Five Tips for a Successful Advisor RFP Process

According to a recent Plan Consultant article by CAPTRUST's Greg Middleton, advisor RFPs are on a “fast track” to becoming the preferred method for conducting an advisor search or documenting that the advisor is qualified, just like with other service providers.

CAPTRUST suggests a five-step process for plan sponsors ­­– a process that provides insights for advisors on how to respond successfully to an RFP:

1. Know the goals, including these:

  • Hiring or benchmarking?
  • An investment consultant or someone to engage participants?
  • Ongoing engagement or project?
  • Outsource fiduciary liability?

2. Document the state of the current plan to get perspective. Ask the right questions – 10 categories are suggested.

3. Cast a wide net. Start with 8 to 12, expecting to meet with three to six.

4. Go beyond the superficial, looking for answers to these questions:

  • Do the answers focus on solutions or outcomes?
  • Is the advisor qualified?
  • Are there conflicts of interest?

Another great resource is available from Principal Funds, whose Ryan Schutty presented on the topic at the recent LPL Retirement Partners meeting. Schutty made some key suggestions on how advisors can be successful, including:

  • Don’t respond to all RFPs, especially the ones where you are not qualified.
  • Try to differentiate.
  • Track wins and losses, and then adapt. 
  • Engage the plan sponsor wherever possible.
  • Simplify and streamline the process.

Warren Cormier from Boston Research Technologies (BRT) says that record keepers get invited to an RFP based on reputation, are invited to finals based on capabilities and win based on chemistry. 

Many advisors are concerned about the growing prevalence of RFPs, but that ship has sailed – partly due to advisors' own efforts to educate their clients on the importance of conducting and documenting a formal RFP process for record keepers and money managers, but also due to the need to comply with regulations. In the end, just as it did with record keepers, the process will weed out pretenders — resulting in better services while providing a steady source of leads to advisors, none of whom has a distribution system nearly as large or sophisticated as record keepers have.

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