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RETIREMENT PLAN INSIGHTS |
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How to Determine if Disclosures are Usable!
James Lorenzen, CFP®, AIF® | April 3rd, 2012 |
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Quick Links | |
IFG Fee & Expense Benchmarking
"Service Provider Disclosures and Plan Sponsor Considerations"
Fee Disclosure and Evaluation Certification
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Greetings! 
If you haven't read the White Paper on the new fee-disclosure regulatory compliance issues, this may be a good time to do it.
Last week we talked about what to do with the provider disclosures after upi receive them. This issue is about how you determine if their usable!
After all, if you can't use them - or if if you can make them relevant for participants - they're not only worthless, but they could lead to some real problems.
If you have any questions, feel free to give me a call!
Enjoy
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Jim
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How To Determine if Disclosures are Usable!
Getting them isn't enough. You must be able to actually use them to benefit your plan participants.
While usability will depend on the individual making the required assessment, there are objective guidelines that can be used to establish a framework.
The first measure of usability: Determine what information will be necessary to make the decision whether a plan arrangement is reasonable from the perspective of Participants. After all, that is the function of a fiduciary.
What information do you need? Annual cost to Participants to operate the plan, including the cost of each designated investment and the cost for each service provider. Everyone concerned must have an understanding of what services are being provided; and this includes just how those services are used and if they're necessary
- Fiduciary status of the service provider.
- Potential conflicts of interest that could be harmful to Participants and methods of protecting Participants from these conflicts.
The second measure is for the Plan Sponsor to decide if help is needed in making this assessment. If the Plan Sponsor is unfamiliar with the information listed above, it is suggested that the assessment be turned over to an expert. In fact, industry-recognized third-party objective assessment and certifcation is available to help document compliance. You can learn more here.
The third measure is the ability to extract the required answers from the disclosure provided. The required answers should be obtainable in less than one hour, without having to seek assistance from the service provider.
The fourth measure applies if the third measure is unsuccessful. In that case a written request for additional information or clarification is made to the applicable service provider. In last week's issue, I described the procedures a plan sponsor must take within 90 days if provider(s) are not forthcoming in order to avoid liability and a requirement to sever provider relationships.
James Lorenzen, CFP, AIF
Founding Principal
THE INDEPENDENT FINANCIAL GROUP
A Registered Investment Advisor
805.265.5416
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 About IFG
The Independent Financial Group is a Registered Investment Advisor providing retirement plan investment and fiduciary consulting to plan sponsors on a fee-only direct-payment basis. IFG acts as our client's advocate in the financial marketplace, providing independent and non-conflicted guidance. IFG does not sell products, earn commissions, or accept any third-party compensation or incentives of any description. Call IFG at 805.265.5416.
About Jim Lorenzen, CFP®, AIF®
James Lorenzen is a CERTIFIED FINANCIAL PLANNER™ and an Accredited Investment Fiduciary® in his 20th year of private practice with clients located in New York, Florida, Colorado, and California. Jim has been a headline speaker on financial and organization development topics at more than 500 conventions throughout the United States, Canada, and the U.K. His articles have appeared in more than thirty publications, including The Journal of Compensation and Benefits, The Profit Sharing Council of America's Insights, and The National Management Association's Manage. He's also been interviewed on American Airlines' Sky Radio and by The Wall Street Journal for Smart Money magazine. More about Jim here.
Accredited Investment Fiduciary®
AIF and AIFA Designees have successfully completed a specialized program on investment
fiduciary standards of care. The curriculum is conducted by the Center for Fiduciary Studies in association with the Joseph M. Katz Graduate School of Business, University of Pittsburgh. Created by Fi360, training began in 1999 to provide the investment industry with the first full-time training and research organization focused exclusively on investment fiduciary responsibility and portfolio management. Designees are required to complete a rigorous training program, successfully pass an examination, conform to a code of ethics, and adhere to continuing education requirements on a yearly basis. These requirements ensure Designees are familiar with the prudent process developed by fi360, as well as kept up to date with recent industry events affecting fiduciaries.
About RPAG
In order to provide IFG clients with the highest standard of `best practices' and institutional-level services, while still maintaining a conflict-free independent environment. IFG has retained Retirement Plan Advisory Group (RPAG) to serve as a `back-office' consulting and technology resource. RPAG provides IFG with highly experienced `back office' of consultants and a state-of-the-art technology platform that support both IFG and plan sponsor clients. The RPAG network includes 350 member firms in 45 states serving approximately 20,000 retirement plans with $65 billion in assets. In short, everyone wins: This back-office support in design, ERISA issues, education, and technology allows The Independent Financial Group to provide institutional-level service without the conflicts of in-house product vending or hidden compensation arrangements.
About This Newsletter
Plan Sponsor Insights content represents the opion of the author. Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.
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