The Art and Science of Recordkeeper Searches

Blue Prairie Group Matt Gnabasik Managing Partner Sr. ERISA Consultant [email protected] 312-376-8435

PSCA Presentation 2016

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A little bit About me and My Experience with RFPs -

ERISA consultant with 24 years of experience. Conducted over 100-plus RFPs/RFIs.

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Worked with plans of all sizes: Start up to Multi-Billion

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All types of plans: DC, DB, NQ, MSP and Stock Plans

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BPG conducts around 4-8 full scope recordkeeper searches per year. As a result, we maintain our own proprietary recordkeeper database.

What is an RFP? What is an RFI? When to Use one over the other? Reasons for…

RFP • Haven’t issued an RFP in a long time. • Suffer from systemic service/data issues. • Recordkeeper consolidation or M&A activity forces it upon you. • Outgrow the recordkeeper. • Conduct every 5-7 years.

RFI • • • •

Gage fees and services. Determine reasonableness. Conduct every 2-3 years. Identify any missing or weak service offerings.

What does a good RFP process look like •

Comprehensive

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Methodical

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Decision Tool

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Fiduciary Audit Trail

Overview of the BPG process •

Establish objectives;

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Collect detailed plan information;

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Determine RFP recipients;

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Send out RFP;

Overview of the BPG process (Cont.) •

Collect and summarize information;

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Weight scores & identify key differentiators;

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Bring in finalists for presentations;

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Negotiate contracts, service guarantees, etc.;

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Make a decision.

RFP objectives We tend to look for vendors that can provide: »

Market-leading user experience that leads to improved retirement outcomes.

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An open-investment architecture platform.

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Industry-leading privacy and security procedures to protect participant and beneficiary data.

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Innovative technology combined with a world-class recordkeeping platform.

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A proactive service team that exceeds stated performance guidelines and standards.

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Customized multimedia employee education and final wellness.

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Customized communication campaigns.

By asking important questions, we will uncover the core competencies and shortfalls for each prospective service provider. The results of the comprehensive analysis will provide fiduciaries a rigorous process along with service, fee and investment benchmarks that can be used to determine if changes are warranted.

The RFP Questionnaire Blue Prairie Group uses a weighted-average scoring system to help busy fiduciaries process and understand large amounts of RFP response information in one concise summary. We use eight unique criteria, each with a different weighting to assist in the vendor decision-making process. Company Overview & Commitment Conversion & Implementation

• Scale, Focus and Dedication to Retirement Services. • Recent Net New Business for Relevant Plans. • Review Lead Time, Blackout Period & Discovery Process. • Implementation of Communication Strategy.

Plan Design & Compliance Support

• Progressive Strategies for Effective Plan Design. • Plan Sponsor & Participant Satisfaction Procedures.

Investment Array & Brokerage Services

• Open architecture & No Proprietary Fund Requirement. • Brokerage Account Details and Decumulation Options.

Plan Sponsor Support & Administration

• Service Team Experience and Expertise. • Technology and Payroll Integration Systems.

Data Security & Technology Systems

• Digital and Physical Data Security Systems. • Planned Enhancements & Privacy Policies.

Participant User Experience Cost Structure & Total Plan Fees

• On-Site Participant Meetings &Monitoring Effectiveness. • Managed Account & Advice Structure. • In-Scope vs. Out-of-Scope Breakdown. • Flat-Fee, Per Participant, Asset and Ad-Hoc Fee Details.

RFP project overview and timeline The RFP project is outlined below and is divided into three main phases (excludes conversion). The purpose of this project is to demonstrate the Committee’s commitment to following a procedurally sound process to ensure that your plan is receiving the most comprehensive services at the most competitive price. Phase I: Project Definition

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Define project, success drivers, and wants/needs.

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Draft custom RFP based on client specifications.

Screen and select shortlisted vendors.

Phase III: Finalist Selection

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Submit RFP to shortlisted vendors.

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On-Site finalist presentations moderated by BPG.

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Receive completed RFPs, analyze data and create Executive Summary.

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Optional vendor site visits.

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Final vendor selection made.

Review Executive Summary and select finalists.

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BPG to negotiate pricing and services with new vendor(s).

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New vendor to be notified of selection.

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COMPLETED

Conversion

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Phase II: Vendor Analysis

IN PROGRESS

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New vendor(s) to draft contracts.

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Committee to approve contracts after council review.

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Conversion process to begin.

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Participants to be notified of vendor change.

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Conversion complete.

Best Practices •

Understand that the RFP is a fiduciary exercise.

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Use an experienced search consultant.

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Keep investments out of the picture (bifurcate the process.)

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Realize at a certain point, world-class recordkeepers have many similar systems, workflows, etc. and they look and feel similar. And, it can be difficult to quantify “soft” data points that help separate one recordkeeper from the other.

Best Practices (Cont.) •

Conduct site visits.

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Bring EEs into the picture (focus group) especially to review the participant websites/user interfaces.

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Read the ASA and negotiate pricing both at point in time and based on expected growth of the plan.

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Use the opportunity to move to a “levelized” fee pricing arrangement.

Contact Information Blue Prairie Group Matt Gnabasik Managing Partner Sr. ERISA Consultant matt @blueprairiegroup.com

312-376-8435

Driven by Passion. Backed by Results.