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Tomorrowsk Presentation

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Center point tomorrowsk_pres Presentation Transcript

  • 1. The MEP Advantage
  • 2. AGENDA1.The Retirement Plan Market2.The Internal Conflict: 401(k) Plans3.Understand the Points of Entry4.Why TomorrowsK?5.Questions
  • 3. The Opportunity An Untapped Market
  • 4. The Retirement Plan Market1.The Opportunity2.The Internal Conflict of 401(k) Plans3.Understand the Points of Entry4.Why TomorrowsK?5.Questions
  • 5. 401(k) Market Understanding the Problems of 401(k) Plan Delivery
  • 6. 401(k) Issues . . .What is the Problem with 401(k) Plans?• Fiduciary and Plan Administrator Roles• Effort Redundancy• Brown Processes (Paper Waste)• Participant Investment Behavior• Conflicts of Interest• “Our Plan should/could/must do what?”
  • 7. THE FIDUCIARY AND PLAN ADMINISTRATOR PROBLEM • Act “Solely in the Interests of Plan Participants” . . .The Legal Standardis to act with “the • Act as a “Prudent Expert” and be a Fiduciary with regard to:care, skill, prudence – Overall Reasonableness of Plan Fees and Expensesand diligence under • Understand flow of Sub-TA, Shareholder Servicing and 12-b1 feesthe circumstances • Assess all wrap fees and all participant-level fees for reasonablenessthen prevailing thata prudent man – Service Provider Oversightacting in a like • Conflict of Interest assessment in platform restrictionscapacity and familiar • Periodic evaluation of fee structure with marketwith such matters – Operation of Plan in accordance with written Investment Policy Statementwould use . . .” – Investments: • Performance of Investment OptionsFor most • Style Drift/Style Purityemployers, this • Construction of Appropriate Liabilityis a daunting • Removal of Underperforming Investment Optionstask and morethan 80% of allplans are out of • Be the “Plan Administrator” – be responsible for:compliance – Timely Deposits of Contributions(according to – Setting Plan-Level Eligibility requirementsthe DOL) – Loans, Hardships, Distributions – QDRO Approval – 5500 Approval & Filing – Summary Annual Report and Summary Plan Description distribution – Ensuring Plan Document revisions and SPD re-distribution – Audit Coordination – 404(c) Communications to Plan Participants – Fiduciary Liability Insurance & ERISA Bonding Requirements – Ensuring participants are receiving education or advice about plan investments
  • 8. But how hard could that really be? EXAMPLE: FEE OVERSIGHT SOURCES: INVESTMENT COMPANY INSTITUTE PROFIT-SHARING COUNCIL OF AMERICA
  • 9. Effort Redundancy & Paper Waste Problems • Individual company 401(k) plans:Many 401(k) plansoperate as they didin the 1980’s – lots – Waste paper to give information that is unused or thrownof paper processes away:and manual datatransfers that waste • Summary Plan Descriptionstime, money and • Prospectusesnatural resources • Paper Statements • Enrollment materials • Summary Annual ReportsEmployers tryingto meet the reallegal of 401(k) – Waste time and energy of employees:plans end upwasting time of • Investment Committees and Trustee Briefingsemployees toboth administer • “Education” sessions that eat up productive timeand participatein the program • Eat up administrative time for all the multiple aspects of running the plan: – QDRO, hardship, loan, and distribution approvals – 5500 and SAR reporting – Coordination of auditors – Arranging time for EE’s to meet with enrollers/educators – Tracking down lost or missing paperwork from employees
  • 10. Effort Redundancy & Paper Waste ProblemsThe desire ofemployers to offer a401(k) plan is • The Administration of 401(k) plans is not why alegitimate; the company goes into business.desire of employeesto have a 401(k) plan – Companies would never dream of operating otheris real; theassumption that the employee benefits this waycompany should bethe legal fiduciary • Example: Health Insuranceand administrativeliaison/operatorshould be called intoquestion. • Having many small-to-midsize companies operating “unique” 401(k) plans that are largelyA better businessmodel for 401(k) indistinguishable from each other is not smartwould be toreplicate the – Repetition of time, money and effort for similar tasks:business model ofinsurance benefits • Investment Committeesadministrationoutsourcing - and • Plan Oversightcorrespondingliability & • Plan Administrationadministrativeduties transfer tothose companies • Economies of scale not present in 401(k) plans
  • 11. Other Major 401(k) Problems • Participant Investment Behavior:401(k) plans havefailed to make – 20 Year Investment Return – S&P 500: 8.20%Wall-Street savvyinvestors out of – 20 Year Investment Return – Participant investor: 3.17%disinterested oroverwhelmed planparticipants • Conflicts of Interest: – “Educators” or “Enrollers” with duty of loyalty to providers – Custodians or Administrators determining investment menus or limiting investment choices:Too many • Pay-to-Play debacle“bundled”solutions disguise • Directed Trade requirementsvery real conflictsof interest that • An intractable mess: an annuity inside a 401(k) . . .harm bothemployers and – Plan Consultants getting paid to both provide advice to theemployees plan and provide advice to participants • “Our plan could/should do what?” – Always behind what could be in plan • Auto-Enrollment, QACA, Cross-testing, etc. SOURCES: DALBAR RESEARCH 2010 (PERFORMANCE AS OF DECEMBER 31, 2009)
  • 12. So what can you do? • Understand the current 401(k) model IS and whyThe only way totruly have a Better401(k) is to directly it doesn’t workconfront theproblems inherentin the current401(k) deliverysystem • Evaluate providers and processes with a critical eye toward what your 401(k) SHOULD BE, not just continue processes that were inheritedA key metric ofyour current401(k) plan is theTRUE cost – notjust what you • Ask the 3 Critical Strategic Questions:spend on feesand – Why am I doing this?expenses, butthe total time – Does this help or hurt my business/employees?and effortrequired toadminister and – Is there a better way to get this done?oversee the plan SOURCES: DALBAR RESEARCH 2010 (PERFORMANCE AS OF DECEMBER 31, 2009)
  • 13. Running a 401(k) is Complicated . . .
  • 14. The Retirement Plan Market1.The Opportunity2.The Internal Conflict of 401(k) Plans3.Understand the Points of Entry4.Why TomorrowsK?5.Questions
  • 15. Organizational Conflict Model
  • 16. Organizational Unity How TomorrowsK Benefits an Organization Business Owners Ultimate Fiduciary CFO/Treasurer Human Resources “The Money Guys” Logistical ResponsibilityInvestment Oversight Tomorrows K
  • 17. WELCOME TO BETTERTomorrowsK – THE NEXT GENERATION 401(k) PLAN EVALUATE ALIGN SOURCE
  • 18. RE-EVALUATE YOUR ROLE DOES RUNNING YOUR OWN 401(k) PLAN MAKE SENSE? STAFF TIME, COMPANY MONEY & RESOURCESE VA L U AT E : All are consumed in delivering this employee benefit. From[verb] : to investment committee and vendor meetings to paying thedetermine the TPA, the total cost of running a 401(k) adds up quickly.significance,worth, orcondition of, PERSONAL & CORPORATE FIDUCIARY RISKusually by As the Employer and primary Fiduciary, you are bothcareful appraisal corporately and personally liable for Fiduciary actions inand study overseeing your 401(k).AL I G N EFFORTS WITH LITTLE BENEFITSOURCE Employees primarily evaluate 401(k) plans by asking two questions: Does it exist? and How much does the employer contribute? Your efforts in complying with fiduciary standards developed for Fortune 500 companies do not normally translate to higher employee appreciation. COMPLEXITY AND CONFUSION The next slide illustrates this Plan Sponsor issue . . .
  • 19. WHAT RUNNING A 401(K) PLAN MEANSRunning a 401(k)plan draws heavilyon your employeeand staff resourcesto oversee acomplex investmentservice industrywithin a web ofever-changingregulatory andlegal requirements.
  • 20. EVALUATING THE OPTIONS YOU HAVE MORE OPTIONS THAN YOU MAY THINK START WITH STRATEGIC QUESTIONS:E VA L UAT E - Why am I doing this? - Is this giving my business a competitive advantage?ALIGN - Is there a different way to accomplish this?S O U RCE UNDERSTAND THE VESTED INTERESTS An entire financial services industry has been created to deliver “solutions” that leave you legally and financially responsible for overseeing their products and services. UNDERSTAND YOUR OPTIONS ERISA, the federal law regulating retirement plans, defines specifically how a retirement plan must be managed. But ERISA doesn’t say you have to be the one that runs it. NOW THERE IS A BETTER WAY . . . TomorrowsK.
  • 21. WHAT IS Tomorrows K? A BETTER WAY TO DELIVER A 401(k) BENEFIT TO EMPLOYEES MULTIPLE EMPLOYER 401(k) PLAN: A COMPREHENSIVE SOLUTION THAT LETS AN EMPLOYER JOIN AN EXISTING 401(k) PLAN COMPLETELY RUN BY PROFESSIONALSE VA L UAT E • An IRS-approved model in use for over 20 YearsALIGN • A way for employers to lower the cost of providing a 401(k) • Aggregation of low value-added services leads to lower costsS O U RCE Conventional 401(k) Cost Items – 401(k) Plan Plan (Average) TomorrowsK Set-up Fee (One-Time) $500 - $3,500 $600 TPA Charges/Admin Charges $700 - $3,000 $400 ERISA Bonding $100 - $300 Covered Annual Audit (if required: >100 EEs) $4,000 - $14,000 Covered Fiduciary Liability Insurance $1,200 - $7,500 Covered Total Annual Cost $2,000 - $20,000 $400
  • 22. WHY TomorrowsK IS BETTER FOR YOUR BUSINESS ALIGN YOUR NEEDS WITH STAFF AND EMPLOYEE RESOURCES ADMINISTRATIVE WORK LOADE VA L UAT E Your human resource staff will not be burdened signing off on various distributions from the plan and coordinating the variousALIGN [verb] : vendors to administer your 401(k).to be or comeinto precisea d j u st m e n t o r OUT-OF-POCKET COSTScorrect relative Lower the administrative cost of doingposition business while still providing employees a valuable benefit they desire.S O U RCE ON-THE-CLOCK EMPLOYEE TIME If your employees want to learn about diversification, risk allocation andtinker with their investment mix, they can do it in the privacy of their home or with other interested parties. Eliminate on-site enrollment and “education” meetings that burn time and add little value to your 401(k) plan.
  • 23. A PROVEN SOLUTION WHO ADMINISTERS TomorrowsK? PLAN CUSTODIANE VAL U AT E TomorrowsK Retirement Plan investments are held at TD Ameritrade, a retirement plan custodian with over $13 Billion in 401(k) assets and one of the most respected plan custodians for their technology, integrityand transparency.AL I G N RECORDKEEPER/THIRD PARTY ADMINISTRATORSOURCE[noun]: a pointof origin or 401(k) Plan Administration is provided by Capital Services, a specialized Multiple Employer Retirement Plan administratorprocurement founded in 1997. Capital Services provides plan administration to over 2,000 corporate retirement plans with over $1.2 Billion in assets. PLAN SPONSOR Allen Plan Administrators (APA) is the Plan Sponsor for TomorrowsK. Founded by a former broker-dealer chief compliance officer and human resource consultant, APA focuses solely on Retirement Plan Sponsor services. PLAN FIDUCIARY The Employer’s Fiduciary Solution (EFS) provides Fiduciary consulting to large and small employers. EFS serves as Principal Fiduciaries on the plan and are responsible for both investment and operational oversight of TomorrowsK. EFS was founded by Matthew Fields, Registered Investment Advisor, CPA, Attorney, and MBA.
  • 24. EMPLOYER DUTIES WHEN USING TomorrowsK• Moving the Plan Sponsorship streamlines 401(k) operations for you as an employer.• As a Co-Adopting employer, you can still choose your own contribution scheme• TomorrowsK assists with continuing non- discrimination compliance. As a Co-Adopting Employer: •Remove 90% of the administrative workload from internal staff •Shift plan management and legal compliance to TomorrowsK •Retire from your duties as a Plan Sponsor
  • 25. RE-SOURCE YOUR RESPONSIBILITIES REALIZE THE MULTIPLE BENEFITS OF SOURCING YOUR PLAN WITH TomorrowsKE VA L UAT E • ELIMINATE ANNUAL PLAN AUDITSALIGN • ELIMINATE ANNUAL FORM 55OO FILINGS • SHIFT FIDUCIARY LIABILITY TO PLAN PROVIDERSS O U RCE [ n o u n ] : • ELIMINATE PLAN DOCUMENT CHARGESa point of originor procurement • ELIMINATE ERISA FIDELITY BOND CHARGES • HAVE PIECE OF MIND FROM KNOWING A PROFESSIONAL FIDUCIARY INVESTMENT MANAGER IS RUNNING YOUR PLAN • REDUCE WASTE AND DELIVER A GREEN 401(K) PROGRAM FIND OUT MORE AT TomorrowsK.COM
  • 26. How is a MEP Better?
  • 27. Do you haveany questions?
  • 28. Your Title Text Here – StepsLorem Ipsum is simply dummy text of the printing and typesettingindustry. Step 1 Step 2 Step 3 Step 4Example Text. Example Text. Example Text. Example Text.Click to add Click to add Click to add Click to addyour text. your text. your text. your text.
  • 29. Market Overview
  • 30. Marketplace Dynamics1.Advisor-Centric Distribution2.Paper-Based, Inefficient Processes3.High Costs, Particularly for Small Employers4.Unprepared for 2012 Fee Disclosure
  • 31. Payroll Providers and 401(k)s1.ADP, Paychex, Ceridian a. Integrated Service Model b. Predominately Traditional 401k due to Plan Administration Revenue2. Independent Payroll Providers a. Un-integrated referral relationships b. Traditional 401(k) Plan Integration c. Multiple Employer Plan
  • 32. Integration Example: Paychex• Integrated Retirement Plan Administration Services with Payroll• 2011: Paychex becomes largest 401(k) provider by both number of total 401(k) plans and new plans• 2011: Number 30 on Business Insurance Top 100 List; Oswald is Number 54
  • 33. MEP Market Dynamics1.Multiple Employer Plans make up 5.4% of all Retirement Plans ($169 Billion in Total Assets with 3.2 Million Employee-Participants).2.Best Estimate: Over 80% of all Multiple Employer Plan assets held by Insurance- Company based programs