Make sure you fully understand your plan provider’s revenue model. Beware of providers who offer a low-cost plan, with a solid on the ground service model–and with an internal revenue model that is dependent on the sale of other products to your employees.
Guard against misuse of your participant and plan data—get written disclosure of who has access to participant and plan data and of the protections in place to ensure that provider employees who want to sell investment and insurance products to your employees don’t leave with that information.
Get full written disclosure of internal sales contests, national sales conferences and other incentives that may influence advisor behavior.
Get full and clear written disclosure of their compensation plans, including internal compensation policies that may influence on-site activity.
Beware of misleading statements in the bid process in order to win business. If a representation made to you is important, get it in writing and have it included in your written contract.
Understand and interview the service team that is promised to you and ask questions about how changes are implemented and how your plan is protected from disruption. If a change occurs, understand the specifics of why the change is taking place and ensure that a change in key personnel allows you to re-evaluate the provider.
Beware of service contracts that disclaim—and effectively negate—representations made in the sales process.
Learn what happens to plan fees and services if the sale of outside products is prohibited. The cost of the plan may increase if the on-site service advisors are not allowed to sell outside products.
Beware of the fact that revenue generated from the sale of outside products to your employees is not disclosed in the bid process and the merit of these products is not addressed in the bid process.
Get full disclosure and explanation of the provider’s credit rating and outlook, recent settlements and/or judgements, and disciplinary actions by regulators—against both the organization and the key members of the team servicing your plan.
Get full disclosure of the organization and management structure.
Understand the team servicing your plan and the reporting relationship of each member of the team.
Ask for written documentation and do not settle for some vague presentation slides that gloss over key details.
Understand the working relationship of each member of the service team and their reporting matrix.
Various divisions of provider entities have different goals and this differentiation can create internal conflict at the organization and confusion among your employees.