Fiduciary support

1 minute 54 seconds

When it comes to fiduciary oversight, the DO encourages sponsors to follow a thoughtful and well doumented process both for selecting and monitoring the advice provider. The READ framework is based on the DO guidance and is designed to give plan sponsors a stepbystep roadmap for making confident fiduciary decisions. Read stands for research, evaluate, ask, and determine. So, let's start with research. You'll want to gather the facts about the provider's qualifications. How do they deliver advice? What are the fees, both direct and indirect? And are there any thirdparty relationships or revenue sharing arrangements? You'll also want to understand whether they assume fiduciary responsibility under Orisa. 
Evaluate. Once you have the information, assess whether the provider meets your standards. Is their advice methodology sound? Are their advice fees reasonable and solely for the provision of advice? That is not subsidizing recordkeeping or other services. Are there any conflicts of interest or potential conflicts of interest?
Ask. Don't be afraid to dig deeper. If something isn't clear or if you need more information to make an informed decision, ask questions. This is the point where you may want to bring in a legal counsel or compliance expert if needed.
And then determine. Finally, this is where you make your determination and document your decisions. Why did you choose this provider? What criteria did you use? The determined step is an ongoing process. You'll want to set a regular cadence to review whether the provider meets your criteria. Look at how the provider is innovating and whether they're staying aligned with fiduciary requirements. Evaluate participant usage and outcomes and confirm that fees remain reasonable for the advice delivered.

57 seconds

But I got one more question for you as well about these cases. What do they tend to be about? And is there even a risk? Because you talked about the process because I'm thinking in my head as a plan sponsor, hey, I've got a process. I check these boxes off. I'm feeling pretty good about where I stand, but I just want to understand the environment in general. What do the cases tend to be about? The cases tend to be about the administrative aspects but I just want to understand the environment in general. What do the cases tend to be about?

The cases tend to be about the administrative aspects um the value that they're getting. So I think that I think that's an important thing to think about. It's not the value of advice that these cases, you know, that's not the reason for these cases being brought about. It's more about the process, which is what we're talking about today.

1 minute 16 seconds

How does a company plan sponsor determine that fees are reasonable? 
Well, I think that it goes back to looking at what the value is for those fees. So, what you know, benchmarking the fees for that particular um product against what else is there out there in the market. But again, you're not looking at fees in isolation. I think that's really key. What are you getting for that fee? So, um, we know from cases we want it to make sure it's apples to apples. So, looking at similar, um, products, but also the the data that you're bringing in. So whether it's an ongoing process, right, you're making sure the fees continue to be reasonable where you may be using some of the data Fiona talked about or whether you're at the outset of this process, you're collecting information about the various providers in order to to benchmark fees. What else is out there? You know, what is um going to be the most appropriate for my participants? What am I getting for that? How's the advice delivered? What type of delivery of am I looking for? And you're going to look at all of that um against the fees that are being charged and make a decision that way.

1 minute 6 seconds

Wendy, another question. How can I determine if advice fees are subsidizing other costs such as recordkeeping? Yeah, that's important question. That is an important question. So, you know, when um looking at recordkeeping fees, I think it's important for plan sponsors to understand the total cost of of fees. So what we have seen is instances where recordkeeping fees seem very low um and are very low but advice costs are actually high. And so you should ask yourself is a subset of the participant population actually subsidizing um the recordkeeping or subsidizing recordkeeping for others based on on the that fee structure. So I I just think it's important for plan sponsors as part of their diligence to, you know, make sure they understand the full fee structure, not just the advice fee, not just the recordkeeping fee, but what the total cost is.

1 minute 28 seconds

Target date funds and advice are really different tools and each plays an important role in a retirement plan. The genius of a target date fund is its simplicity. It takes a single input, your age, and builds a portfolio around your expected retirement date. That makes it a great solution for participants who want a straightforward age-based portfolio. Advice, on the other hand, is much more personalized. It considers a participant's full financial picture. Things like other sources of income, marital status, outside assets, and risk tolerance. That means advice can support participants with more complex needs or those who want help achieving multiple goals. It's also a good fit for people whose risk tolerance is either more conservative or more aggressive than the standard target date glide path. And advice can be especially valuable during market ups and downs or when someone is facing a big financial decision. It helps people stay on track and feel more confident about their finances. That's why it makes a ton of sense to offer both. Different people need different things at different points in their financial journey.