Retirement plan advisers often partner with plan sponsors to put out requests for proposal for plan service providers. These days, however, more and more advisers are finding themselves on the other side of an RFP.

“I’ve seen RFP activity increase more sharply in the last six to 12 months than it had previously,” says Matthew Eickman, the national retirement practice leader for Qualified Plan Advisors. “It felt like there was still a bit of a lull after the peak of the pandemic, when, as the saying goes, [plan sponsors] weren’t putting out the most important fires, they were just putting out the hottest fires. If the plan wasn’t on fire, then they were trying to fix the things that needed to be fixed.”

A robust RFP market creates both risks and rewards for plan advisers. But unlike years ago, when plan sponsors may have been looking at the basics of getting fiduciary retirement plan advisement, their needs are more robust in the modern qualified plan market.

“My sense is that more of the RFPs are driven toward gauging market-reasonable costs and discovering what additional, somewhat non-fiduciary, but consulting services they can achieve through that arrangement,” says Eickman, who oversees a national practice with 20 locations. “That could be more fiduciary education, that could be more frequent recordkeeper benchmarking, that could be offering wellness, that could be offering advisers managed accounts or various additional services that they’re seeking.”

The trend toward more adviser RFPs is not just due to changes among plan providers. It’ is also being driven by the very aggregation in the retirement plan adviser and wealth management space that is making adviser offerings more robust, according to industry players.

When a retirement plan adviser joins a new firm, there can be a disruption that prompts a plan sponsor to seek confirmation they are still with the right adviser, or at least consider other options, according to industry experts.

“With the growth of ‘aggregators’ in the market purchasing independent advisers, this has prompted some sponsors to go to market to check on services and fees,” says Jay Gepfert, founding partner of Culpepper RFP. “Potential leadership changes and client services team might be changing as these acquisitions move through the buyout phase of an advisor acquisition.”

The Adviser Shuffle

Mark Olsen, managing director of advisory PlanPilot, says rampant aggregation in the space now has plan sponsors not only responding to adviser changes, but on the alert for potential shuffling after a few years with an acquiring firm.

“They [the plan sponsors] don’t want to do this exercise again in two-and-a-half years, so they will have more pointed questions now about succession planning,” Olsen says.

QPA’s Eickman notes that, as registered investment advisories and retirement plan advisories merge, business priorities can shift.

“M&A activity in the RIA space has impacted relationships that plan sponsors or committees have with longstanding advisers,” he says. “One of the sources of that impact is that the resulting organization following the transaction isn’t always one that has the same philosophical commitment to retirement that the predecessor organization may have had.”

If an adviser has a close relationship with a client, they may be relatively open with the plan sponsor about being dissatisfied with the new setup. This may be a way of ensuring the client that the adviser is doing everything possible to work through the problems, Eickman says, or it could be a strategy to keep the client on the hook.

“There are a couple of situations where advisers are biding their time and letting

their clients know how long their lockup period is [with the acquiring firm],” he says. “They’re really essentially hoping the clients will ride it out with them, and then when the adviser can go someplace else, perhaps they can follow the adviser.”

One other pressure point for RFPs is the ongoing consolidation among recordkeepers, Eickman notes. When a plan sponsors loses a recordkeeper, it can also be a time for widespread benchmarking across all plan services.

Pick Your Shot

The RFP volume is such that PlanPilot’s Olsen says his firm has to be selective in terms of which requests they take the time to dig into for response.

“Part of it is asking, respectfully, them to say how many RFPs they’ve sent out,” he says. “If they are sending out 15 of them, and I haven’t had lunch with this person or know them in some way, I’m not going to put a lot of work into a 1 and 15 chance.”

Olsen says advisers can stand out in the RPF process by “taking a step back” to think about how they can explain what makes their firm different, such as delving into the investment research the firm does and how it makes decisions for the plan menu.  

It is also important, he notes, to show clients how the advisory will help them maintain the highest fiduciary standards, from running the plan to choosing their recordkeeper. This is particularly important in the current high-litigation environment.

“We like to show them that we’ll ensure the checklists are in place, the meeting minutes are appropriate and well documented,” he says. “My view is: Plan for the worst, hope for the best.”

Strong client retention can also be helped, according to Eickman, by keeping good records of all the work being done with a client and being able to showcase those results.

When a new committee chair considers a change to the 401(k) plan, or the adviser, Eickman says it is important to show examples such as the number of meetings that had been run, the fund changes that were overseen, the fiduciary trainings provided or the number of educational participant webinars the firm conducted.

“All of those things can help to defend an existing client relationship and protect business,” he says.