It’s almost unheard of for a plan sponsor of any significant size not to go through an RFP process to search for a record keeper — so it only makes sense that the RFP process would migrate to plan advisor searches. InHub, a new service that launched this week, allows plan fiduciaries to scan a network of advisors, create a customized RFP and then manage and document the process.
The service, based in Chicago and started by former Morgan Stanley Graystone consultants, is designed for foundations, endowments and retirement plans — basically those with money that carry fiduciary obligations. If an advisor wins the business, it pays a fee, as does the plan sponsor for using the service. While InHub has been in existence for a few months, the recent announcement seems to herald their official launch (although the website still claims to be in beta testing mode).
The advisor RFP process is not new, but it appears to be gaining traction, with some industry vets like Trisha Brambley working with plan fiduciaries on the advisor search. Industry research group RAC, led by many leading advisors, published an RFP template in 2012 claiming that better educated plan fiduciaries will hire more experienced plan advisors.
But some advisors fear that the growth of this RFP process, especially if made easy online, could further accelerate the pricing decline that most plan advisors are facing, especially in the mid and larger markets. If everyone checks the same boxes, will online RFPs create the perception that advisory services are commodities? Regardless, more plan sponsors will pick advisors based on their merit, not their relationship, which has to be a good thing — that is, unless fees become the biggest factor, diminishing the elements of value and chemistry.
