Sheet Metal & Air Conditioning Contractors’ National Association

Trustee Advisor Blog

This blog educates industry trustees to aid them in better fund operations in order to control costs and provide quality benefits to fund participants.

Hiring Your Trust Experts

Mar 31, 2011

Trust Experts

From time to time a trustee's support-team of experts, known as service providers, will need to be replaced. Service providers, ranging from investment managers, accountants, administrators, consultants, attorneys, to actuaries, are critical to the success of a trust fund.

Hiring a new attorney, accountant, or investment manager can be a daunting task. Most contractors serving as trustees are skilled in construction not law, finance, or investment banking. Interviewing someone whose expertise is foreign to your own field of experience need not be intimidating. Following are some helpful guidelines.

The hiring process usually starts with the trustees identifying the scope of services desired and developing a request for proposal ("RFP").

Determining whom to solicit a proposal from can often be challenging in light of the specialized nature of multi-employer trust funds. Some trustees rely on their other service providers, who likely work with many funds in the area, to help identify potential candidates. Others speak to trustees serving on another trade's trust fund in their area. Still others contact their local chapter or SMACNA national for possible referrals.

No matter how you find them, be sure your RFP provides each prospective service provider with complete and identical information about the plan and what services you are looking for so you can compare apples to apples.

Some items a trustee needs to consider include:

  • Information about the firm: financial condition and experience with multi-employer plans of similar size and complexity
  • Information about the quality of the firm's services: the identity, experience, and qualifications of professionals who will be handling the plan's account; any recent litigation or enforcement action that has been taken against the firm; and the firm's experience or performance record
  • A description of business practices: how decisions are made; how they communicate with trustees; internal procedures for keeping up to date on laws, regulations and industry best practices. For example, regarding investment managers: how plan assets will be invested if the firm will manage plan investments or how participant investment directions will be handled
  • Information about the proposed fee structure: in comparing estimates from prospective service providers, ask which services are covered for the estimated fees and which are not.

Some providers offer a number of services for one fee, sometimes referred to as a "bundled" services arrangement. Others charge separately for individual services. Trustees should ask prospective providers for a detailed explanation of all fees associated with their investment options. (Be aware of fees that may be hidden such as transaction or mutual fund fees.) Compare all services to be provided with the total cost for each provider. Consider whether the estimate includes services you did not specify or want. Remember, nothing is really free as all services have costs.

Trustees should document the selection (and monitoring) process. 

If the selection and monitoring of service providers is delegated to a subcommittee of the trustees, the trustees should educate committee members on their roles and responsibilities as well as seek periodic reports from the subcommittee of their actions.