Administration November 14, 2012

Effective Oversight of RFP Groups

November 14, 2012 (PLANSPONSOR.com) – Requests for Proposals (RFPs) are more than a calling card—they are an investment manager’s resume.
Reported by

Yet investment consultants and many institutions are demanding that RFPs and related documents be turned around more quickly than ever. At the same time, the volume of documents that many RFP teams process has mounted.  

Cerulli Associates’ latest edition in The Cerulli Edge series, the Institutional Edition, says RFP managers need to manage proactively both volume and complexity to prevent volume and complexity from derailing their team. These groups must also continue to optimize efficiency.  

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

One of the most impactful methods of managing RFP volume is an effective qualification process, according to the Cerulli report. One RFP executive Cerulli interviewed indicated that after his firm put an RFP qualification process in place, the number of proposals declined 38%, but win rates escalated.  

The qualification process must fully vet potential mandates by asking questions such as: Does the firm have a competitive product that meets all of the qualifications set forth by the prospect? Is the investment strategy a core competency or a stretch? Does the firm have sufficient investment capacity in the strategy to manage additional assets? When the qualification process works, RFP teams report that they do not have to turn away documents because the sales force understands the importance of qualifying these requests upfront.

Creating a streamlined organization with a sufficient number of flexible and well-trained professionals is also key, Cerulli says. More than two-thirds (67%) of managers operate an RFP function that is performed by a centralized team solely devoted to RFPs. More than one-fourth (29%) of RFP managers surveyed oversee a centralized team that has a range of responsibilities beyond RFPs (e.g., marketing duties). Some RFP teams are responsible for updating consultant databases. Cerulli points out that investment consultant and other third-party databases play an increasingly important role for managers as they seek to secure mandates.  

Cerulli counsels RFP teams to set realistic timeframes when targeting a completion time for a document. RFP teams should operate at optimum, but not always maximum, speed. Three-quarters of firms target a one- to two-week turnaround time for RFPs. A much smaller group (25%) set a goal of three to four weeks for completing an RFP. Only half of the RFP groups that target one to two weeks for document completion achieve this goal 100% of the time, underscoring the importance of negotiating achievable deadlines, the report notes.  

Cerulli advises that one of the best means by which managers can get ahead of more complex documents and questions is to catalog the answers immediately after they have been developed—and approved by compliance if needed. To take this step, managers must be equipped with the systems to warehouse and maintain the content. At this juncture, most managers have adopted third-party RFP software (e.g., PMAPs or Qvidian) or collaboration software (e.g., SharePoint), but some remain committed to their proprietary systems, typically built off a Microsoft Excel spreadsheet.  

This research is from “The Cerulli Edge – Institutional Edition” and is available for purchase by contacting CAmarketing@cerulli.com.
Benefits November 14, 2012

Parents and Adult Children Need Retirement Planning Talk

November 14, 2012 (PLANSPONSOR.com) – Adult children and their parents struggle to communicate about retirement planning, providing care for elderly parents and inheritance strategies.
Reported by

Fidelity Investments’ Intra-Family Generational Finance Study found one-quarter (24%) of adult children believe they will have to help their parents financially in retirement, while nearly all (97%) parents say they will not need help.   

Approximately 95% of parents and their adult children say at least some conversations have taken place, but very few adult children believe the conversations were very detailed. Sixty-five percent of adult children and parents agree that discussing retirement readiness is an important topic, but 72% disagree on the level of detail that has been covered to date; and only 11% of children believe the conversations were very detailed.  

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

In addition, the study revealed 97% of parents and children disagree about whether a child will take care of his or her parents if they become ill.Major miscommunication also exists when discussing inheritance and estate planning; on average, children are underestimating the value of their parent’s estate by more than $100,000.    

While nearly nine in 10 (89%) adult children and parents agree that health and eldercare is an important topic of conversation, 63% disagree on the level of detail that has been covered to date.Only 10% of children believe the conversations were very detailed. Eighty-nine percent of adult children and parents agree estate planning is an important topic to discuss, but 70% disagree on the depth of the conversations that have taken place, and only one in five (19%) children say the discussions have been very detailed. 

Why Aren’t They Talking?  

While more than nine in 10 (94%) adult children and their parents agree it is important to have frank conversations about wills and estate planning, eldercare or covering retirement expenses, there are significant barriers to even starting these discussions within families.The top barrier noted by 30% of parents is they do not want their adult children to overly rely on a potential inheritance, and the top barrier for adult children (40%) is that they feel like it is not any of their business to ask their parents about these topics.     

When asked who they are comfortable with when talking about their financial situation, the study found that both parents (68%) and their adult children (60%) feel more comfortable discussing with a third-party financial professional than to each other.    

Only one in three (34%) respondents agree on the best time to start these discussions.Parents are more likely to cite when they near or enter retirement (37%) as the right time, while children indicate they would like to have a conversation before their parents retire or have health issues (37%).  

When adult children and their parents had detailed conversations about these critical topics, 83% agreed the other was willing to talk about wills and estate planning, eldercare or covering retirement expenses. Peace of mind of parents jumps from 61% to 91% when comparing those parents who have not had detailed conversations with their adult children versus those who have.  Additionally, parents who have had detailed conversations with their adult children feel significantly more at ease about their children’s financial future—68% versus 30%—among those who have not had detailed conversations. 

Fidelity offers a Family Finance Conversation Guide, and more information about its survey is here.  

«