One of the questions we are hearing a lot lately from financial advisors and plan sponsors is “should we be considering a new recordkeeper for our 401(k) plan?”
Over the past couple years, the last thing our plan sponsors wanted was the extra stress and burden of transitioning their 401(k) plan from one recordkeeper to another. Financial advisors were also cautious about volatile markets and adding extra work on over-worked clients working remotely and managing an uncertain landscape.
However, in 2022, it is a buyers’ market and there is a lot of movement – whether that is activity around repricing at current recordkeepers or transitions to new providers.
In this 2-part series, we’re going to talk step-by-step through the events that may take place during a Request for Proposal (RFP) evaluation and in a subsequent piece, provide inside knowledge about what to expect if you consider making a provider change.
Step 1 | Work with your financial advisor and CrossPlans to get some options
Your financial advisor is going to play a key role in helping you explore the RFP. They will want to understand your motivation, goals and capacity for the transition. Some of the most common reasons to consider moving a plan are:
Exploring new technology and tools available for plan participants
Your current recordkeeping platform isn’t providing all functionality, integration and online sophistication your HR or payroll team needs
The plan’s pricing is no longer competitive in the landscape
Looking for a different investment approach or fund offerings
Service or communication with your recordkeeper isn’t meeting expectations
Led by your financial advisor surveying the leading providers, getting quotes and delivering options, CrossPlans believes every plan should be considering a Request for Proposal (RFP) every couple years to ensure your current provider is continuously meeting your goals and expectations.
Step 2 | Review the RFP
After obtaining the RFP, your financial advisor and CrossPlans will schedule a meeting to discuss the options and proposals from the incumbent as well as top names in the industry. It is important to remember that while pricing is always a consideration, ERISA does not require a plan sponsor to select the lowest cost provider.
Reviewing the RFP may be as simple as reviewing a spreadsheet or as detailed as receiving a web-demo or presentation from various recordkeepers. Make sure the process includes the key decision makers and works for you and your company.
Step 3 | Time to Make a Change?
In the event you decide it is the right time to make a change in your recordkeeping providers, you need to know there will be a roadmap, timeline and process. It is not an overnight flip of the switch, but a linear process that takes anywhere from 60-90 days. The new recordkeeper will have kick off calls and put together weekly check-ins to make the process as easy as possible for you and your plan.
Stay tuned for part two!
CrossPlans
23041 Avenida de la Carlota
Suite 300
Laguna Hills, CA 92653
714.210.4164
949.387.0611 Fax
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