10 . Jan . 14

5 Reasons to RFP

Conducting a request for proposal for your organization’s retirement plan, foundation, or endowment can be expensive, time consuming, and flat out painful.

But just like going in for your routine dentist appointment, it’s something you have to (or at least should) do.  Thankfully, we’re not suggesting every 6 months…just 3 years.  So if you haven’t done an RFP for a while, here are 5 reasons why you might want to consider doing a Request for Proposal for your investment consultant this year.

1.  Unhappy:  Of course, if you are unhappy with your current investment advisor, don’t put off   making a change any longer.  And if you are going to make a change, be sure to do it through a formal process like an RFP so the due diligence process is thorough and documented.  This goes for those who do not currently work with an advisor and are considering hiring one for the first time.

2.  Reduce fees: By taking your account out for bid, it almost always leads to a reduction in overall fees, even if you decide to stay with the current provider.  In fact, just telling the advisor you are considering doing an RFP may lead to a fee reduction.

3.  Cover your bases: If by chance a DOL audit comes up or worse yet, a lawsuit, show that you have taken the proper due diligence steps to re-evaluate your advisor.  The emphasis is on demonstrating a prudent process rather than the investment results.

4.  Needs are changing:  Sometimes the advisor that you worked with when the account only had $5 million in assets doesn’t have the experience to manage the account now that it has reached $10 million.  For example, you may want to start considering new asset classes or investment strategies that are outside your advisor’s scope of expertise.

5.  Learn about new services:  The investment industry is constantly changing and advisors are always trying to distinguish themselves from the competition.  By doing an RFP and asking about service offerings, you may learn about innovative solutions and ideas other investment committees like yours are implementing.  Even if you stick with your current advisor, it may encourage them to step up their game.


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