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Prospect ‘Progressively’: Lead with Advisor RFP

Progressive Insurance and more recently Allstate through their Esurance division market themselves by offering to compare their pricing with the competition. Can — and should — plan advisors take a page out of these insurance companies’ playbook?

A large DC advisory firm with over $30 billion in AUM is starting to aggressively push advisor RFPs when prospecting. Though most plan advisors would prefer just to get hired without undertaking an RFP process, even smaller plans are starting to conduct RFPs.

Leading with a push for an advisor RFP shows confidence in that advisor’s abilities and team strength. It’s almost impossible to hide weaknesses in a thorough, well-run RFP, and this particular specialty group does so with a confidence that their resources are as good or much better than those of their competitors. And they are not afraid that an RFP will come down to price only, which may happen from time to time.

It’s also the right thing to do. To fire the incumbent advisor and hire a new one without conducting a prudent, documented process might actually be a borderline fiduciary breach, just as it would be with the plan’s investments or record keeper. To not conduct periodic RFPs for their current advisor might be worse.

And then there’s the debate of the value of benchmarking versus an RFP. Both have their place — a plan might benchmark their advisor annually and conduct an RFP every three to five years or when there’s a major corporate event.

Does anyone really think that there will not be more advisor RFPs in the future? Those who do are probably waiting for the return of C shares. But imagine how it looks to a plan sponsor when a new advisor leads with the idea of conducting an RFP, a practice they advocate for their current clients, while you argue that there’s no need. It raises the suspicion that you have something to hide.

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