Search Tools - Match Set
Finding a plan provider that will suit the needs of a plan sponsor is arguably one of the most important duties of a plan adviser; not being able to make the best match can leave the sponsor dissatisfied with your work and ultimately may cause you to lose them as a client.
The process of researching the various solutions offered by providers is generally thought of as being very time-consuming and cumbersome. There are, however, products and solutions that aim to help advisers with those requests for proposals (RFPs). These tools are designed to guide the adviser and their client down a path of questions to help them find the best-fitting provider for their needs. Whether by asking the right questions or by offering a side-by-side comparison of the providers, these tools are meant to streamline the process. If you are not already using one of these tools, you may have some of the following misperceptions about them:
They eliminate the need for an adviser (i.e., plan sponsors can do it themselves).
One such provider search tool is Pathfinder, developed by Asset International (parent company of PLANADVISER). The tool has undergone extensive upgrades over the past few years and has been repositioned as an adviser-facing product, rather than one used by the plan sponsor, according to Matthew Savage, Senior Business Development Manager for Pathfinder. Savage explains that this is because advisers are the retirement plan experts, not the sponsors. Although the initial design was targeted at helping plan sponsors do their own searches, most lacked the knowledge and expertise to use the tool on their own—and, over the years, that experience has been borne out across the market spectrum. Plan sponsors may well want to do their own searches, but they rarely have the patience or expertise to rely on these sophisticated tools. At the same time, because of the search tools’ breadth and depth, they can greatly extend an adviser’s perspective on competitive offerings and providers that would otherwise lie well outside an adviser’s normal purview.
The product will not allow for enough customization for each client.
When recommending a provider, you want to make sure the selection is best for your client’s unique situation—that it can accommodate plan design features, education delivery specifics, or particular investment recordkeeping needs. Sometimes you want to make sure it takes into account the nuances of your experience as well. That is why, when the Retirement Plan Advisory Group (RPAG) developed its provider search tool, the e401k Proposal, it included 400 data points for each provider for advisers to sort through. The more information that is available about each provider’s services, the better, says Nick Della Vedova, Manager of RPAG.
Pathfinder also makes several hundred data points available, though the menu has been significantly streamlined from earlier iterations. Providers go into the system to complete 460 questions, Savage explains. Advisers go through the same questions with their clients, and highlight which are non-negotiable responses (known as the “required” questions), and which have one answer that is preferable to another (known as “preferred” questions). The latter also can be weighted on a 1-5 scale in order of importance. The process is referred to as the “discovery questionnaire,” Savage notes.
The product allows for too much customization for my “run-of-the-mill” 401(k) clients to be helped.
Not all advisers agree with the “more is better” mantra. Mark Boser of SevenHills Plan Advisors in St. Paul, Minnesota, says that a good deal of the information included in standard RFPs is “useless” and “never used by the adviser or plan sponsor.”
This was the case with the “old-fashioned” manual method as well as with the new streamlined process, he says. Boser has used e401k Proposal and says he found the tool easy to use; however, superfluous information provided in hundreds of data points does not add value.
The tools can be used by advisers who simply might want to get more information about providers they already are considering for a client with relatively basic needs. Savage says if an adviser is interested in particular questions on the questionnaire, he can look at a provider’s particular answers to these questions and compare them with the needs of the client.
Della Vedova points out that on e401k Proposal, advisers can compare a plan’s incumbent provider with three to six other providers in a side-by-side format and, if an adviser would like to pull up a provider that is not already included in the database (which currently has about 60 providers), he can contact RPAG and inquire about the provider’s absence.
The process is complicated enough already—technology will only make it worse.
Della Vedova says advisers have been so accustomed to a time-consuming process, many may not believe that what used to take days or weeks, has been streamlined to take only a few hours. Not only can you research solutions from more than 60 vendors, but e401k Proposal also compiles a report to show the results to sponsors.
A feature on Pathfinder even thinks one step ahead for you—as part of the questionnaire an adviser completes with a client, some questions automatically include follow-up questions based on the answer, Savage says.
What search tools like these can do instead is help advisers apply objective evaluation standards across a broad swath of providers and detailed product offerings efficiently and effectively, and produce a detailed analysis report for the plan committee at the same time.
The results are not as accurate as if I were to do it manually.
On the contrary, says Savage, who points out that, without using a tool, the RFP process can be very manual and cumbersome. “With each new client, there’s a huge amount of research. [Pathfinder] allows an adviser to have a database that automates the process, and include providers they might not have thought of before or providers that have fallen out of favor for a while, but now they’re back in the game. It allows them to expand their universe of providers while taking the manual burden off their plates.”
—Nicole Bliman