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Is it time to evaluate your recordkeeper?

Women doing paperwork on a computer

A competitive vendor search, whether through a full-scope request for proposal (RFP) or a more limited request for information (RFI), is an exercise that will have an immediate, lasting and potentially significant impact on retirement program participants.

An RFP or RFI presents an opportunity to make meaningful changes to your organization’s retirement program to ensure it is competitive, up-to-date and aligns with your goals.

In addition, recent retirement plan litigation has highlighted the importance of a competitive bid process: this widely-accepted best practice can also serve as a shield against claims of fiduciary dereliction.

So, if a competitive search is prudent, when is the right time to get started? That answer may depend on how you answer the following questions:

  1. What are the goals of my organization’s retirement plan as it relates to my business and my employees?
    • There are many benefits for an employer to start a retirement plan, including having a tax-advantaged vehicle for your employees to save for retirement and being able to attract and keep employees. As the top priorities of your plan may change over the years, especially with retirement committee turnover, it is important to consider the reasons why you have a retirement plan in place. 
  2. When is the last time I reviewed my recordkeeper service agreement?
    • What services is your organization currently receiving? What services should be added? Do the current services align with your organization’s goals? Do these services align with industry norms? Service agreements should be reviewed on a regular basis as the law and industry best practices change over time, including cybersecurity and data protection.
  3. Has my retirement plan kept up with the changes in the retirement industry?
    • Since the Employee Retirement Income Security Act (the legislation that governs employer-sponsored retirement plans) was enacted in 1974, there have been countless changes in the retirement industry. It makes sense to ensure that your organization’s retirement plan provider and plan are up to date. Recordkeepers are perpetually refining, improving and augmenting their service offerings. After-tax savings options, automatic enrollment for employees, technological advances like projection tools and electronic delivery of documents, and increased focus on cybersecurity are a few of the many benefits that recordkeepers now offer. 
  4. What am I paying my recordkeeper?
    • Are you paying an asset-based fee, a hard-dollar fee or a combination of both?  Is there an explicit fee? Your service agreement should include the fees associated with your retirement program. As the assets in your plan grow over time your bargaining power increases. If you are allocating plan expenses across participant accounts, it is your responsibility to test the marketplace to make sure the fees are reasonable. Even if you have no intention of leaving your current provider, this exercise can often generate some level of cost savings.
  5. When was your last RFP for recordkeeper services?
    • When was the last time you went through a competitive bid process? General plan benchmarking or an RFI are alternate options, but an extensive RFP is the best way to comprehensively gauge how your current recordkeeper compares.

If you are not able to answer each of these questions clearly and definitively it may be time to explore a competitive bid process. As your organizational goals change over time it is important to ensure you have the right partner for your organization’s retirement benefit needs and are getting the right services for a reasonable price. An RFP can compare the services you currently receive with those of other recordkeepers and ensure you are getting the best possible benefit.

If you have questions about retirement plan services or would like to begin talking to a retirement plan advisor, please get in touch online or by calling 800.388.1963.

The above is provided for informational purposes only. HANYS Benefit Services is a marketing name of Healthcare Community Securities Corp., member FINRA/SIPC, and an SEC Registered Investment Advisor.

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