Look for More Record Keeper Search Activity, But Largely to Benchmark Price

Record keeper search activity is expected to increase, according to the latest research from Cerulli Associates. However, RFPs will only serve to benchmark pricing.

“More than half of plan sponsors have indicated they are likely to conduct a search for a record keeper within the next two years,” explains Kevin Chisholm, senior analyst at Cerulli. Many of them, however, have no intention of leaving their current record keeper.

There is “concern that the current emphasis on costs will increase the frequency of provider searches and force record keepers to re-bid on plans before they become profitable,” Chisholm reports. About 60% of plans have been with their current record keeper for more than three years. But, a significant percentage, slightly more than 40%, have been with their current record keeper for less than three years.

Cerulli anticipates that record keeper searches will increase dramatically as fee disclosure plays out. The challenge for record keepers will be to determine which plans are truly seeking out a new provider and which ones simply want to benchmark pricing.

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  1. Dorann Cafaro
    Posted January 15, 2013 at 4:16 pm | Permalink

    Most Recordkeeping RFPs to Benchmark Fees: Recordkeeper search activity is expected to increase; however, most requests for proposals (RFPs) will only serve to benchmark pricing, according to Cerulli. “More than half of plan sponsors have indicated they are likely to conduct a search for recordkeeper within the next two years,” said Kevin Chisholm, senior analyst at Cerulli Associates. “However, many of these plan sponsors have no intention of leaving their current recordkeeper.”

    Plan Sponsors simply need an independent, comprehensive and informative alternative to the RFP – they often have no interest in switching. Compared to an RFP, benchmarking has the following advantages:
    1) More robust apples-to-apples comparison which has statistical validation documenting reasonableness
    2) Establishes a link of fees and service value compared to other plans
    3) Accurate fee comparison using current actual costs verse estimated RFP
    4) Reduces expense since FBi benchmark reports are less costly to a RFP

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