The Nov. 26 special report article, “A shift toward streamlining,” was very ably answered by Christopher Tobe (Letters to the Editor, “RFPs needed to prevent corruption,” Dec. 10). I'd like to add the larger issue of fiduciary responsibility to this discussion.
The retirement plan industry has done so much for American employees and retirees because it is populated for the most part by capable, well-intentioned professionals. But sometimes, bad things happen. We all know that private/corporate plans are subject to ERISA regulations that, fortunately for fiduciaries, value the process of the search over the eventual result. Public plans, while not specifically subject to ERISA, have their own geographically determined procurement procedures. The key operative for both is a reasoned process that is well documented.
In those rare cases where a dispute arises between plan sponsor and service provider, and especially where it rises to the level of litigation, a corporate fiduciary or public plan official will be very grateful to have a well-documented commitment to which to point. An RFP for an investment manager, trustee/custodian, or any other service provider, is still the best way to do this.
Sure, sometimes an “irrationally exuberant” marketer prepares most of the RFP, but I've always insisted the highest administrative official in the organization co-sign the document. Plan sponsors deserve no less than management's full attention on marketing commitments.
Mr. Tobe demonstrated how RFPs help prevent corruption in the hiring process, and ensure the lowest possible fee for the service. I've been both answering and writing RFPs for 45 years, so I can attest to the fact the RFP rationalizes the selection process of the best service providers, while helping protect board members and other fiduciaries from ERISA and other liabilities. RFPs are hard work that pays off.
Michael L. Costa
Partner, Alliance of Fiduciary
Hilton Head Island, S.C.