from Gradney & Vistica Financial ManagementPHONE: (866) 981-1500 > 2710 Loker Avenue West | Suite 370 | Carlsbad, CA 92010 > www.gradneyvistica.com from Gradney & Vistica Financial Management A Better Way to do the 401(k)
The Advisors Access™ program has attracted more than $200 million in 401(k) plan assets since the beginning of 2008 and has gained the endorsement of some of this country’s most prominent independent ﬁduciaries.Remember when 401(k) planswere supposed to be… a benefit? Find out how Advisors Access™ can help both you and your participants enjoy a better 401(k) experience. Contact us at (866) 981-1500. Advisors Access . A Better Way to Do the 401(k) ™
Compare the advantages of the Advisors Access™ 401(k) program to those sold by brokers or offered direct by large fund companies and insurance companies: A beneﬁt for employees, providing them with an outstanding Advisors Access Broker-Sold Plan Direct-to-Provider Plan opportunity to grow their retirement assets, tax-deferred, through their employer? Fee-only Registered And a beneﬁt for the companies who offered those 401(k) Investment Advisor YES NO NO plans, helping to distinguish them from other, less-generous companies in the market and keeping their employees happy Advisor assumes and productive? ﬁduciary liability for fund selection and YES NO NO Somewhere, somehow, the 401(k) plan lost its way. performance monitoring The market became dominated by huge ﬁnancial services companies that only wanted to cram as many of their high- fee, proprietary funds in the fund lineups as possible. Those Access to DFA funds YES NO NO exorbitant fund fees were used to hide everything from recordkeeping expenses to broker compensation, making it impossible for plan sponsors and plan participants to truly Advisor-Managed understand plan costs. Portfolios YES NO NO Those same providers refused to take on the liability of fund selection and performance monitoring, instead forcing Expert team comprised the executives of the companies who operated the plan to of independent service YES providers NO NO shoulder that liability. Meanwhile, participants were left to fend for themselves, forced to choose from a bafﬂing menu of investment options Access to thousands of mutual funds YES SOME SOME to cobble together an investment portfolio that they alone were responsible for managing and maintaining. It doesn’t have to be this way. Full fee transparency YES NO NO The 401(k) plan can work. It can meet the needs of plan sponsor and plan participant alike, and do so in a cost- effective, client-focused manner. Direct advice to YES participants SOME SOME14 3
Welcome to Advisors Access : ™ A better way to do the 401(k) The majority of the funds we use in the Advisors DFA’s client list reads like a Who’s-Who of this coun- Access program come from Dimensional Fund Advi- try’s premier corporations, public retirement plans and sors (DFA). It is important for you to know that none non-proﬁt institutions, including: of the service providers in the Advisors Access pro- gram receive any compensation from DFA for using AT&T Inc. their funds. Boeing Corporation California Public Employees’ Retirement System We simply think DFA funds are among the best in the Carnegie Mellon University industry. Illinois Municipal Retirement Fund J. Paul Getty Trust DFA is one of the 15 largest mutual fund companies Kellogg Company in the United States, managing more than $165 billion Merck for individual and institutional investors. PepsiCo, Inc. Packard Foundation So why isn’t DFA a household name? Pﬁzer Inc. Sara Lee Corporation The simple answer is that DFA doesn’t want to be a St. John’s Hospital household name. DFA doesn’t advertise and doesn’t offer its funds through retail distribution channels. Unlike nearly all other fund companies, DFA doesn’t take all-comers to its funds. In fact, the only entities in the country that have access to DFA funds are large institutional investors and independent advisors that DFA has personally vetted and approved. The reason for all this exclusivity is that DFA believes there is a right way to invest – and a wrong way – and the ﬁrm only wants to attract assets that are com- mitted to its disciplined investment philosophy. That philosophy includes a belief in minimizing fees and trading, diversiﬁcation, efﬁcient markets and long- term investing. DFA adamantly avoids the kind of “hot” money from retail investors that ﬂows in and out based on short-term market conditions and drives up expenses in the process.4 13
About DFA: The Best Big Fund Company You’ve Never Heard of… Advisors Access is the way the 401(k) should be – ™ a program that provides expert, conﬂict-free advice to plan sponsors and their participants, access to some of the most sought-after investment vehicles in the world, and total plan costs that are much lower than many of the programs offered by the large ﬁnancial services providers. The Advisors Access™ program highlights include... • Fee-only, independent Registered Investment Advisors who serve as both ERISA 3(21) and 3(38) advisors, taking the liability for investment selection and performance monitoring off of the plan sponsor. • Expert, one-on-one advice to plan participants. • Access to institutional investment vehicles that are not available on retail 401(k) platforms and normally require a minimum investment of $2 million per fund. • Advisor Managed Portfolios that give participants the ability to turn the management of their 401(k) assets over to expert advisors. • A comprehensive fund menu that is created by independent advisors using our Proprietary Fund Screening Process. • The ﬂexibility for participants who desire to manage their own portfolio to open a self-directed brokerage account and select from among thousands of mutual funds, stocks and bonds. Institutional funds from firms like Dimensional Fund Advisors are used • Independent providers who are free from the conﬂicts extensively in the Advisors Access of interest that plague traditional 401(k) plans. 401(k) portfolio strategies. • No hidden fees or fee-sharing arrangements between providers, giving you full transparency for all plan costs.12 5
The Advisors Access Expert Team ™ One of the main beneﬁts of the Advisors Access 401(k) program is that we have assembled a team of expert service providers in every area. Unlike bundled programs in which one provider dabbles in a little of everything, the Advisors Access program brings an Expert Team concept to the management of your 401(k) plan. The Advisors Access Expert Team Members include: ™ STEP 1: Analyze Fund Structure STEP 4: Research Fees, Sales Charges We use only open-end mutual funds in the Advisors Ac- and Trading Costs cess program. We exclude all collective trusts, annuities, When it comes to fund fees and expenses, the less you closed-end mutual funds and private money managers pay, the more you keep. That may seem like common INVESTMENT ADVISORS from consideration. While such investment vehicles may sense, but it escapes the vast majority of the fund indus- Gradney & Vistica Financial Management BAM Advisor Services sometimes have merit for individual investors, it is often try, where total funds costs often run between 2% and 3% Gradney & Vistica Financial Management is the lead Advisors Access is a 401(k) service program offered by difﬁcult, if not impossible, to obtain reliable third-party annually. In the Advisors Access program, we place a pre- information on which securities those types of investment mium on funds that keep fees well below industry average. advisor in the Advisors Access program, serving as the BAM Advisor Services, one of the nation’s largest vehicles hold, what their fees and expenses are, and In fact, many of the funds in our program cost ﬁve times ERISA 3(21) Fiduciary Advisor to your plan. In this role, providers of fiduciary-minded solutions in partnerships what their performance has been. This lack of veriﬁable less than the average retail actively managed stock fund! Gradney & Vistica Financial Management oversees all with independent Registered Investment Advisors all information makes such investment vehicles unsuitable members of the Advisors Access Expert Team. across the country. for consideration in a 401(k) plan. STEP 5: Secure Access To Institutional Funds Retail funds attract assets from small investors, who tend Gradney & Vistica Financial Management will guide you In Advisors Access, BAM serves as your 401(k) plan’s STEP 2: Sort Active from Passive Funds to trade frequently and drive up fund operating costs. through a proprietary Prudent Fiduciary Process based designated 3(38) investment manager, taking on the Studies show that more than 80% of actively managed In Advisors Access, we use predominantly institutional on industry best practices. This process includes periodic responsibility and liability for selecting and monitoring the funds fail to beat their market benchmark over ﬁve-year mutual funds, which are used by some of this country’s review meetings with the plan’s trustees and one-on-one funds in your plan. Working with your 3(21) fiduciary time periods. In contrast, passively managed funds seek largest retirement plans, foundations, endowments and advice for participants. advisor, Advisors Access provides “a better way to do to track a market benchmark or asset class at low cost not-for-proﬁt groups. These funds incur much lower the 401(k)”. and with great efﬁciency. In the Advisors Access program, expenses and therefore often generate a higher net we screen out high-fee, poor performing actively managed return than comparable retail funds that trade more often. funds and focus our search process on passively man- aged funds. This isn’t just our opinion; according to The Third Restate- From this rigorous screening process emerges some of ment of the Trusts, “Current assessments of the degree the most effective, lowest cost investments available in of efﬁciency (of the capital markets) support the adoption the 401(k) marketplace, the majority of which come from of various forms of passive strategies by trustees … the Dimensional Fund Advisors (DFA) and Vanguard – two of greater the trustees’ departure from one of the passive the most highly regarded fund companies in the world. strategies, the greater is likely to be the burden of justiﬁ- cation and also of continuous monitoring.” In the Advisors Access program, we use these funds to craft a comprehensive fund lineup that participants can STEP 3: Identify Available Asset Classes use to create their own portfolios, and we also use those One of our main goals when selecting funds for the same funds to construct the Advisor Managed Portfolios Advisors Access program is to be sure our investment so popular with participants. vehicles cover the full spectrum of asset classes and investment styles – stocks and bonds, foreign and domes- tic, large and small, growth and value, etc. We seek out fund companies that provide very precise exposure to our targeted asset classes, and do so with the least amount of tracking error and with very low fees. This helps us ensure that participants using our funds and portfolios get the asset-class exposure they are expecting.6 11
The Advisors Access Proprietary ™ Fund Screening Process In Advisors Access, we aren’t limited to just a few fund families. As independent RIAs, we are free to choose from over 10,000 mutual funds when we create our fund lineup and construct our Advisor Managed Portfolios. So how do we sort through thousands of investment vehicles to ﬁnd the best funds for our clients? RECORDKEEPER ALLIANCE CUSTODIAN The answer lies in the Advisors Access Proprietary Fund Screening Process, a 5-step methodology One of the main advantages of the Advisors Access pro- Plan assets in the Advisors Access program are held in we developed to sort the good from the bad and ﬁnd the investment vehicles we believe to be gram is our nationwide network of independent record- trust accounts at TD Ameritrade, Wilmington Trust, best-in-class. keeping ﬁrms. These experts in beneﬁts consulting and or Charles Schwab & Co., three of the largest and most administration are completely independent of any fund respected custodians in the business. While the advisors company, brokerage ﬁrm or insurance company; as such, to your plan are authorized to manage the plan’s assets, their incentive to provide top-notch client service and the assets are always held in plan name at the custodian. professional counsel is paramount. That custodian works for you, not your advisor, providing you important peace-of-mind about the safety and security Recordkeepers participating in the Advisors Access of your plan’s assets. Recordkeeper Alliance include: ALL STEP 1 STEP 2 STEP 3 STEP 4 STEP 5 Advisors Access • Schwab Retirement Plan Services, Inc., one of the FUNDS Funds largest and most respected recordkeeping ﬁrms in the United States. Schwab is one of the only large providers in the industry that does not require plan sponsors to use proprietary, high-fee funds in their investment menu. • McCready & Keene, one of the nation’s largest s independent third party administration, recordkeeping nd sts es Fu and actuarial ﬁrms, dually headquartered in Virginia Co s ss nd l e na and Indiana. la ur g Fu tio in tC ct ad e ru tu • Administrative Services, LLC, one of the Southeast’s se siv Tr sti St As s premier beneﬁts consulting ﬁrms and a subsidiary of In d Pa Our pledge of independence and objectivity: nd an e to bl Fu the highly regarded accounting ﬁrm Kassouf & Co. in m Neither the investment advisors nor the plan es la ss fro e ai Birmingham, Ala. Fe ce yz Av recordkeepers in the Advisors Access program e Ac al ch tiv y An ar tif Ac receive any compensation from the investments re en se cu rt Re Id offered through the plan. Se So10 7
The Advisors Access Investment Modules ™ The Solution to “Analysis Paralysis”: Not Just Choices… SOLUTIONS. Advisor-Managed Portfolios International Real Intermediate Term Bond 0% In the Advisors Access program, we don’t just give you options – we give you answers. We offer Estate 5% Inflation Linked Bond 0% Domestic Real Short Term Bond 0% Most 401(k) providers tout all of the investment options three distinctly different investment modules to your participants, ranging from a complete “do-it- Estate 5% International US Large Growth Stock 20% available on their platform. But the reality is that participants for-me” solution to a self-directed brokerage window that lets a participant choose just about any Small Stock 6% are often overwhelmed by too much choice. Faced with investment they desire. mountains of data about dozens or even hundreds of funds, Here is a look at the three different investment modules International Large Stock 14% participants often develop “analysis paralysis” and end up making hasty, impulsive decisions about one of the most available in the Advisors Access program: ™ US Large Value important things in their lives – their retirement assets. Stock 20% US Mid/Small Value We developed the Advisors Access investment lineup to Stock 16% overcome this problem. While the Advisors Access platform US Mid Growth US Small Growth Risk/Return Chart Stock 7% Stock 7% offers participants plenty of options, it also offers them something in short supply in the 401(k) market: HIGH LOW HELP. ALL EQUITY PORTFOLIO Our Advisor Managed Portfolios give participants the abil- MODULE A ity to make a single choice about the investment of their Participants can choose from one of the ﬁve Advisor Managed Portfolios constructed by the Advisors Access GROWTH PORTFOLIO 401(k) assets and still have the peace of mind that they investment team. These all-or-nothing investment options span the risk spectrum from aggressive to conserva- are being invested in a well-diversiﬁed, expertly managed tive and are designed to give participants a single-choice investment option that frees them from the burden MODERATE GROWTH PORTFOLIO portfolio. of managing their own portfolio. CONSERVATIVE PORTFOLIO Unlike lifestyle and target-date funds, these portfolios are managed at the participant level by professional investment DEFENSIVE PORTFOLIO managers. Rebalancing and, if necessary, fund replacement are handled automatically for all participants. The partici- MODULE B Participants can choose from a menu of twelve mutual funds selected by the Advisors Access investment pant’s only responsibility is to select the portfolio that best team. These funds were screened from the thousands available on the recordkeepers’ platforms to provide The Advisors Access™ Advisor Managed suits his or her long-term risk and return needs. participants with a select group of funds that are low in cost and provide outstanding asset-class represen- tation. For participants who wish to construct their own portfolios but want an objective advisor to do the Portfolios give your participants the ability to turn the management of their Statistics show that when participants are offered the research for them, these funds are excellent options. 401(k) assets over to professional advisors. option to select an advisor-managed portfolio or construct their own portfolio, more than 80% of participants opt for the advisor-managed portfolio. Clearly, when given the option to have an expert advisor M OD UL E C Participants can build and manage their own portfolio through a self-directed brokerage window offered by the manage their portfolio for them, the vast majority of partici- custodians in the Advisors Access program. With this option, participants can choose from literally thousands pants jump at the chance. of mutual funds and individual securities, or retain the services of an independent investment advisor to man- age their portfolio for them. In the Advisors Access program, they have that chance. NOTE: Plan sponsors can choose to offer all three modules, or can simplify the investment line-up by offering only Module A, or a combination of Module A and Module B.8 9
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