Find Your Match: Tips for a More Successful DB Provider Search

The funded status of defined benefit (DB) plans drastically improved in 2013 thanks to strong investment performance and rising interest rates1. Due to the improvements, many plan sponsors may feel a false sense of security and become complacent in regards to their DB plan. BUT, they should be doing the opposite.

Now is actually a critical time for plan sponsors to evaluate the status of their plan and take action to help manage the risks associated with having a DB plan. And working with the right service provider can be instrumental in helping them meet the goals and objectives of their plan.

DB plans are unique and complex.  One of the phrases we use at The Principal® is “When you’ve seen one DB plan, you’ve seen one DB plan”.  Additionally, differentiating between DB service providers can be a daunting task.  To help ensure a DB plan sponsor is getting the service they need, it’s critical to successfully match their needs with the right service provider. 

As I talk with potential clients, and their financial professionals, their #1 priority is to find a provider who’s continued to invest in their DB business such as providing new resources, tools and risk management strategies.  To find the right one, a provider search if often conducted. But note – conducting a DB provider search is very different from a defined contribution (DC) search. The good news is we have resources to help you with both.

To help start a DB provider search, here are some tips:

  • Start with fact finding – collect all relevant information about the DB plan in order to ensure accurate information is being shared with potential service providers
  • Do a plan assessment – identify the plan’s strengths, weaknesses and priorities.  For example, is data management currently a struggle?  Is fully funding the plan a priority?
  • Create a process to fairly evaluate different service providers and develop a formal Request for Proposal (RFP).  You should be able to get a sample RFP from most DB service providers.
  • Once you’ve narrowed the field of service providers, develop a semi-finalist presentation agenda
  • Develop a semi-finalist presentation scorecard to more easily identify which provider is likely to be the best fit.

If you’re considering a new DB provider, check out our DB Provider Search Guide. It offers best practices and resources to help financial professionals work with plan sponsors to help match their plan needs with the right service provider. Or, contact your representative of The Principal for more DB or DC provider search resources and information.

In addition to blogging here, I also tweet regularly about DB topics of interest. Click to follow me on Twitter- @scottruba.

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Affiliation Disclosures

While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that none of the member companies of The Principal are rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements.

Insurance products and plan administrative services are provided by Principal Life Insurance Company a member of the Principal Financial Group® (The Principal®), Des Moines, IA 50392.