Rethinking the RFP: A Strategic Playbook for DC Plan Success

Selecting and monitoring service providers for a defined contribution (DC) plan is a core fiduciary responsibility that can significantly influence participant outcomes. As a plan’s assets grow, mix of participants, plan features complexity, or scope of services needed, a formal due diligence review becomes essential. This is most effectively conducted through a Request for Proposal (RFP) process. The RFP provides an opportunity to benchmark the current provider’s performance and fees, improve operational efficiency, enhance services, and ensure continued regulatory compliance.

A well-structured RFP process begins by clearly defining the objectives. These may include benchmarking costs and services in line with ERISA Section 408(b)(2), enhancing participant communications and education, streamlining plan administration through modern technology, or seeking improvements in investment offerings and client service responsiveness. A thoughtful and customized RFP should reflect the specific goals of the plan sponsor and the unique characteristics of the retirement plan.

An effective RFP includes comprehensive information about the plan, such as assets, participant demographics, investment options, and cash flow patterns—so that providers can tailor their responses accurately. It is equally important to define the evaluation criteria upfront. These might include performance standards, call center metrics, participant access, investment flexibility, conversion timelines, and total fees. Clarifying any non-negotiable conditions or restrictions at the start can prevent time-consuming misalignment later in the process.

Evaluating RFP responses requires a combination of quantitative analysis and qualitative judgment. Metrics such as service benchmarks, investment performance, and cost transparency provide a useful baseline for comparison. However, financial stability, depth of regulatory knowledge, and the ability to provide proactive compliance support are equally important in distinguishing a strong provider. Developing a scorecard with weighted criteria can streamline the comparison and decision-making process.

Education and communication capabilities are critical differentiators. Providers should offer multi-channel education through online tools, printed materials, webinars, in-person seminars, and access to knowledgeable representatives. Tools should be intuitive, cover key topics such as retirement income, investment strategies and support informed decision-making. Importantly, any participant material must be educational, not merely marketing in disguise.

As the regulatory environment continues to evolve, providers should demonstrate expertise in maintaining compliance and offering timely, practical solutions. Robust operational procedures, current legal knowledge, and up-to-date systems are non-negotiable. Providers should be able to show how they have helped plan sponsors adapt to new regulations and maintain compliance proactively.

Once finalists have been selected, the in-person presentations become a pivotal stage in the evaluation. Each finalist should be given a consistent agenda to ensure an apples-to-apples comparison. The personnel who will be directly responsible for servicing the account should be present to speak to their capabilities and experience. These sessions offer an opportunity to evaluate the quality of the client relationship and assess cultural fit, elements that are difficult to gauge on paper alone.

The plan sponsor or committee overseeing the DC plan is ultimately responsible for the prudent oversight of the service provider relationship. Establishing a selection subcommittee composed of professionals with expertise in legal, compliance, investments, finance, payroll, and systems can enrich the evaluation process. Each member brings a distinct perspective to assess whether a provider can meet the organization’s needs in their area of focus.

Many plan sponsors choose to engage an independent, retirement plan consultant to manage the RFP process. These consultants bring industry expertise, a deep understanding of provider capabilities, and access to databases that streamline the search. They assist in crafting targeted RFPs, pre-screening providers, and creating evaluation frameworks that support clear, well-documented fiduciary decisions. A consultant’s insights can be especially valuable in identifying potential conflicts of interest, evaluating fee structures, and benchmarking service quality.

The RFP should be viewed not only as a compliance exercise but also as a strategic opportunity. It allows plan sponsors to validate that services are being provided at a reasonable cost, identify potential enhancements, and ensure the continued alignment of the provider with the plan’s goals and fiduciary obligations. The Department of Labor expects plan sponsors to conduct this type of formal review every three to five years.

Bundled service providers, which offer a full suite of services, including recordkeeping, plan administration, trustee and custodian functions, compliance, investment services, and participant education, can simplify plan management under a single contract. However, even within a bundled structure, it is essential to ensure transparency in service delivery and clarity on fees. For plans with open architecture, separate RFPs may be needed for each provider category.

In all cases, a well-executed RFP is a key element of fiduciary governance. It reflects a thoughtful, documented process that helps protect participant assets, promote better retirement outcomes, and fulfill the plan sponsor’s duty of care. When conducted diligently and reviewed periodically, it is one of the most effective tools to ensure that the plan remains competitive, compliant, and aligned with participants' best interests.