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We would like to submit an RFP for invtmnt advry srvs for a DCplan. Can u provide us a scope of work doc template?

Dec 09, 2013 by Douglas from Montvale, NJ in  |  Flag
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David is right. There is no one size fits all RFP template for DC plans. There are many different services an investment provider can offer so you need to identify which are right for your plan. Having said this there are some questions you should certainly have your advisor answer before you hire them. For example, will the advisor act as a Fiduciary to the plan in writing? Most will not or cannot. It is ok for your advisor not to be a plan Fiduciary. But this means that the sponsor retains 100% of the responsibility for selecting and monitoring the investments the plan offers. If there is an issue raised by participants, the DOL or the IRS regarding the investments the employees at the sponsor will be the ones providing documentation for why they selected and retained each investment. You really shouldn't put yourself in this position unless you consider yourself an expert in the investment area. If you aren't an expert consider hiring an advisor who will function as a fiduciary. A ERISA 3(21) fiduciary advisor will be a co-fiduciary with the members of your investment committee. If there is a problem you will all down down with the ship together but the idea of hiring the expert is to avoid there being a problem in the first place. An ERISA 3(38) Fiduciary Investment Manager will mitigate most of the sponsor's potential liability when it comes to investments as they will be solely responsible for selecting and monitoring the investments. Effectively the sponsor has delegated that responsibility to a third party and is therefore off the hook for the advisors investment picks. The sponsor does retain responsibility to oversee the 3(38) advisor but this is much less effort then documenting and choosing the investments yourself with the help of a non-fiduciary advisor.

Of course you will also want to ask how they are paid and how much. A financial advisor can get paid from plan assets, by the sponsor, by the investments inside the plan or by the recordkeeper. I am partial to the advisor being paid by the plan or sponsor. That way the fees are fully transparent. When the advisor is paid by the investments or by the recordkeeper it can very hard to understand how much they are being paid. Since it is the sponsor's responsibility under ERISA to know how much each service provider is paid and also that the fee is reasonable, non-transparent fees can be problematic.

There are many other services an advisor can provide. Will they help draft and update your Investment Policy Statement? Will they provide education to the plan participants? Is so will it be one on one or in groups or electronically? Will they provide fiduciary education to ensure any plan fiduciaries at your employer are doing their job correctly? Doing everything correctly is more important every day as more and more sponsors/fiduciaries are having to answer to the DOL, IRS and participants. Plus doing things right leads to a better plan and ultimately better participant outcomes. So compliance is not a bad thing.

Douglas, I hope you can see that even if you find a RFP template you should give very serious thought to what you expect of your investment advisor and modify the template accordingly. Hope this helps.

Comment   |  Flag   |  Dec 09, 2013 from Woodbridge, VA

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Hi Douglas, I don't believe I can attach anything to this answer area, but if you email me your contact information to dkring@conestogaplanning.com , I can send you one of the docs my firm uses for basic information to begin the process in order to provide a detailed proposal. However, one of the ways that we help in providing a proposal that best suits your needs is to meet with you and ascertain what is the best fit for your company. Of course, the more information you provide such as a census and plan assets, among other items, the better the proposal will be. Do you want to maximize contributions for the owners or key employees? Do you have multiple locations? These are all rhetorical questions here, but when I meet with a company, I will have many questions to design a plan for your business, and not take a cookie cutter approach, so just requesting a proposal without having a conversation with the plan advisor will generally lead to a sub par plan.

Comment   |  Flag   |  Dec 09, 2013 from Malvern, PA

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Douglas, I'm not sure what your plan needs, but here are the most common types of things advisors do for a plan:

• Investment Policy Development, Fund Menu Design - putting together a thoughtful instruction manual for how your plan's investment options are chosen and monitored • Plan Design Consulting - considering available features and working with your administrator to identify what might work better for the plan under a different design • Compliance Oversight - helping you stay on task, educating you on your fiduciary responsibilities, making life easier when it comes to how the plan functions • Act as Investment Fiduciary (3(21)) to the Plan or Act as Discretionary Fiduciary (3(38)) to the Plan - sharing investment liability • Vendor Management/Issue Resolution/Vendor Search - helping you manage your vendors as your advocate and translator or helping you replace them • Transition Services to New Recordkeeper - if applicable • Vendor Fee/Service Reviews - making sure you know what you're paying for what services so you can determine if they are reasonable, also helping you know what else is out there • Investment Monitoring/Committee Meetings/Fund Replacements/Fund Manager Search - driving the bus for reviewing investments, providing due diligence reports and executive summary of what's going on with investment options, documenting the meeting minutes or providing documentation of decisions made • Education Program Strategy/Employee Meetings - figuring out how to help employees understand and appreciate the plan and then determining the course of action, conducting meetings • Asset Allocation Modeling - putting together a custom set of asset allocation models taking into consideration the plan and the participants

And here are some questions you'll want to ask: • information about the firm and who you'll be working with (biography, ownership structure, affiliates, subsidiaries) • Form ADV II if they're an RIA (required disclosure/conflicts of interest document for advisors - broker/dealers do not have) • Is retirement plan advisory a main focus, what % of the organization's revenue was derived from it • What services does the firm provide that might be a conflict of interest (custodial, investment management, insurance, etc) • How will they be compensated - level or unlevel commissions, asset based, flat fees, per hour/project, etc. • Do they get commissions or other remuneration from any service providers in exchange for placing or renewing a plan, or solicit any form of compensation for helping place investment managers, custodial banks, or other service providers in the plan? • Are they a fiduciary to the plan? • Do they carry a fidelity bond or fiduciary liability insurance or any other insurance that would be beneficial to the plan? • How your plan will be serviced, by whom, what special retirement plan-related education and experience do they have

I can think of others but that should get you headed in the right direction! Cheers, Courtenay


1 Comment   |  Flag   |  Dec 10, 2013 from Alexandria, VA
Courtenay Shipley

OH - I misread. You're submitting, not doing the request! Just turn my answer around to your perspective instead of the client's :)

Flag |  Dec 10, 2013 near Alexandria, VA

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