Mastering the RFP

In the last couple of years, the Department of Labor (DOL) fiduciary rule-making process, and emphasis on disclosures and due diligence, has prompted retirement plan sponsors to become more methodical and deliberate about any decisions related to their plan, including the selection of advisers.

Thus, while issuing a formal request for proposals (RFP) to advisers once was conducted only by plans with  $50 million or more in assets, today even plans with as little as $20 million are going through the process. In “Outscale the Competition,” advisers reveal that 90% of the questions in an RFP are boilerplate. It’s in the remaining 10% that advisers can stand out from the competition.

With Sway Research projecting that defined contribution investment only (DCIO) assets will command a 54% share of the retirement plan market by the end of 2022, insight into what DCIO providers believe are their strengths and differentiators is revealed in “Current Focus.” This complements the 2018 PLANADVISER DCIO Survey, which showcases characteristics of the top 10 providers in that market, the products and services they supply to advisers, and their best-selling funds.

For some investment firms, the best-selling investment is the target-date fund (TDF) suite. “The Retirement Purse” examines how glide paths of TDFs that take participants “to” or “through” retirement are much more complex than advisers may be aware. Many TDF providers believe that, due to behavioral risk and the increase in longevity, investors should remain committed to TDFs in their retirement years and that these vehicles should start them off with higher levels of equity than was thought wise in the past.

Advisers typically look to expand their business through referrals—but that’s not the only way many retirement plan advisers have been successful. This year’s Practice Development department series is devoted to new revenue streams, with this issue’s installment exploring health savings accounts (HSAs). In addition to this, “Key Partnerships” makes the case for advisers walking participants through Social Security and retirement tax optimization, as these topics are underdiscussed. Payroll-integrated student loan debt repayment support is another emerging area through which advisers can differentiate their practice.

For Spectrum Investment Advisers, part of their business development mantra was: “If you build it, they will come”—and that has certainly rung true. Five years ago, when constructing an office building, the company’s president, James Marshall, decided to feature a coffeehouse where Spectrum could host educational events for sponsor clients and participants. He credits this with tripling the company’s assets to $2.2 trillion.

Because of the movement in the retirement plan advisory community to flat fees, many advisers are also embracing “clean shares.” You may be surprised, though, to learn in “Clean Shares’ Popularity” that, while they generally do not have front-end load or 12b-1 revenue-sharing fees, they can include sub-transfer agency fees or other kinds of revenue sharing.

We hope you agree that many of the ideas in this issue for how to expand your practice are unique, and will help you successfully grow your assets.