim Phillips, president of Retirement Resources, in Peabody,
Massachusetts, notes that sometimes advisers and plan
sponsors use standard RFI or RFP templates from industry
groups such as The SPARK Institute Inc., without tailoring
them to a plan sponsor’s specific situation.“This is not
giving the plan sponsor an idea of whether the provider can
handle its plan in a specific way,” he says.
Kelly agrees that many capabilities—and probably the
most important ones—are inadequately probed for by way
of a template-RFI or -RFP approach.
Each plan is unique in some respects, Phillips stresses.
For instance, a plan may have payrolls on different cycles,
different eligibility periods for different classes of employees,
or participants who move in and out of the country. “Probably
the most important thing is whether the provider candidate
can handle the unique needs of a specific plan,” he says.
Uniqueness is typically demographic or operational in
nature. Employers usually are familiar with demographic
uniqueness, such as having an unusually young or old
employee population, an unusually high or low average
education level, or a large number of workers with visas or
other immigration considerations, Phillips says.
For operational uniqueness, such as that relating to
payroll issues, Phillips says, “an adviser can uncover [it]
through a discovery process—having discussions with
human resources [HR] and finance, examining plan documents, reviewing any compliance issues, talking with