Request for Proposal Process

7 Mistakes to Avoid in a Request for Proposal (RFP) Process

In Ancient Greece, a man could propose marriage to a woman by throwing an apple at her.  If she caught the apple, it meant she accepted the proposal.

For wealth management firms searching for new technology partners, throwing fruit at them would not be an appropriate replacement for a formal request for proposal (RFP) process. But many companies treat RFPs as though they are simple projects that do not require much thought or planning to be successful.

The impact of selecting new wealth management technology can be felt for at least 3-5 years and sometimes much longer. It is important to be thorough and methodical in the selection procedure.  In my experience, many clients rush through the vendor reviews or even skip the RFP altogether and just pick a vendor with the flashiest demos or the lowest price.

This can be a disaster for your firm.

When an RFP is called for it must be done right to ensure you make the best decision for the long-term health of your firm.  I’m going to share my top 7 mistakes that you must avoid to run a successful RFP.

1. Don’t Wing It – You Need a ProcessRequest for Proposal Process

This is the number one mistake that most companies make when it comes to selecting new technology solutions.  The staff assigned to run these projects usually have little to no experience running RFPs. When they do have some experience, they ran their previous projects off the cuff, on-the-fly, seat-of-their-pants or winging it. These are all methods that deliver inconsistent results.

A clearly defined process that lays out the necessary steps, timeline, and goals is critical to a successful RFP.  It also should include a methodology for gathering business priorities, establishing selection criteria, communicating status to stakeholders and agreeing on the definition of success.

My consulting firm, Ezra Group, has assisted dozens of firms with structuring and running an efficient RFP process.

This article is an overview of the components needed for an effective RFP process. However, you should consult with a professional to help you develop a process that is right for your firm and the technology systems being evaluated.

2. Don’t Start Without a Team, But Keep It Small

Unless you’re a very small company, there should be an RFP team that works together to execute the process and agree on a decision. The team should include at least one person representing each of the departments that will be using the technology or be affected by it.  Each person on the team can represent more than one department, if needed.  But the team should be kept as small as possible!  Bigger is not better.

3. Don’t Skip The Initial Vendor List (Hint: Send out an RFI)Request for Proposal Process

Coming up with the initial list of vendors is probably the most important part of the selection process. Yet many firms do not give it the proper attention.

According to Doug Fritz, president of consulting firm F2 Strategy, companies often throw together an initial list culled “from industry conferences, word of mouth or tools that someone had used at a previous firm.  The problem with this approach is that it can exclude potentially exceptional or innovative solutions that would have been captured with only a slight increase in effort.”

A Request for Information (RFI) is a very short questionnaire that is used determine whether or not a vendor’s product should be included in the process.  Many people confuse an RFI with an RFP or use the terms interchangeably, but they are not the same thing.

An RFP is a much more detailed questionnaire that also requires a proposal to be submitted.  The RFI questions can be sent out in the body of a short email and the responses can be received back the same way.  It is best to avoid lengthy discussions at this point.  The goal is to survey the market and determine who should and should not be included in the RFP/

Along with products from the industry leaders, try to include “a dark horse / non-traditional player as their unique perspective and ways of approaching a problem may be eye opening,” suggested Zohar Swaine, president of consulting firm Mink Hollow Advisors.

4. Don’t Send the RFP to More Than Four or Five Vendors

Be cognizant of the vendors’ time and effort when sending out RFPs.  If you have done your RFI correctly, you will be able to narrow down the number of vendors who received the actual RFP to no more than four or five.  Sending out to more than five vendors is counterproductive for a number of reasons:

  • Your team does not have unlimited time.  They have to review and analyze all of the responses.  Unless their full-time job is to manage the RFP, handling more than six responses will swamp them.
  • It’s unfair to the vendors.  Vendors are constantly responding to RFPs and expend significant work to reply to them.  It is not fair to ask them to do this work when there is a low chance of them winning the business.  If all vendor products were equally qualified (which they never are), then sending to six vendors would give each less than a 17% chance of being selected.
  • Evaluation will be difficult.  We use a template that shows all vendor responses side-by-side so that the team has an easier time evaluating them.  This very difficult with more than three or four vendors, impossible with six.

Give yourself a break and do not send the full RFP out to more than three or four vendors.  Keep one or two additional vendors in reserve in case one of the first set of vendors decides not to respond for some reason.

Another tip from Swaine is to include some background information and context as part of the RFP. Explain why your firm is looking for new technology at this time.  Share some of your future plans and growth projections.  “Firms need to balance their need to protect internal confidential information with the additional value gained by the vendors responding,” Swaine noted.

5. Don’t Write an Encyclopediarequest for proposal process

Remember what we said about the RFP team?  Bigger is not better?  The same holds true for the RFP itself.  You want to be complete, but that doesn’t mean it has to become The Encyclopedia Britannica.  (For those of you too young to remember, The Encyclopedia Britannica was Google in hard copy form.)  An RFP with 500 or 1,000 questions is not going to provide you with significantly more useful information than one with 200-300 questions, if you ask the right questions.

Think about the time it takes each vendor to respond to an RFP then multiply that by the dozens of RFPs they are sent annually.  Also, remember that your team has to review every response to every question from every vendor you send the RFP to.  Five vendors multiplied by five hundred questions is 2,500 responses that have to read, quantified and compared.  Think about asking the right questions rather than as many questions as possible.

Many of our customers had previously downloaded an RFP template from the Internet or brought one from a prior job.  Our advice is to keep the format, if you like it, but throw away the content.  Most of it is useless filler that sounds impressive, but is not helpful for selecting the right product.

Regarding content, we recommend the following sections for most RFPs:

  • Company overview – firm size and structure, market position, funding, ownership and experience in the industry
  • Technology and Functional requirements – details on their technology platform and specific functionality that you’re looking for
  • Deployment, support & security
  • Pricing

“Spending time upfront structuring the RFP will prompt thoughtful responses. For example, you might wish to include a section on scenarios / day in the life versus asking stock questions as these will better demonstrate how a vendor provides solutions to your precise situation,” Swaine recommended.

6. Don’t Wait Until Final Vendor Selection to Start Contract Negotiations

Most RFP processes have vendor selection followed by contract negotiation as two distinct phases.  “That is an extremely flawed sequence of events—negotiations are severely compromised when a vendor is notified that it has been selected prior to beginning negotiations,” according to CIO magazine.  This process order often results in the customer leaving concessions on the table if negotiations drag on for longer than planned, making it increasingly more difficult to switch vendors.

Instead, force a competition between the last two or three vendors, recommends Fritz.  Notify them that they are in the running but that you are going to make a decision based on a final competition.  Also, let them know the other vendor(s) they are competing against and solicit them to provide a specific list of their advantages versus the other(s).  This information will be gold for your process and should give you additional insight and caution as well as potentially leverage during the contract phase.

Speaking of the contract phase, since you have a proposal with pricing from each vendor, start probing them for flexibility in their pricing.  Now is the time to play one off against the other and add the results into your final evaluation.

Lastly, if you still haven’t been able to agree on a winner, bring everyone back in for a half-day bake-off presentation, Fritz proposed.

7. Don’t Start Without a Firm End Date

RFPs can seem like a never-ending process if they are not run correctly and managed ruthlessly towards an agreed-upon end date.  We highly recommend setting the end date when the project starts and getting everyone to agree to it in the first meeting.  Assigning a strong project manager will help to drive the project towards the completion date.  Otherwise, these projects can drag on for months longer than necessary.

Following the advice in the previous six tips will help keep the project on track and give you a higher probability of completing on time.  Remember that time is money.  The longer you delay selecting a replacement technology, the longer you will suffer from lower productivity and/or increased costs of your current system.

Request for Proposal Mistakes to Avoid

Clients normally spend thousands of dollars on consulting time to learn these seven lessons.  Here you get them for free.  Try them out on your next RFP and let me know how it works out.  You can share your success (or horror) stories of vendor selection or RFP processes with me at



The Wealth Tech Today blog is published by Craig Iskowitz, founder and CEO of Ezra Group, a boutique consulting firm that caters to banks, broker-dealers, RIA’s, asset managers and the leading vendors in the surrounding #fintech space. He can be reached at