Products May 22, 2015

Fiduciary Plan Advisors, InHub Offer RFP Tech

Clients of Fiduciary Plan Advisors can now work more collaboratively in a centralized and Web-driven request for proposal process, delivered through technology by InHub.
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Fiduciary Plan Advisors (FPA) has entered into a strategic partnership with InHub, the creator of Web-based RFP technology. 

The partnership allows Fiduciary Plan Advisors to offer their current request for proposal (RFP) consulting services online so that committee members of the adviser’s defined contribution, pension, health care and endowment clients can take part in an online RFP process. The technology creates a centralized RFP portal in which committee members can review proposals and executive summaries, take notes and vote online.

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This Web-based platform allows users to customize a RFP questionnaire, submit the questionnaire to their chosen candidates, receive and evaluate proposals, and prudently document the entire process for their auditable files.

Jania Stout, practice leader and co-founder of FPA, said in a statement the firm had been conducting RFPs the same way everyone did—inefficiently, using Word documents and a lot of emails flying back and forth. She predicts using InHub’s eRFP tool will cut their time in half and allow clients to get more involved. “It's the best of both worlds,” she said. “We really could not have built it better ourselves.”

According to Chad Wilson, investment director and co-founder of FPA, the firm has seen a significant uptick in demand for qualified advisers to guide committees through the process of identifying service providers, particularly for outsourced chief investment officer (OCIO) services.

OCIO services for either endowments or large pension plans are in particularly high demand, Wilson said. “We feel we are qualified to help committees understand the differences between the large OCIO firms. The big consulting firms could definitely do this, but they are conflicted, since most of them would also want to participate in the RFP.”

Use of RFPs is also expanding on the heels of rising health care costs, Wilson said. Those costs are sparking opportunities on the health and welfare side to assist employers in identifying health brokers and consultants for their organizations. “

“More RFPs are being conducted now than ever before, and committees don't have the time or expertise to run the process,” according to Stout. She called InHub a game changer in the institutional space for its transparent and interactive technology.

InHub, based in Chicago, was founded by former institutional investment consultants with the goal of creating a less-cumbersome RFP process. Fiduciary Plan Advisors, in Baltimore, is a consultant to all types of employer-sponsored retirement plans.

More information on the eRFP through Fiduciary Plan Advisors is on the firm's website.

Opinions May 22, 2015

Managed Account Demand on the Rise

“Do it for me” investors opt for professional management.
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Some common questions employers frequently ask are, “How do I set my employees on the right path to retirement?” and “What workplace resources can I provide them so that they’re retirement ready?”

These seemingly simple questions quickly turn complex when you take into account employees’ many behaviors and investing styles—including some workers’ preference to manage their own money while others want a professional to handle the investing.

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For the employees who are “do it yourselfers” (DIY), they manage their retirement savings on their own and call the shots. On the flip side, “do it for me” (DIFM) investors allow a financial services professional to manage their savings for them. We define this type of management to mean being 100% invested in a target-date fund or a workplace managed account, where a professional provides asset management so that each employee is properly allocated and on the right path.

The secret that this DIFM group harnesses is that they’re allocated in a way that considers their personal situation. In fact, looking at seven-year annualized returns based on return information for Fidelity Investments recordkept plans that offered managed accounts on a continuous basis from 1/1/2007 to 12/31/2013, the DIFM group who took advantage of a workplace managed account experienced less turbulence as a result of the risk management that comes with a professional overseeing the investments because they made sure they were allocated appropriately and according to the investor’s risk tolerance.

Managed accounts also helped those who were investing too conservatively by introducing funds that would help the portfolio grow enough so that the investor could reach his retirement goals. As a result of this tailored management, managed account investors historically have tended to experience a much tighter range of returns than those managing investments on their own. In an analysis of the risk distribution over a five-year year period for Fidelity recordkept plans as of 12/31/14, DIY investors experienced a range of risk two times broader than those in a managed account[i].


[i] The annualized returns presented exclude (1) workplace savings plans designated for employees of Fidelity Investments and its affiliates, (2) participants whose accounts included greater than 20% exposure to company stock at any point during the period, and (3) Extreme return values.

Employer demand for workplace managed accounts is steadily on the rise. This is due in part to the fact that the benefits of a managed account aren’t just for employees. When an ERISA 3(38) provider is managing the employee’s account, it assumes the employer’s fiduciary responsibility for those investments while an ERISA 3(21) adviser shares the responsibility.

As your company considers the benefits of offering DIFM employees a workplace managed account, here are some things to consider:

  • Understand the skill, will and time of your employees: Whether they’re “do it yourself” investors or DIFMs, understanding your employees’ willingness and aptitude for managing money will help determine the type of guidance, tools and products that will benefit them most.
  • Helping your employees manage risk is half the battle: By helping workers understand the risks associated with investing on their own and offering investment options that help meet their needs, employers can play a key role in improving retirement savings outcomes.
  • Provide needed solutions: Some employees need help managing their investments, so consider the benefits that a managed account may provide them in reaching their retirement goals.

Since an employee’s defined contribution plan may be the largest asset they ever have—and the key to reaching their retirement goals—helping them effectively manage their exposure to risk will help them reach their fullest potential.

 

Sangeeta Moorjani, senior vice president of professional services for Fidelity Investments    

This feature is to provide general information only, does not constitute legal or tax advice, and cannot be used or substituted for legal or tax advice. This article is contributed content and not written by a PLANSPONSOR or Asset International employee. Any opinions of the authors do not necessarily reflect the stance of Asset International or its affiliates.  

Fidelity Brokerage Services LLC, Member NYSE, SIPC 900 Salem Street, Smithfield, RI 02917     

Fidelity Investments Institutional Services Company, Inc. 500 Salem Street, Smithfield, RI 02917    

© 2015 FMR LLC. All rights reserved. Posted courtesy of Fidelity Investments.          721629.1.0

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