Experts in Personalized Retirement Plan Design & Administration

Correctly Sized RFP

In the midst of a recent adviser search, adviser Gerald Wernette, speaks to the importance of focusing on understanding the sponsor’s concerns and needs—and doing so right from the beginning of the search process, even before the adviser responds to a request for proposals (RFP). Source:

Key Article Quotations:

“Often, 70% to 80% of an adviser RFP covers standard questions such as explaining the firm’s investment-analysis process,” Middleton says. “The other 20% to 30% is where the plan sponsor will put in specific topics related to the issues that sponsor is trying to address,” he says. “It’s that 20% to 30% that distinguishes or separates the respondents” (Pg. 1, Paragraph 4).

“Advisers should listen to sponsors in these meetings. Wernette recommends letting sponsors carry the weight of the conversation. “If they are not doing 90% of the talking, you’re not having a good intelligence-gathering meeting,” he says. “Typically, that’s all we’ll do—start off with a few focused questions, and they’ll start telling us things. If you do it right, rather than you trying to do any pre-selling to them, they’ll basically tell you how to sell to them” (Pg. 2, Paragraph 2).

“An adviser has to convince the plan sponsor that the plan is in his or her ‘sweet spot.’ It’s very important for advisers to communicate that their core competency is where the plan lives.” An adviser can specify what percentage of his overall business involves similarly sized plans, for instance” (Pg. 3, Paragraph 3).

“Spectrum finds it can distinguish itself in adviser searches by its flexible approach to how a sponsor wants to allocate its fees. The advisory firm can work on an asset basis, a per-head basis or for a flat fee, Demet says. “Flexibility in this area has been well-received,” he says. “We’re seeing more interest from sponsors in a per-capita arrangement or a flat fee, versus an asset-based fee,” he notes” (Page 4, Paragraph 2).

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