Fiduciary Best Practices

FIDUCIARY 360

McCulley Financial Group has focused on providing Fiduciary Best Practices by partnering with Fiduciary360, whose mission statement is...

 

"To promote a culture of fiduciary responsibility and improve the decision-making process of investment fiduciaries."

 

The Self-Assessment of Fiduciary Excellence (SAFE) is intended to identify the critical moving pieces in fulfilling your organization's fiduciary role as a corporate retirement plan sponsor.  A process built around the four cornerstones of organize, formalize, implement and monitor will contribute to a more successful retirement program and mitigate potential fiduciary liabilities.

 

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404(a)

Fiduciary Duties

404(c)

Protection For Participant

Investment Decisions

 

Sufficient Investment

Information & Education

 

Broad Range Of

Investment Options

 

404(c) Policy Statement

& Employee Notice

 

Description Of Investment

Alternatives & Fund Facts

 

Description Of

Fees & Expenses

 

Copy Of

Prospectus

 

Voting & Tender Rights

(If Applicable)

 

Quantitative & Qualitative

Fund Analysis

 

Investment Policy Statement

(IPS)

 

Consistently Implement

Results

 

Defray Reasonable

Expenses

 

Prudently Select

Investments

 

Independently Monitor

Investments

 

Follow Plan

Document

The steps under ERISA behind 404(a) and 404(c) are numerous and complex; this is only an overview.

STEP 1:  ORGANIZE

Practice S-1.1

Investments are managed in accordance with applicable laws, trust documents, and written investment policy statements (IPS).

 

Practice S-1.2

The roles and responsibilities of all involved parties (fiduciaries and non-fiduciaries) are defined, documented, and acknowledged.

 

Practice S-1.3

Fiduciaries and parties in interest are not involved in self-dealing.

 

Practice S-1.4

Service agreements and contracts are in writing, and do not contain provisions that conflict with fiduciary standards of care.

 

Practice S-1.5

Assets are within the jurisdiction of appropriate courts, and are protected from theft and embezzlement.

 

STEP 2:  FORMALIZE

Practice S-2.1

An investment time horizon has been identified.

 

Practice S-2.2

A risk level has been identified.

 

Practice S-2.3

An expected, modeled return to meet investment objectives has been identified.

 

Practice S-2.4

Selected asset classes are consistent with the identified risk, return, and time horizon.

 

Practices S-2.5

Selected asset classes are consistent with implementation and monitoring constraints.

 

Practice S-2.6

There is an IPS which contains the detail to define, implement, and manage a specific investment strategy.

 

Practice S-2.7

The IPS defines appropriately structured, socially responsible investment (SRI) strategies

(where applicable).

STEP 3:  IMPLEMENT

Practice S-3.1

The investment strategy is implemented in compliance with the required level of prudence.

 

Practice S-3.2

Applicable “safe harbor” provisions are followed (when elected).

 

Practice S-3.3

Investment vehicles are appropriate for the portfolio size.

 

Practice S-3.4

A due diligence process is followed in selecting service providers, including the custodian.

 

STEP 4:  MONITOR

Practice S-4.1

Periodic reports compare investment performance against appropriate index, peer group, and IPS objectives.

 

Practice S-4.2

Periodic reviews are made of qualitative and/or organizational changes of investment decision-makers.

 

Practice S-4.3

Control procedures are in place to periodically review policies for best execution, “soft dollars,” and proxy voting.

 

Practice S-4.4

Fees for investment management are consistent with agreements and with all applicable laws.

 

Practice S-4.5

“Finder’s fees” or other forms of compensation that may have been paid for asset placement are appropriately applied, utilized, and documented.

 

Practice S-4.6

There is a process to periodically review the organization’s effectiveness in meeting its fiduciary responsibilities.

 

 

All written content on this site is for information purposes only.  Opinions expressed herein are solely those of “McCulley Financial Group, LLC”, and our editorial staff.  Material presented is believed to be from reliable sources, however, we make no representations as to its accuracy or completeness.  All information and ideas should be discussed in detail with your individual adviser prior to implementation.  

FIDUCIARY FRIENDLY.  PRUDENT ADVISORS.  COMMITTED TO CLIENT SUCCESS.