Sometimes, participating in an RFP process is like eavesdropping on an awkward first date. You can tell everybody is trying to say the right thing, but nobody really understands what the other person is talking about. Here are a few questions to incorporate into your conversations with vendors, so you can better understand what you’re buying before you sign a contract:
You and your vendors come from different worlds. Vendors love to work with large companies that have deep pockets and teams of experts to guide the project along. When they look at financial services, they see a vast opportunity representing one-twelfth of the entire U.S. GDP. What vendors don’t realize is that they aren’t dealing with 300,000 advisors in a single market, but 300,000 small businesses, each operating in its own market. Advisors’ needs vary widely, their budgets are tightly managed, and they may not have a fully dedicated internal contact to teach vendors the ropes. That’s why your most important goal in your due diligence and selection is to make sure your vendors understand your business. Do they know the difference between a broker and an advisor? Between fee-based and commission-based business? Are they aware of the regulatory, sales and marketing review you are subject to? Do they even know how you get paid? If vendors don’t understand these basics, how can they possibly offer you anything useful? I’m going to come out and say it: You should only use vendors who have worked with advisors before.
I admit it. I didn’t get it for a long time. There I was, working in-house at advisor firms, putting out RFPs to marketing agencies and consultants as part of my daily job responsibilities. The proposals would come back. I’d review them, cheerfully nodding at all the big promises, all the corporate happy talk. We’d sign the deal. Do the project. And then—nothing. The benefit to the firm, or advisor, rarely outweighed the cost. Eventually, I realized it was all wrong. The consultants were selling a high-sounding bill of goods that did very little for our business, largely because they didn't actually understand our business. When I started FiComm, I swore I would never do that to a client, and I’m still passionate about that commitment. (Maybe I’m just mad they had me fooled for so long.)