Best Practices for Selecting a Retirement Plan Adviser

Selecting the right institutional retirement plan investment consultant is essential for Retirement Plan Committees seeking to uphold high fiduciary standards and effective plan governance. The process involves careful evaluation of consultants, transparent fee disclosure, and a thorough understanding of evolving regulations and legal requirements. This guide outlines the best practices, common pitfalls, and key steps for conducting a successful Request for Proposal (RFP) to identify the most suitable adviser for your retirement plan.

An ideal retirement plan consultant should be independent, free from conflicts of interest, and not affiliated with plan service providers. Transparent fee structures are crucial to avoid hidden costs and ensure unbiased advice. Consultants play a vital role in advising on regulatory changes, legal issues, and investment monitoring, helping committees document decisions and select appropriate investment options.

Professional advisers assist with plan design, participant engagement, investment selection, fiduciary processes, and vendor management. Independent consultants often lead to better investment outcomes, improved governance, and enhanced regulatory compliance. As retirement plans grow in complexity and assets, committees may need to initiate an RFP to address increased regulatory burdens, gaps in service, or outdated fee structures.

The RFP process should begin with clearly identifying objectives and specifying the services needed. Committees may form sub-committees to streamline the process and should define the scope of services required. Establishing evaluation criteria, such as a scoring matrix, ensures transparent and objective assessment of consultant proposals. Key roles, including project lead and primary contact, should be appointed to manage communications and oversee the process.

Supporting documents—such as plan reviews, policy statements, fee disclosures, and demographics—should be gathered and reviewed to identify service gaps and areas for improvement. RFP questions must be customized to address specific plan needs, such as low deferral rates or poor investment performance. The process for sending and evaluating responses should be systematic, with a clear timeline for preparation, evaluation, and final decision-making.

Best practices include using third-party consultants to facilitate the RFP, regularly reviewing plan documents, and customizing RFPs to increase the likelihood of selecting the best adviser. Common mistakes to avoid include lack of clear objectives, poorly defined scope, insufficient fee transparency, ignoring conflicts of interest, and inadequate evaluation criteria.

In summary, a successful RFP for a retirement plan adviser hinges on clear objective, a well-defined scope of services, openness to new perspectives, and thorough documentation. Committees should prioritize transparency, objective evaluation, and regular review of plan documents to identify and address service gaps. By following these best practices and avoiding common mistakes, Retirement Plan Committees can select an adviser who meets their needs and supports the long-term success of their retirement plan.

Bridgebay Financial, Inc. (www.bridgebay.com) provides comprehensive due diligence to protect plan fiduciaries, enhance transparency, and improve participant communication. The firm leverages technology to offer cost-effective investment solutions and adheres to the highest professional standards set by the CFA Institute and IMCA.

Bridgebay’s advisory services focus on:

• Retirement Plan Services

• Institutional Investment Consulting

• Treasury Management Consulting

Specialty services include RFP search and evaluations for pension consultants, OCIOs, multi-asset class managers, co-fiduciary managers, investment managers, diversity-owned managers, ESG managers, custodians, and recordkeepers.

Bridgebay does not manage or custody client assets, nor participate in wrap-fee programs. Clients include corporations, defined contribution plans, foundations, and not-for-profit organizations.