Skip to Content
Advisor Insights

Answering Another Key Question in a Request for Proposal

Contributor Scott Simon argues why he doesn’t think alternative investments are good choices for retirement plans.

Last month’s column dealt with a question often asked in a Request for Proposal. An RFP is a formal document in which an employer, such as the sponsor of a 401(k) plan that’s governed by the Employee Retirement Income Security Act of 1974, or ERISA, solicits proposals from qualified firms to perform third-party services such as investment management, recordkeeping, or other plan administration.

Nonprofits, including endowments and foundations as well as other pools of money subject to fiduciary edicts, may also choose to issue an RFP, and requirements for those RFPs should not be any less exacting than for ERISA plans. According to best practices, a requestor should go to market and issue a new RFP every three to five years in order to ensure that its plan is receiving services that, among other things, are cost-effective.