Selecting a Retirement Plan Adviser

Selecting the right retirement plan adviser is a critical decision for any committee responsible for overseeing a retirement plan. A well-structured Request for Proposal (RFP) process helps ensure that the committee identifies an adviser who aligns with the plan’s objectives, offers transparent fees, and supports long-term success. This guide outlines the essential steps and best practices for conducting an effective RFP, emphasizing the importance of clear objectives, thorough evaluation, and open communication.

Choosing the right retirement plan adviser requires a structured RFP process. Committees should begin by establishing clear objectives for the RFP and defining the specific services needed for the retirement plan. It is important to remain open to new perspectives, additional services, and current market trends that may not have been previously considered.

Organizing the committee efficiently is also crucial. If the committee is large or has limited time, forming a sub-committee of two to three people can improve the speed and efficiency of the RFP process. The scope of services desired by the consultant should be clearly defined.

Next, the committee should establish evaluation criteria by creating a general scoring matrix. This helps identify priorities and determine the importance of various factors in the final decision, ensuring a transparent and objective evaluation of consultant proposals.

Appointing key roles is another important step. Assign an individual to lead the RFP project and designate a primary contact to communicate with respondents on behalf of the committee.

Supporting documents such as current quarterly plan reviews, annual plan reviews from the recordkeeper, investment policy statements, fee disclosures, plan demographics, and recent plan health reports should be gathered and reviewed. These documents help identify service gaps and areas needing improvement.

RFP questions should be customized using findings from plan reviews to address issues like low deferral rates, poor investment performance, or top-heavy concerns. The goal is to identify an adviser who meets the plan and service needs at a reasonable cost.

The process for sending and evaluating responses should be organized and systematic to ensure all proposals are fairly considered. A clear timeline and process for preparation, evaluation, and final decision should be outlined, with consensus among committee members on key issues being important for a successful outcome.

Best practices include using a third-party consultant to facilitate the preliminary phases of preparing the RFP if needed, regularly reviewing plan documents to identify gaps and areas for improvement, and customizing the RFP to address specific needs. Common mistakes to avoid include lack of clear objectives, failure to define scope, overlooking fee transparency, ignoring conflicts of interest, insufficient evaluation criteria, not reviewing key documents, using generic RFP questions, poor organization and communication, not considering market trends, and rushing the process.

In summary, a successful retirement plan adviser search relies on a transparent, organized, and well-documented RFP process. By prioritizing clear objectives, thorough evaluation, and fee transparency, committees can avoid common mistakes and select an adviser who will support the long-term success of the retirement plan. Following these best practices ensures that the committee makes an informed decision that benefits plan participants and meets fiduciary responsibilities.

Bridgebay Financial, Inc. advises employer retirement plans including 401(k), 403(b), 457, profit-sharing, and defined contribution plans—on investment policy statements, committee charters, asset allocation, investment style selection, fund selection, ongoing monitoring, and provider evaluation. The firm’s advice is delivered through consultations with Retirement Committees and does not involve discretionary account management services.  Bridgebay creates Investment Policy Statements that provide a disciplined framework for plan governance, due diligence, and compliance with ERISA, DOL, and other regulations.  These policies set plan objectives, authorities, responsibilities, and controls, and are reviewed annually to help fiduciaries fulfill their responsibilities.  

Bridgebay conducts asset allocation and gap analyses to ensure fund lineups are diversified, efficient, and meet 404(c) requirements, identifying gaps or redundancies in fund offerings.  The firm evaluates fund menus for cost-effectiveness, asset class representation, and alignment with participant demographics and preferences, including socially responsible investments.  Advanced quantitative tools are used to assess target date and target risk funds, comparing them to benchmarks and peers to help sponsors understand performance.  Fee analysis is a core service, with Bridgebay ensuring fee transparency, benchmarking expenses, and assisting sponsors in renegotiating or recapturing fees for improved plan value.

Ongoing monitoring are emphasized, with quarterly reviews and user-friendly reports provided to Retirement Committees.  Bridgebay’s proprietary scoring system, proactive meetings, and vigilant oversight support prudent governance and help plan sponsors make informed decisions.