PREPARATION
FIDUCIARY ADVISER TRAINING
The Fiduciary Adviser Training component covers the role and responsibilities of the Fiduciary Adviser and the process of selling to an employer. During this course, the adviser learns how to:
- Engage a prospective client (employer)
- Address most frequently asked questions
- Make sales presentation to prospective client (employer)
- Efficiently identify best prospects for personal advice
- Extend the employee relationship to the total household
- Capture and consolidate rollover funds
- Prepare and maintain the required documentation and disclosures
- Adhere to guidelines of fiduciary responsibility and prudent man rule
- Prepare for required selection, review and independent audit required for plan sponsors to have fiduciary protection
- Explain the differences between a Fiduciary Adviser and a non-fiduciary adviser
- Explain differences between conflicted and un-conflicted Fiduciary Advisers.
ERISA TRAINING
The ERISA Training component covers the key areas of ERISA that Fiduciary Advisers are expected to know. This training is limited to knowledge required to advise plan participants and does not include the advanced knowledge required to advise plan sponsors. During this course the adviser learns how to:
- Avoid excess contributions and top-heavy problems
- Manage vesting and company stock restrictions in the retirement plan
- Make choices among plans when multiple plans are available
- When participants should use default investments
- Take best advantage of employee loans
- Identify when fund line-up needs to be changed
- Take advantage of features such as in-force distributions, Roth 401(k) and catch-up contributions.
INVESTMENT SELECTION TRAINING
The Investment Selection Training component prepares the adviser to give advice that meets the PPA standards of generally accepted investment theories within the investment options available in the retirement plan. During this course the adviser learns how to:
- Work with participant to develop financial goals
- Advise participant on the appropriateness of various risk levels
- Recommend asset allocations that are appropriate to goal and acceptable risk level
- Explain the basis of recommendation to participant.
CERTIFICATION
Certification provides the screening and documentation required by the plan sponsor to meet the fiduciary obligation of prudent selection of a Fiduciary Adviser. The certification process consists of:
- Background Check that discloses past regulatory incidents or other publicly available information that is pertinent to the ethics of the adviser.
- Client Results that invites the advisers existing clients to report on the advisers’ past performance in the quality of advice, trust, financial results, satisfaction with services provided and communications. Clients report on:
o Length of time adviser has provided services to the client
o Clients’ overall rating of adviser
o Clients’ satisfaction with specific services provided by adviser
o Clients’ rating of financial results to date
o Extent to which adviser has put clients’ interest ahead of adviser’s own
o Clients’ satisfaction with support of the adviser
o Clients’ profile
- Knowledge Test to establish knowledge of ERISA.
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SALES
BUSINESS DEVELOPMENT SUPPORT
FAN support includes extensive business development resources needed to maximize success in the employer market. Support includes:
Sales Tools
- Sales letters to plan sponsors
- Plan sponsor presentation deck
- Disclosures required under PPA
- Sample engagement letter
- Employee questionnaire
FAN Promotion
- E-mail campaigns
- Webinars
- Bylined articles
Online Adviser Network
- Plan sponsor search for Fiduciary Advisers
- Plan providers make referrals
Advertising
- Opportunities for online advertising
ADVISER NETWORK
Objective
- Connect plan sponsors with suitable Certified Fiduciary Advisers
Content
- Current base of Certified Fiduciary Advisers
Network Search Process
- Plan sponsor is directed to this site through a variety of promotional programs.
- The site is entered at Registration Page with or without identifying variables (Firm, Name, E-mail, Phone, Password) (ID):
- Entry with ID is pre-filled and given access to Search Page. Entry with ID originates from links where the user is already registered.
- Entry without ID requests user to register and an email is sent with password. User must open e-mail and retrieve password and enter it on the Registration Page in order to proceed.
- Search Page displays criteria that users enter to find Certified Fiduciary Advisers. User then submits request to search the data base and a Results page is then displayed.
- Results Page is limited to 10 Certified Fiduciary Advisers and includes a 50 word description of each. When there are more than 10 found, the first 10 that were never accessed or were not accessed for the longest time are selected. Results page includes a check box to request additional information on the Fiduciary Adviser. User receives a confirmation page listing the selected advisers and notifying him/her to expect an e-mail with info. The user may repeat the process with different criteria.
Selected advisers on the Results Page receive an e-mail request for information that is to be sent directly to the registered user.
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EXECUTION
CASHMAPPER –EMPLOYEE 60 SECOND CHECKUP
CashMapper is a computer-based program that uses non-threatening questions to do a 60 second financial checkup for employees and identify what financial advice each employee needs most.
Employees receive an instant reading of their financial condition and are referred to the most appropriate solution that is available. Potential solutions include default investment, computer model, fiduciary adviser or external services such as debt management.
Fiduciary Advisers receive notice of employees needing their services,preferences and capabilities.
Narrow Casting
Replacing the one-size-fits-all approach, CashMapper uses its electronic platform to focus on one employee at a time. High costresources are applied only when individual solution is identified.
Find Need, Deliver Solution
CashMapper uncovers the employee’s financial concerns, career stage, cash flow situation and wealth, then prescribes the solution that is pre-approved by fiduciary adviser and plan sponsor.
Provides REAL Leads
Results from CashMapper are leads with pre-established need that are delivered to fiduciary advisers and other areas in the firm as well as non-threatening external services.
Add Value For Plan Sponsor
CashMapper delivers higher productivity of employee base and includes an annual employee engagement survey about the employee base. This adds great value to the plan from the sponsor’s perspective.
FAENROLL - ADVISER RECORD KEEPING
FAEnroll is the record keeping and billing service of the Fiduciary Adviser Network (FAN). Employer and employee clients are tracked and invoiced to facilitate payments. FAEnroll performs three critical functions on behalf of Fiduciary Advisers:
• Captures and maintains records of advisers eligible investment advice arrangements (EIAA)
• Captures and maintains records of employees enrolled by the fiduciary adviser under each EIAA
• Creates billing and payment instructions for fiduciary adviser compensation.
FAEnroll is in compliance with record keeping requirements of the Pension Protection Act of 2006.
FAEnroll Service
Only current Certified Fiduciary Advisers may elect to use FAEnroll to maintain records and bill for compensation. FAEnroll assesses a fee based on the number of employees enrolled.
Advisers register for FAEnroll then enter each employer’s EIAA. The EIAAs describe the terms of the arrangement, including fee structure, estimated number of employees to be served, billing arrangement and billing cycle.
Employees may enroll for the Adviser’s services through FAEnroll. This permits the employee to register and request an appointment. Alternatively, the Adviser may register employees that have enrolled outside the system.
Advisers enter compensation received.
Based on the EIAA the following is performed automatically:
• Invoices with required supporting details are created and sent to the appropriate “bill to” party.
• Funds collected are aggregated, remitted to Adviser or firm and openreceivables are updated.
• Employer service report is issued
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COMPENSATION
INCOME POTENTIAL
Fiduciary Advisers will earn an estimated $500 per employee served each year. Additionally, Fiduciary Advisers have access to the employee’s household assets, rollover funds and can provide a variety of financial services. The following table shows the estimated adviser income:
COMPENSATION REQUIREMENTS & METHODS
Fiduciary Advisers must receive level compensation from plan that engages that adviser. The PPA guidelines for compensation arrangements are:
Compensation Prerequisites
In order to qualify, the fiduciary adviser or affiliate cannot receive compensation that varies with investment options in the plan. Only 12b-1 fees that are level, regardless of plan assets are permitted.
Compensation Disclosures
Fiduciary advisers must disclose all fees received, directly or indirectly through an affiliate or contractual arrangement. Disclosure is made to plan sponsor and each participant before advisory service is provided.
Compensation Amount
Compensation for advice must be reasonable, which is expected to be in the range of $300 to $1,500 per year per participant.
Payment Options
Five payment options are permitted, in two categories.
- Administratively simple, but presents risk of fiduciary breach
1) Overall plan assets are charged
2) Plan sponsor pays a single fee to fiduciary adviser
3) 12b-1 fee is used to pay fiduciary adviser
- Administratively more complex, but risk free
4) Participant account is charged
5) Plan sponsor pays the participant fee for advice
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RENEWAL
AUDIT
The annual audit required by PPA, mandates a written report to plan sponsors on the Fiduciary Adviser’s compliance with the requirements of PPA. The Audit involves:
- Adherence to the retirement plan document
- Review of documentation
- Update background check, client results and knowledge
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