What Do Plan Sponsors Focus on When Doing an RFP?

Employers completing requests for proposals want to choose from providers with deep experience in retirement plans and benefits; with robust technology capabilities; and with resources that can enhance employee education and boost retirement readiness.

Employers base the specific areas of focus for an RFP on their objectives, on the benefits of the plan and on the needs of the workforce.

Fulfilling a successful RFP is a challenge because it demands squeezing the most juice from the effort, plan sponsors explain, but there are aspects that are common across all processes.

Priorities Range, But Tech Is Key

One such focus is providers’ underlying technology, says Thayla Bohn, senior vice president of corporate and human resources at American Fidelity Assurance Co., a life and health insurance products provider.

“There’s an expectation now from customers—from employees and participants—that their experience with … your benefits provider is going to be as easy as it is to buy something on Amazon,” she explains. “[Plan sponsors must] make sure that [they’re] looking at that and ensuring participants or employees are going to have [the best] experience as they can interacting with that [benefits] information ’in a way that is comfortable for them—which now is typically mobile, on their phones. That requires continued investment [in technology] to stay on top of that.”

American Fidelity Assurance changed its retirement plan recordkeeper and investment administrator via a 2020 RFP, eventually choosing new providers about six months after the initial RFP deadline, although the full process from published RFP to transition took about 16 months. The company, based in based in Oklahoma City, planned the RFP after having identified areas for improvement such as enhancements to employee education, Bohn says.

“Everybody’s [supposedly] a technology company now, and so [plan sponsors] have to look at what is the current state of [the provider’s] technology and how much investment are they putting into that for the future?” she asks.

After sorting through the provider entries, American Fidelity selected a provider that was using technology to educate employees on proper use of benefits to the greatest extent possible and that to answer questions from workers who prefer to call customer service, adds Bohn.

“One of the things we were really looking at closely in our RFP was, ‘What is the technology you’re using today?’” she says. “‘What’s the [look and feel of the] participant experience?’ and then also, ‘What are you investing in to ensure that this is staying up to date for the future as things change?’”

The company also focused on finding a provider with employer education resources on compliance, legislative and regulatory changes to limit plan sponsor risks, Bohn says.

“We recognize the pace [and] the speed of change [are] accelerating,” Bohn explains. “There’s a lot of compliance issues as a plan sponsor, there’s a lot of changes that happen with legislation, and therefore the company focused on finding providers with the bandwidth to ensure the retirement plan remains compliant,” Bohn explains. “A big issue is to partner with someone who has the ability and to scale and make those changes.”

Similarly, technology was a focus area for providers at Hines—a global real estate, investment, development and management firm based in Houston. the company’s selected provider must be able to deliver a mobile app that allows participants to access every aspect of the employee-benefits experience as comfortably as they would on a desktop.

“The [provider’s] mobile platform is really important, because that’s where the plan sponsor get[s] the most engagement,” says Junaid Karimi, vice president of total rewards and human resources information systems at Hines.

Karimi agrees that compliance support for benefits, broadly, and the retirement plan, specifically, are critical to success in fulfilling an RFP.

The ability to bring resources for plan “compliance with the ever-changing legal regulatory landscape [is important in the RFP], because there seems to be 401(k)-related legislation once a year in the last four or five years,” he says.

It is also important for providers to meet current compliance, data and security standards and work in a support role for the fiduciary duty of Hines’ 401(k) investment committee.

“There’s a compliance aspect to it too, so the [provider’s] got to come with the appropriate audit controls,” Karimi says.

RFP Table Stakes

Employers will, of course, differ in their specific needs, but there are definite table stakes plan sponsors need in their initial RFP responses to earn consideration.

Employers will want the RFP to adhere to specific areas of focus that will vary by company, but common aspects like size and scale will be considered by all. Additional aspects are understanding of the plan sponsor’s business and an ability to accommodate company growth and business expansion, employers say.

At American Fidelity the search must-have was education for participants that could take part of that burden away from Bohn’s team, which is small, she says.  

“Education of our colleagues was a big point for us,” she explains. “We don’t have a lot of resources in order to internally provide a lot of education.”   

Among the table stakes for Hines are a minimum size, scale and sophistication of the selected company, Karimi says, although he believes newer companies might take a different approach.

’“A lot of the Bay Area-based fintech, Gen Z companies are great for micro savings or for 22-year-old’s who save the change that they get back from the Starbucks barista and [that] goes directly to their savings, but that’s not something that’s going to work for a company like Hines,” he says.

At Salas O’Brien, an Irvine, California-based engineering firm, the must-haves for providers include ease of use for the benefit platform and the providers’ depth of experience in the space, says Lucas Hellmer, associate vice president for compensation and benefits.

“Is the team member experience going to be good for individuals who are going to be using that particular product?” he asks. “[If] they don’t have some of those things, I would not move further with that particular vendor.”

For the Southwest Airlines Pilots Association, a provider must be able to allow for separate source investing, accommodate a range of investment choices that workers have become accustomed to using, and ensure the choices remain available to participants.

“You can’t take away a benefit that [workers] already have, so that would be a must-have,” says Mike Haynes, director of retirement at the Southwest Airlines Pilots Association.

“[A provider must] have the capabilities, [because] it’s okay to have the bells and whistles and to have the marketing and to talk, but you need the nuts and bolts behind it in order to execute,” Haynes says. “The technology, in order to implement the specific plan provisions, [is critical].”

Benefits decisionmakers at the Southwest Airlines Pilots Association—with an estimated asset total of more than $8 billion—must also see the provider is able to implement their specific plan provisions, including Roth investment options, he adds.

“Whatever entity that would recordkeep our plan needs [to have] a sophisticated enough brokerage account in order to accommodate that flexibility, that choice that we allow our pilots,” Haynes says.

Plan Sponsors’ Challenge to Providers

Many providers will compete for retirement plan and workplace benefits business, and the selection can be time-consuming and complex, according to a variety of plan sponsors with different businesses. It also must be forward-looking.

“What I look for in vendors is [a provider] who is able to keep up with the [company’s] growth, knowing that our strategy is going to continue to get bigger and bigger,” says Hellmer, of Salas O’Brien. “What additional resources can the vendor add to support the growth trajectory for our organization?”

To win selection, a provider must have a service team that will be responsive to the company’s growth needs, to plan sponsor and employee requests and one that is strategic-focused, Hellmer continues.

“Knowing that the provider will have perspective on what the industry is doing, [what’s coming] next and how [the company is] adapting is key to making sure that we also have a strategic partner,” he says.