The Prospecting Professor: 401k Prospecting: A Providers Perspective

Last week I noted that the # of plan providers who are thinking about changing or actively searching for a new plan provider...is at an all-time high.

In a recent report on managing 401k plans, the Institute of Management & Administration highlights "Nine Keys to Selecting a New 401(k) Provider." For financial advisors interested in pursuing the takeover business, this "inside" perspective may be insightful.

Prepare for the search before you start drafting an RFP and sending it out. Make sure it is the right timing for your organization.
Get control over your plan assets. This is your bargaining power. When you are looking for a new provider, they want to make sure that your plan assets can transfer.
Given a written notice to the vendors that might need it: stable value vendors, recordkeepers and trustees.
Review the investment policy structure.
Assess whether this is a good time to change 401k providers. Is this a priority for your organization.
Think about who will be involved in the search.
Think about what you want to request in the proposal.
Decided if you should hire a search consultant.
Assess your internal capabilities.
Be realistic about the time you have.
If you do hire a search consultant, ascertain that the consultant is not biased, that they are not receiving fees from potential candidates.
Don't distribute a large number of RFPs.
When choosing bidders do research. Find out which providers are in the market space that your plan is in.
When you issue the RFP, make sure the RFP elicits good quality bids.
Make sure your RFP questions all have a purpose.
After you send the RFP out, hold a bidders teleconference to answer questions.
Once the bids arrive, know how you are going to analyze the proposals, and what kind of scoring method you will use.
Choose two to three finalists.
Have finalists come to your site and do a presentation, or conduct site visits to their base of operations. The latter is preferable, as it will give you better insight into the provider and its culture fit for your organization.

In the first place, for all you math whizzes out there, you are saying to yourself, 'What's with the title of this report? There are nineteen keys to selecting a 401k provider that are listed here.' Hey...cool it! I didn't make up the title, I'm just reporting on it.

Either way, selecting a new 401k provider is a daunting task...and so is prospecting for the takeover business. Every little bit helps. Hope this helps you.