Why, When and How of the Technology RFP Process

The Request for Proposal (RFP) process is a critical step in selecting the right tools for wealth management firms. It is a process that involves bringing stakeholders together to identify a clear purpose for the technology, asking the right questions of potential vendors and analyzing the results to inform purchase decisions.

The RFP process can be complex and time-consuming for firms to undertake. Typically, the smallest projects—ones that involve non-core, low risk systems—take six to eight weeks to complete, while larger projects for high impact systems can take as long as nine months. Because most wealth management firms do not have a well-developed RFP process in place, knowing the best approach isn’t always a given. Conversely, at F2 Strategy we are well-versed in helping our various clients make decisions on whether to invest in infrastructure, renew a software product, or implement a new system. In fact, we’ve developed a very specific process to identify decision drivers, a library of thousands of potential requirements and questions and a robust framework to analyze the results and inform the decision.

This article shares the insight we’ve gleaned from doing several RFPs a year to help you understand their importance, how to successfully execute the process on your next project and when to ask for support.

Why Use an RFP for a Technology Implementation

Adding or changing a tool can have big implications for a firm. Advisors want to get it right. An RFP creates a framework to understand the key decision drivers for any tool you want to evaluate. These drivers can include risk mitigation, suitability/compatibility, cost/return on investment, ease of implementation, ease of use and impact of change. The scope of the process can be scaled to fit small, low-risk changes to large, core-system upgrades.

RFPs lay out all the information in an apples-to-apples comparison to present executives and leadership with the key decision drivers. It helps them select the right tools and negotiate contracts with confidence.

Additionally, an RPF process that solicits feedback from the team to ensure their voices are heard brings ownership of the process to all levels of the firm. This helps the firm gain buy-in and supports user adoption of the new tool. It also provides the ability for the firm to leverage the subject matter expertise within their teams to inform decisions.

How the RFP Process Works

The length of the RFP process will depend on the change under consideration as well as the selection strategy and goals. If the expectation is that the process will narrow the vendor landscape down to one or two suitable vendors for deeper-dive due diligence or proof of concept, then some elements of the initial review can be streamlined. If the goal for the conclusion of the RFP process is vendor selection and contract execution, then more time and consideration must be allocated to ensure that the solution will succeed across the enterprise over the long term and will integrate well within the existing ecosystem. Whether streamlined or in-depth, there are four basic steps in the typical RFP process: 

  1. Develop Criteria and Set Goals—Identify and interview all key stakeholders within the firm to understand the current state and identify decision factors and selection criteria: what is the day in the life with the current process, what are the current pain points, what could make the process better, what are key decision drivers – the must-haves and the deal-breakers, and what is the impact of no change.
  2. Explore Potential Technology Solutions—After acquiring that knowledge, leverage industry knowledge to develop potential future-state solutions. Review different tools that peer firms use to achieve similar goals and narrow the list of potential vendors down to three to five suitable options that will mitigate the pain points and achieve the goals of the future-state.
  3. Compile RFP Questions—Solicit requirements and develop a list of pertinent questions that will focus on the key decision drivers for vendors to answer. If a vendor is unable to do a specific task that the firm requires, that is criteria for that vendor to exit the process.
  4. Coordinate Demos—The process of gathering information, reviewing and scoring the RFP questions informs the development of the use case list that is provided to the vendors to guide the demonstrations. Each vendor receives equal opportunity to showcase their solution and ability to meet the requirements.

When to Outsource the RFP Process

 There are several reasons wealth management firms decide to outsource the RFP process. For example, firms might have expertise or resource constraints. By outsourcing firms can:

  1. Leverage a proven process that has been thoroughly developed and tested; utilizes the appropriate subject matter experts; and employs tools (such as surveys for direct feedback) and data analytics capabilities to automate and expedite processes and gain deeper insights.
  2. Access experience and subject matter expertise that goes beyond the internal team, which may have in-depth knowledge of the tools in-use, but most likely does not have as much exposure to or first-hand knowledge of the vast landscape of other solutions in the market.
  3. Mitigate resource constraints by augmenting the existing team with resources to handle all the details and heavy lifting required by this time-consuming process.  While this can be like a second job outside of the core competency of the internal team, the outsourced consultants are well-versed in the process and well-equipped to research and understand these tools.
  4. De-risk vendor selection with a well-organized RFP process, support resources and tools to ensure a successful outcome.

Ultimately, executives and business leaders create value with well-informed decision making.  The goal of any RFP process is to give the decision makers more confidence in those investment decisions and a higher probability of success for the implementation of impactful changes.

If you need guidance with your RFP process, get in touch to explore the ways we can support your needs and help you select the right tool for your firm. 

Share This article

Latest Insights