Proposals That Please

As senior director, marketing at CAPTRUST, Greg Middleton leads the business development team. Last year, he says, the firm, which is headquartered in Raleigh, North Carolina, saw about a 10% reduction in the number of adviser requests for proposals (RFPs) it received as employers dealt with more urgent pandemic issues. With a return to normalcy beginning, he is seeing more plan sponsors ramp up a search for a new adviser.

Since a year ago January, CAPTRUST has received RFPs most often from plans in the $100 million to $250 million range, followed closely by plans with up to $10 million in assets and plans with $10 million to $25 million in assets. “There were specific services [such as participant advice] that were relied on more heavily than normal during the past 15 months,” Middleton says. “We typically see these scenarios about every 10 years, with the last one being around the Great Recession. During these more volatile times, for some plan sponsors it becomes clear that their advisory firm was not able to deliver the services the way they were portrayed, when they were needed the most. This resulted in some plan sponsors going back to market based on their experience.”

When a sponsor conducts an RFP to potentially switch to a new adviser, knowing how to effectively respond is crucial. “RFPs are not going away: They are here to stay,” Middleton says. “If advisers are growth-oriented, then responding to RFPs will be a legitimate part of their process.”

3 Differentiation Offerings

Here, experts discuss how they differentiate their own practice in RFP responses, in several key areas.

1) Plan-level fiduciary services. With many specialist practices willing to take on an investment fiduciary role, simply confirming in an RFP response that your firm will serve as a fiduciary is not enough. “Once you get to plans above $5 million, that is almost a ‘check the box’ type of thing,” says Chris Donnelly, who is head of the national RFP team in his role as chief advisory services officer at SageView Advisory Group in Newport Beach, California. “It’s less about just saying we are a fiduciary and more about showing how we are a fiduciary.”

Committees, particularly for plans that have $10 million to $200 million in assets, have become much more knowledgeable about their need for fiduciary services to be supplied by their adviser, says Alexander Assaley, managing principal at AFS 401(k) Retirement Services in Bethesda, Maryland. “When it comes to adviser RFPs, the ‘barrier to entry’ is being an advisory partner that will serve [only] as an investment fiduciary to that plan,” he says. “Our firm wants to deliver fiduciary services that are not just investment consulting, but also plan design consulting, vendor searches, and employee education and advice. We’re delivering full-scope fiduciary advice across the spectrum of a retirement plan.”

Francis Investment Counsel LLC, in Brookfield, Wisconsin, differentiates its fiduciary services in an RFP response by explaining the direct access a sponsor client has to the firm’s in-house technical experts, says Joseph Topp, a principal at the firm. “If you take a big wirehouse, it also has ERISA [Employee Retirement Income Security Act] compliance expertise, plan design expertise and investment analysis expertise. But how close to the adviser and the service team are these experts? If a committee wants to ask its adviser about one of these areas, the adviser has to find an expert and maybe patch that person in to a call with the committee,” he says. “At Francis, our experts are on our actual client service teams, and that’s an important differentiator for us.”

2) Participant-level fiduciary services. AFS 401(k) Retirement Services does not just say in an RFP response that it offers fiduciary advice to individual participants. It also explains why. “We think that’s important for the fabric of who we are as advisers,” Assaley says. “We explain that the foundation of our firm’s fabric is to help people improve their financial life and enjoy their life—that’s at the core of what we do. In an RFP response, we want to be able to create that connection point of why we are doing the work we are doing.”

CAPTRUST differentiates its participant-level fiduciary advice service by explaining how it can effectively do the work with that specific sponsor’s employee group, Middleton says. An RFP response for an oil and gas company with employees who work mostly in the field will explain how the advisory firm will reach the widely dispersed employees, for example. “There are some core components that go into an advice program, but an RFP response has to relate directly to the demographic population of the plan sponsor doing the RFP,” he says. “You need to demonstrate that your resources are going to help to achieve that specific sponsor’s goal.”

Francis Investment Counsel explains in an RFP response the wide scope of its participant advice service. “We’re willing to incorporate a more holistic approach in our one-on-one work with participants and to talk about what’s important to a participant. It may be student loans, contributing to an HSA [health savings account], or debt or budgeting issues,” Topp says. “You name the financial topic, and our advisers will speak on it and offer individualized advice.”

Francis also explains that its fixed, flat-dollar fee structure and sole focus on retirement plan work mean it is free of potential conflicts of interest in advising participants, Topp says. “We don’t handle rollovers, and we don’t do any wealth management.”

3) Financial wellness programs. Assaley sees financial wellness as an area where plan advisers have an incredible opportunity to add value. “We add that value by offering a hands-on, customized financial wellness experience for our clients—and we look for organizations that want to build out that type of program,” he says.

In an RFP response, SageView differentiates its wellness services from competitors’ by explaining the multifaceted internal resources it has for building an in-depth program. “‘Financial wellness’ is a ‘buzzword,’ but what does it actually mean?” Donnelly says. “Does an advisory firm offer its own adviser managed accounts, as we do? Does it have its own call center staffed with CFPs [Certified Financial Planners]? Does it do one-on-one meetings with participants? In an RFP response, we explain how we have the resources to help that plan’s participants.”

More and more, companies want to create a foundation of financial wellness that helps support not only the retirement plan but also the company’s culture, says Kathleen Kelly, managing partner in Compass Financial Partners, a Marsh & McLennan Agency LLC company, in Greensboro, North Carolina.

“So we’re not coming in and saying, ‘This is our financial wellness resource, and every client utilizes it.’ We’re very customized in developing and implementing a financial wellness program,” she says. “In an RFP response, we describe the basics of how we tailor that customization. We also explain that we have a dedicated financial wellness team: It’s all they do, and they’re CFPs.”

3 Differentiation Techniques

The advisers also discussed three keys to how to approach writing your RFP response.

1) Customize your content. SageView’s consultants ask a potential client many questions upfront and listen closely to its answers; this way the RFP response can be customized, Donnelly says. The advisory firm has template responses to typical RFP questions but then adapts them for a specific response. “Definitely, the customization goes a long way with sponsors,” he notes.

To customize a response, Kelly agrees, it is crucial to talk upfront with the prospect. “As advisers, communicating our differentiators needs to start with a recognition of what the plan sponsor is trying to accomplish. So the more pre-response conversations you can have to learn about its goals, the better,” she says. “How do you differentiate your practice in an RFP response? You create an experience for the reader that jumps off the page. That happens as a result of giving a much tighter response that is based on customization and trying to identify early on, through additional fact-finding, what’s important to that potential client. What’s important doesn’t always come through in the RFP questionnaire.”

2) Share relevant case studies. When plan sponsors perform an RFP, the biggest challenge most advisory practices face in responding is not whether they have the core capabilities needed to serve that plan, Assaley says. “The biggest challenge is how best to express in an RFP response that they have those capabilities. We try to develop a storyline with real-life examples of work we’ve done for our clients, other organizations [that share similar] demographics and characteristics with the potential client. We build in those case studies to the RFP response and give the sponsor a really clear sense of what the experience of working with us might be like.”

Many sponsors send their RFP to 10, 20 or even 30 advisory firms, and when the sponsor looks at the responses, “probably only 25% of the advisory firms really distinguish themselves,” Middleton says, noting that he bases that assessment on several things, including feedback from the sponsors. It is likely that all of the advisory firms offer services such as investment reviews, plan design consulting and participant education. “It’s the ability to give examples of how you can deliver that service, to ‘evidence’ that, that will distinguish you,” he says. “It’s like test-driving a car.”

3) Have an informative, not promotional, tone. “With my team, I try to eliminate the fluff in an RFP response,” Donnelly says. “You can create an eight-paragraph answer to an RFP question that sounds like good marketing, or you can just give them the answer.”

When Kelly thinks about Compass Financial Partners’ differentiator, she sees it as the firm’s very results-driven orientation and strong track record of producing results for clients. And the results sought are not the same for each, so an example her firm would include in a response would discuss specifically how Compass had partnered with a client to achieve the particular results it wanted. “The more we can illustrate solutions, as opposed to just listing our capabilities, it’s definitely a differentiator,” she says.

Art by A. Richard Allen