When Should Plan Sponsors Conduct an RFP for Their Retirement Plan?

When Should Plan Sponsors Conduct an RFP for Their Retirement Plan?

For most plan sponsors, the retirement plan RFP conversation starts the same way.

Something goes wrong. A fee complaint surfaces. A committee member raises a concern. Litigation lands nearby and suddenly everyone is asking whether the current arrangement would hold up.

At that point, the RFP becomes a scramble — compressed timelines, reactive decisions, and a process built around solving a specific problem rather than evaluating the full picture.

That's one way to conduct an RFP. It's rarely the best way.

The Case for Proactive Evaluation

The plan sponsors who tend to fare best — in audits, in litigation, and in outcomes for participants — are more proactive in service provider evaluations. They're the ones with the most defensible processes.

A proactive RFP isn't an admission that something is wrong. It's documentation that the plan's fiduciaries are doing their job: periodically confirming that service providers remain competitive, compensation is reasonable, and the relationship continues to serve participants' interests.

That documentation matters. Not just when something goes wrong — but before it does.

Why Plans Go Years Without a Formal Evaluation

It's not negligence. It's friction.

RFPs require coordination. They raise questions about existing relationships. They can feel like an accusation directed at an advisor or recordkeeper who has done nothing obviously wrong. And when internal teams are already stretched, adding a formal evaluation process to the calendar is easy to defer.

So it gets deferred. And then deferred again. Until a trigger event makes it unavoidable.

The problem is that by the time the trigger arrives, the leverage is gone. The process is compressed. The documentation is thin. And the decision — whatever it is — is harder to defend.

What Changes Over Time (Whether You're Watching or Not)

The retirement plan industry does not stand still. Over a period of three to five years:

Fee structures shift. What was market-competitive in 2020 may not be in 2025. Benchmarks move, and plans that don't test against them can overpay without knowing it.

Technology platforms improve. Participant experience, reporting capabilities, and plan administration tools have changed significantly. Plans on older platforms may be leaving real value behind.

Regulatory expectations increase. The Department of Labor's focus on fee transparency and fiduciary documentation has intensified. The standard for what constitutes a defensible process is higher than it was five years ago.

Ownership structures change. Advisor firms are frequently acquired, merged, or restructured. The firm that was independent when the relationship started may look very different today — with compensation arrangements that warrant a closer look.

None of these changes are necessarily disqualifying. But they all deserve to be evaluated.

Common Triggers — and Why They Shouldn't Be the Only Trigger

Certain events do legitimately prompt an RFP: a merger, a significant increase in plan size, a change in committee leadership, questions raised by ERISA counsel during an annual review.

These are reasonable catalysts. The issue is when they become the only catalyst — when plan sponsors wait for a visible problem before evaluating whether a problem exists.

A structured, periodic review process removes that dependency. It means the evaluation happens on the sponsor's timeline, not in response to external pressure.

Proactive vs. Reactive: What the Process Looks Like

A reactive RFP is built around urgency. The goal is to resolve a specific issue quickly, which often means narrowing the field early, compressing the evaluation, and producing a decision that addresses the immediate concern.

A proactive RFP is built around thoroughness. There's time to define criteria before proposals arrive. Providers can be compared on consistent terms. Documentation reflects genuine deliberation rather than a post-hoc rationale for a decision already made.

From a fiduciary perspective, the proactive version is significantly easier to defend — because the process demonstrates that conclusions were reached objectively, not under pressure.

What ERISA Actually Requires

ERISA does not mandate RFPs at specific intervals. What it requires is that plan fiduciaries act prudently, monitor service providers and fees on an ongoing basis, and make decisions solely in the interest of participants.

An RFP is one of the clearest ways to demonstrate that this standard is being met. It creates a record — of what was considered, who was evaluated, how decisions were made, and why the outcome serves participants' interests.

That record doesn't guarantee immunity from scrutiny. But its absence is exactly what scrutiny looks for.

The Real Question

The question isn't whether a plan is "due" for an RFP by some arbitrary schedule.

The question is whether the plan sponsor can demonstrate — to regulators, to auditors, to a plaintiff's attorney — that service providers have been evaluated objectively, that fees have been benchmarked against the market, and that decisions were made in a structured and documented way.

If the answer to that question is uncertain, the timing for an RFP is now.

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