Vendor Search and Analysis

ERISA mandates that the plan sponsors accept and discharge a relatively high degree of fiduciary responsibility with regard to the plan and its participants. In conjunction with plan benchmarking, issuing a request for proposal (RFP) to a population of prequalified vendors injects an element of plan specificity and uniqueness to the fee reasonableness determination.

The RFP process typically involves three phases:

  • Preparation
  • Analysis
  • Conversion
The customized RFP includes a questionnaire covering all desired service components and capabilities. It also reports meaningful demographic, design, investment and asset data to assist vendors in proposing exactly how and at what cost it would deliver its service offering to the plan.

The vendors draft their proposals, which are then carefully reviewed and analyzed. The capabilities and solutions proposed by each vendor are compared head-to-tail across the board. Once the proposals are reviewed, about three finalist vendors are selected to give in-person presentations and answer questions.

Once a vendor has been chosen, the conversion phase begins, which can take up to three months to complete. The plan's investment option lineup is selected by the plan sponsors, service agreements are negotiated and plan assets and data are transferred to the new vendor.

This process helps satisfy the plan sponsors fiduciary duty to prudently select and monitor the plan's vendors and ensure that the fees charged to the plan in connection with he vendor's services are reasonable.