Case Study: Health Insurance Client
Plan Sponsor and Investment Consultant Deliver Cost-effective Retirement Plan Solution to Participants
A large health insurance provider located in the Western U.S. decided it needed help managing its defined contribution plan costs. Because of our experience in helping investment committees manage retirement plans and our independence from investment management firms, Bidart & Ross was selected to assist the company’s investment committee in meeting its goals.
Initial discussions revealed two primary committee goals:
- First, evaluate and reduce record-keeping and administration costs associated for the plan
- Second, improve the overall quality and composition of the plan’s investment line-up
Preliminary review exposes plan’s costs
Based on these goals, Bidart & Ross conducted a preliminary review and analysis of the client’s defined contribution service provider, focusing on investments and services offered, and associated costs.
Analysis in hand, we informed the investment committee that it might be possible to reduce their annual plan administration and record keeping costs from $1.2 million to $600,000. Understandably, the committee was more than a little skeptical that a 50% cost reduction could be achieved without giving up quality of service. Additionally, we determined subtle changes to the plan’s investments could improve the overall investment line-up.
Action: Formal Search, Documented Procedure
Bidart & Ross recommended, provided oversight and implemented a search for a defined contribution service provider. The search included:
- Developed, with client input, a customized Request For Proposal
- RFP distribution to providers that Bidart & Ross screened and were pre-determined could meet the ongoing needs of the client
- Qualitatively and quantitatively evaluated each provider’s response to determine the strongest provider fit for the plan
- Documented the search and selection process in the form of a detailed report, which compared the services and costs of each provider and provided recommendations for finalist interviews
- Recommended an improved investment line-up and mapping of investments from the plan’s current investment array
Results: A True 50% Net Savings
The report was delivered to the committee six weeks after the project start and three firms were selected as qualified finalists. Due diligence on-site visits to the finalist firms were arranged. Visits were comprised of committee members and their Bidart & Ross consultant.
In the end, these efforts allowed the committee to confidently select a provider that could not only provide a more cost-effective solution, but whose services exceeded those of the plan’s current provider. From a total cost perspective, the plan sponsor realized a 50% savings on their record keeping and administration costs annually. Additionally, documentation of the search process helped to establish procedural prudence on behalf of the committee in the selection of a new provider.
FINE PRINT:
Please Understand:
Due to the confidential relationships we enjoy with our Clients, only broad industry categories are used in these Case Studies. However, all Case Studies are based upon factual events and results attained with Bidart & Ross Clients.