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As a fiduciary, there is a lot to consider when selecting an Annuity Search Firm. More than ever, informed decisions require diligent research to ensure a respondent’s suitability. Unfortunately, standard RFP/RFI responses will not always include certain key factors. To make the right choice, here’s what you need to know:
Find the right fit.
Consider the depth and bandwidth of the organization.
A large placement may fit best within the care of a large firm, and vice versa.
Get to know your team. Examine the credentials of the firm’s leadership, including education and professional experience.
Review any history of complaints, allegations or settlements with appropriate regulatory bodies (DOL, State Attorney General’s, State Insurance Commissioners) to gain insight on the firm’s ethics.
Compare your findings with the respondent’s RFP response submission. Have they been forthcoming on these issues?
Know what to expect.
Compare the services provided to the cost of services being charged. Make sure the firm offers:
Pre-sale search and due diligence
Request a sample of their insurance company financial due diligence (pursuant to DOL 95-1).
Verify who performs the due diligence– will it be conducted internally or subcontracted?
Placement execution
Post-sale support
When will services be completed (i.e. annuity provider selection, contract issuance)?
Some search firms consider their services complete once a sponsor has selected an insurance firm (even though there is still work to be done). Will the firm support filing, reconciliation, and contract negotiations or will the burden of these tasks fall on you?
Terms of payment:
Is a deposit required? Some firms require a deposit up front. For example, many smaller firms ask for a 25% deposit to initiate services.
Does the firm require any progress payments?
Penalties:
Avoid providers who charge penalty fees. Some firms charge penalties for terminated contracts or if a decision not to purchase annuities is made. In other words, you could still be charged even if you are not satisfied with your provider’s service.
Are there any penalty fees for termination of consultant services?
Are there any penalty fees for failure to complete the annuity purchase?
Evaluate provider communications.
Plan Specifications
Financial Due Diligence on Insurance Companies
Engagement Letter
Timelines
With a comprehensive understanding of responsibilities, deliverables, and firm qualifications, you can make an informed decision and ensure a successful Pension Risk Transfer.
October Three is a concept-driven, results-oriented consulting firm. Our transparency, proprietary financial due diligence, clear communications and depth of resources distinguish us from our competitors.
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