Why you should choose Bliss Consultants
Some
things are great on the "spur of the moment." Other things are better
accomplished with planning and forethought, like choosing a new
administrator for your 401(k) plan. Invest more time on preparation, and
you'll spend less time fixing problems. If your company is looking to
change 401(k) administrators or investment managers, first ask yourself
these questions:
Where are we now, and where do we want to be? Make a list of everything that's right about your current administration and everything that's wrong with it. Are the fees too high? Do they take too long to pay out terminated participants? Do you receive many participant complaints?
Who will participate on our search team? Determine which departments will be represented. Human resources, HRIS, finance, and payroll should all have a place at the table, and there may be others in your organization. You might consider including a consultant on the committee. Consultants can offer a broader range of expertise, but their fees may be a factor in your decision.
From which vendors will we request proposals? You can locate potential vendors from peers at other companies, professional organizations, trade journals, Web sites, and advertisements in service-provider directories, in print, or on the Web (see sidebar). Make sure your mailing list of potential vendors includes correct names, titles, and mailing addresses. If any of these are incorrect, it could cost you in terms of time.
When these questions have been answered, develop the Request for Proposal (RFP). At a conference sponsored by the Society for Human Resource Management, it was suggested that the following be included in the RFP, some in every proposal; some may not be necessary in every case.
Follow Through
Shopping for a new 401(k) plan administrator can be a complex process. If you have prepared your RFP in an organized and thoughtful manner, you can more easily evaluate the responses.
Here are some ideas to help you make sense of the pile of proposals you will receive and to choose the administrator that will work best in your situation.
To conduct a thorough review of the proposals, it helps to organize responses in an objective way. Try this:
The Profit Sharing/401(k) Council of America recommends exploring the staff size, performance record, technical capabilities, financial condition and capitalization, insurance/bonding, and litigation record for each vendor. Be sure you know which individuals will be responsible for your account. Find out about their training, certifications, and qualifications.
Of course, once you narrow the field, you'll want to do an on-site visit. Expect a dog-and-pony show, but don't be so "wowed" by the presentation that you neglect to check the more mundane details. Beware of vendors who claim they can meet your every need without researching complicated requests. Find out particulars: How will they handle your special circumstances? Always get the details in writing.
Ask for and check references for each finalist. References should include a client that is about the size of your company, one that is in the same industry (if possible), and a client that was recently lost. In the current environment of turnover among vendors (see the sidebar), it should not be too difficult for the vendor to supply the name of a former client who has moved on.
Next, compare fee structures. Some vendors charge a fixed-dollar amount per year, some charge on a per capita basis, and some charge based on a percentage of assets.
Last, make sure the vendor you choose includes all the details of your agreement in a written document signed by all parties. The document should include the fee structure and any special circumstances pertaining to your plan.
With the process so organized, the right vendor for your needs should rise to the top. Enjoy your new association, but don't get too attached. Statistically, you probably be doing it all over again in a few years!
Where are we now, and where do we want to be? Make a list of everything that's right about your current administration and everything that's wrong with it. Are the fees too high? Do they take too long to pay out terminated participants? Do you receive many participant complaints?
Who will participate on our search team? Determine which departments will be represented. Human resources, HRIS, finance, and payroll should all have a place at the table, and there may be others in your organization. You might consider including a consultant on the committee. Consultants can offer a broader range of expertise, but their fees may be a factor in your decision.
From which vendors will we request proposals? You can locate potential vendors from peers at other companies, professional organizations, trade journals, Web sites, and advertisements in service-provider directories, in print, or on the Web (see sidebar). Make sure your mailing list of potential vendors includes correct names, titles, and mailing addresses. If any of these are incorrect, it could cost you in terms of time.
When these questions have been answered, develop the Request for Proposal (RFP). At a conference sponsored by the Society for Human Resource Management, it was suggested that the following be included in the RFP, some in every proposal; some may not be necessary in every case.
- A cover letter, in which you provide an estimated timetable for the selection process and the conversion.
- A profile of the vendor's organization.
- How investments and the interactions with the trustee will be approached.
- What system, hardware, and voice response systems they use.
- Details about participant transactions, participant statements, and reports to management.
- Internet accessibility.
- Employee communication.
- Quality control.
- Nondiscrimination testing.
- Government reporting.
- Vendor's fees, number of clients, and references.
- A profile of your company and the plan.
- A list of what your administration must include and a "wish list."
Follow Through
Shopping for a new 401(k) plan administrator can be a complex process. If you have prepared your RFP in an organized and thoughtful manner, you can more easily evaluate the responses.
Here are some ideas to help you make sense of the pile of proposals you will receive and to choose the administrator that will work best in your situation.
To conduct a thorough review of the proposals, it helps to organize responses in an objective way. Try this:
- Determine your most important objectives and considerations; then rank them in order of importance.
- Using a matrix, compare each vendor's proposal with your list and score them against each other.
The Profit Sharing/401(k) Council of America recommends exploring the staff size, performance record, technical capabilities, financial condition and capitalization, insurance/bonding, and litigation record for each vendor. Be sure you know which individuals will be responsible for your account. Find out about their training, certifications, and qualifications.
Of course, once you narrow the field, you'll want to do an on-site visit. Expect a dog-and-pony show, but don't be so "wowed" by the presentation that you neglect to check the more mundane details. Beware of vendors who claim they can meet your every need without researching complicated requests. Find out particulars: How will they handle your special circumstances? Always get the details in writing.
Ask for and check references for each finalist. References should include a client that is about the size of your company, one that is in the same industry (if possible), and a client that was recently lost. In the current environment of turnover among vendors (see the sidebar), it should not be too difficult for the vendor to supply the name of a former client who has moved on.
Next, compare fee structures. Some vendors charge a fixed-dollar amount per year, some charge on a per capita basis, and some charge based on a percentage of assets.
Last, make sure the vendor you choose includes all the details of your agreement in a written document signed by all parties. The document should include the fee structure and any special circumstances pertaining to your plan.
With the process so organized, the right vendor for your needs should rise to the top. Enjoy your new association, but don't get too attached. Statistically, you probably be doing it all over again in a few years!
