PLANSPONSOR - August - September 2022 - 24

PROVIDER RELATIONSHIPS | 2022 RECORDKEEPING SURVEY
call for a more formalized request for information or
request for proposals process. These options will provide
the most data on available services and total costs; they
can be evaluated in terms of the cost and design of the
present plan.
" The simple request for information can give you
more reliable pricing data and is something plan sponsors
can do relatively often to make sure pricing is still
in line with the market, " explains Tom Kmak, CEO and
co-founder of Fiduciary Decisions, a consultancy for fiduciaries
and plan sponsors, in Scottsdale, Arizona. " The
RFP process will give you more data, and that can be important.
If your plan is growing significantly or hasn't been updated in a
number of years, or if you're considering adding on new services,
you need to be able to see where you stand. "
" The simple request for information
can give you more reliable pricing
data and is something plan sponsors
can do relatively often to make sure
pricing is still in line ... "
Recent litigation bears this out. The case of Ramos v. Banner
Relative Value
Kmak notes that RFPs can be expensive and time-consuming,
because plan sponsors will often need to work with a third party
to gather and coordinate all of the information. Still, the cost of
conducting a solid process will be less than rendering significant
plan changes or facing litigation as a result of making underinformed
decisions.
" There is a tendency within the industry to focus purely on
price, and that really doesn't tell the whole story. If you end up
changing recordkeepers frequently because you're chasing price
or you realize the cheap platform doesn't have services you need,
that creates a lot of disruption for plan participants, " Kmak says.
Health in 2020 highlights the need to balance plan design and
recordkeeping fees. Plan sponsors were alleged to have fallen
behind in their monitoring of plan offerings, holding onto
some that were alleged to be subpar for too long and using a
revenue-sharing model that led to excessive fees.
The ruling was a mixed bag.
The judge found that the range of fund offerings and services
provided were not imprudent and that dips in investment performance
do not necessarily equate to fund damage. However,
because the plan design failed to include the option to renegotiate
fees, participants were getting overcharged: The plan could not call
for adjusting prices down as the market rates fell. The result shows
that, to pass a reasonableness standard, sponsors have to consider
products, services and price together and ensure that agreements
include the option to make changes in the future.
A more recent spate of cases involving target-date funds highlights
the same point. In those cases, plan sponsors have come
 Total Defined Contribution Plan Assets, by Plan Type
$10.3t
$10t
$9.43t
$8t
$7.12t
$6.11t
$6t
$4.60t
$4t
l Money purchase/
Profit sharing $390b
$2t
l Nonqualified deferred
compensation $172b
l Other $248b
$0
2013
2015
2017
2019
2021
2022
$6.08t
l 401(k) $7.58t
l 403(b) $1.40t
l 457 $554b
24 PLANSPONSOR.COM August - September 2022
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PLANSPONSOR - August - September 2022

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