This document summarizes a presentation on fiduciary compliance for retirement plan sponsors. It discusses the fiduciary duties plan sponsors have under ERISA, including the duties of loyalty, prudence, monitoring investments and expenses. It outlines the new Department of Labor fiduciary rule and how it expands the definition of a fiduciary. The presentation reviews recent fiduciary litigation involving 401(k) and 403(b) plans and recommends best practices for plan sponsors, including establishing an oversight committee, using an investment advisor acknowledged as a fiduciary, creating an investment policy statement, and obtaining fiduciary insurance.

1. Thrive. Grow. Achieve.
Fiduciary
Compliance for
Retirement Plan
Sponsors
Dennis Gogarty, CFP®, AIF®
Chase Deters, CFP®, ChFC®
Special Guests:
Harry Atlas, Esq. – Venable, LLP
Anthony Bologna – Ascensus, Inc.
Copyright Raffa Wealth Management, LLC . All Rights Reserved.

2. Page
WELCOME
2
YOU'RE
MAKING A
DIFFERENCE
IN OUR
WORLD.
LET US
MAKE A
DIFFERENCE
IN YOURS.
Raffa Wealth Management (RWM)
• Founded in 2005 by principals with over 25
years of financial services experience
• Clients are mid-sized institutions, high net-
worth investors, and qualified retirement
plans
• Assets under management exceed $600
million
• Affiliated with accounting, tax, estate and
financial planning professionals.

3. Page
AGENDA
3
Harry Atlas, Esq. – Venable LLP
• Fiduciary Compliance for Retirement Plan
Sponsors
Anthony Bologna - Ascensus
• Fiduciary Training
Chase Deters - Raffa Wealth Management
• Fiduciary Review of Policies and Agreements

4. © 2016 Venable L
November 1, 2016
Fiduciary Compliance for
Retirement Plan Sponsors

5. © 2016 Venable LLP
LEGAL CONTEXT
5

6. © 2016 Venable LLP
Overview of Fiduciary Duties
• Duty of Loyalty – Act in sole interest of plan
participants and beneficiaries for the exclusive
purpose of providing benefits
• Duty to Monitor – Monitor service providers and
investment managers and pay only “reasonable”
plan expenses
• Duty to Follow Plan Terms – Follow terms of plan
document in day-to-day operation of the plan
• Duty of Prudence/Care – Carry out duties prudently
• Duty to Diversify – Diversify plan investment
options
6

7. © 2016 Venable LLP
ERISA Duty of Prudence
• Must act with care, skill, prudence, and diligence
• Duty to seek outside expertise if/when necessary
• Primarily relates to investment fund selection,
including performance and fees, and plan fees
generally
• Focus is on the process
• U.S. Supreme Court held that 401(k) fiduciaries
have a continuing duty to monitor funds made
available under a plan
• There has been a recent increase in 401(k)
investment/fee litigation
7

8. © 2016 Venable LLP
DOL Fiduciary Rule
• New ERISA fiduciary rule expands who is a
fiduciary when providing investment advice for
a fee to a retirement plan or its participants
– Key is whether a recommendation is made that can
reasonably be viewed as a suggestion to take a
course of action or refrain from a particular course of
action
– There must be direct or indirect compensation
8

9. © 2016 Venable LLP
Investment Education versus
Investment Advice
• Plan information
• General financial, investment, and retirement
information
• Asset allocation model
• Interactive investment materials
9

10. © 2016 Venable LLP
Impact of Fiduciary Rule on Plan
Sponsors
• <$50M in plan assets – adviser and plan
sponsor may need to enter into contract stating
that there are no conflicts of interest and
including appropriate fees, depending on how
adviser compensation is structured
– Best Interest Contract Exemption (BICE)
• >$50M in plan assets – identify fiduciary for
advice, ensure new requirements are satisfied,
and engage investment committee
10

11. © 2016 Venable LLP
Impact of Fiduciary Rule on Plans
• Primary impact on recordkeepers/TPAs and
advisers
• Increased sensitivity for TPAs to avoid
inadvertent investment advice
• Limit assistance provided by TPAs to
participants contemplating distributions
11

12. © 2016 Venable LLP
Recent Fiduciary Litigation
• 401(k) litigation
• 403(b) litigation
• Litigation against financial institutions with
proprietary products in fund menu
12

13. © 2016 Venable LLP
401(k) Litigation – Sample of recent
large settlements
• Boeing – $57M settlement
– Nine years of litigation
– Alleged payment of excessive administrative and
recordkeeping fees
– Allegation that corporate banking relationship influenced
decision to use recordkeeping services
– Alleged imprudent offering of technology sector
fund
– Alleged imprudent management of company stock
fund
– Holding excessive cash in a unitized stock fund
13

14. © 2016 Venable LLP
401(k) Litigation – Sample of recent
large settlements
• Lockheed Martin – $62M settlement
– Alleged payment of excessive fees
– Alleged imprudent management of stable value fund
– Alleged imprudent management of company stock
fund
14

15. © 2016 Venable LLP
401(k) Litigation – Sample of recent
large settlements
• Novant Health – $32M settlement
– Alleged fiduciary breach due to offering retail class
shares when institutional class shares were available
– Alleged payment of excessive fees for recordkeeping
and administration
15

16. © 2016 Venable LLP
401(k) Litigation – Not all rulings are
negative
• Chevron – Last month court granted motion to
dismiss – complaint did not include sufficient
underlying facts to support breach of fiduciary
claims arising from:
– Use of money market fund instead of stable value fund
– Use of retail instead of institutional share classes
– Use of mutual funds instead of lower-cost collective trusts
– Failure of re-bid administrative services on a regular basis
– Failure to monitor retirement oversight committee
16

17. © 2016 Venable LLP
403(b) Litigation
• Many large universities have been sued within
past two months
• Allegations include:
– Failure to leverage the plan’s bargaining power by
using multiple recordkeepers, and multiple
investment funds within each asset class
– Selection and retention of underperforming funds
– Inclusion of far too many funds, resulting in
“decision paralysis”
– Failure to conduct competitive bidding or negotiate
fees and revenue sharing
17

18. © 2016 Venable LLP
403(b) Litigation (continued)
• Many plan sponsors have legacy investment
products with transfer restrictions that have
made fiduciary oversight difficult or impossible
– If legacy investment providers begin to loosen
transfer restrictions because of the litigation, plan
sponsors should revisit the legacy investment
products in their plans and consider whether they
should be removed.
18

19. © 2016 Venable LLP
FIDUCIARY
BEST PRACTICES
19

20. © 2016 Venable LLP
Plan Oversight Committee
• Committee delegated by Board with status of “plan
administrator” and oversight authority over plan
investments and fees
• Beneficial because it serves to identify employees
who serve as fiduciaries (and excludes others)
• Beneficial because it provides a framework for
satisfaction of fiduciary duties
• Board retains residual fiduciary responsibility and
should have a reporting mechanism in place to
monitor Committee
20

21. © 2016 Venable LLP
Fiduciary Investment Advisors
• Be sure that your investment advisor has
acknowledged fiduciary status
• Section 3(21) co-fiduciary (non-discretionary)
– Investment fund performance monitoring
– Share class and other investment-based expense
monitoring
– Benchmarking of plan expenses – investment and
recordkeeping
• Section 3(38) investment manager
(discretionary)
– Complete control over fund lineup
21

22. © 2016 Venable LLP
Investment Policy Statement
• Addresses substantive criteria for investment
fund monitoring
• Addresses process for investment fund
monitoring
• Addresses default investment fund or funds
• Need to ensure that fund performance reports
from outside investment advisors align with the
investment policy statement criteria
22

23. © 2016 Venable LLP
Indemnification and Insurance
• ERISA imposes personal liability for breach of
fiduciary duty
• Committee members can be indemnified by the
plan sponsor
• The plan sponsor can maintain fiduciary liability
insurance covering ERISA claims
23

24. © 2016 Venable LLP
Privacy and Cybersecurity
• PII – Personal Identifiable Information
• PHI – Personal Health Information
• ERISA
• HIPAA/HITECH
• State laws
– State privacy laws may not be preempted by ERISA
– Some state privacy laws may be broader than HIPAA
24

25. © 2016 Venable LLP
Privacy and Cybersecurity
• ERISA Fiduciary Duties
– Duty of Loyalty
• Must act solely in the interest of participants and
beneficiaries
– Duty of Care
• Must follow reasonable standard of care in protecting
participant personal and plan information
• Plan sponsors must implement stringent measures to
ensure compliance with industry practice
– Personal Liability
– Penalties for Breach of Fiduciary Duty
25

26. © 2016 Venable LLP
Privacy and Cybersecurity: Action
Items
Plan sponsors need to protect participant assets
and participant information
• Contract terms with service providers may not
provide sufficient protection for data security
and privacy issues
– Demand notice of breach and create reporting
protocol
– Allocate liability in event of breach
– Understand location and time frames related to data
storage
26

27. © 2016 Venable LLP
Privacy and Cybersecurity: Action
Items
• Review internal security measures and work
with IT/Infosec to evaluate service provider
security protocol
• Review fiduciary liability policy for coverage or
consider cybersecurity insurance
• Train plan participants and beneficiaries to
protect passwords and documents with PII to
avoid cybertheft
• Develop breach response plan
27

28. © 2016 Venable LLP
Takeaways
1. Maintain fiduciary liability insurance. Mounting a
defense, even if successful, will be costly.
2. Understand the plan’s fee structure, including how
any revenue sharing amounts flow.
3. Keep abreast of the competitive landscape for
recordkeeping services and ensure that the plan is
not overpaying (directly or through revenue
sharing).
4. Negotiate for “excess” revenue sharing to be
rebated to an “ERISA budget account” or consider
“fee leveling” so that some participants are not
subsidizing others.
28

29. © 2016 Venable LLP
Takeaways (continued)
5. Have an orderly process for evaluating investment
fund performance, and document the process.
6. Avoid unnecessary duplication of funds. Each
asset class should have, at most, one passively
managed and one actively managed option.
7. Be deliberate in your choice of cash equivalent
options (stable value, money market fund, bank
deposit).
8. Negotiate protection for cybersecurity threat or
theft.
29

30. © 2016 Venable LLP
Questions?
30
Harry I. Atlas
Partner, Venable LLP
410.528.2848
HAtlas@Venable.com

31. Page
AGENDA
31
Harry Atlas, Esq. – Venable LLP
• Fiduciary Compliance for Retirement Plan
Sponsors
Anthony Bologna - Ascensus
• Fiduciary Training
Chase Deters - Raffa Wealth Management
• Fiduciary Review of Policies and Agreements

32. Presented by: Anthony Bologna
November 1, 2016
Fiduciary Training

33. 33
Agenda
About Ascensus
Department of Labor Fiduciary Regulation
Plan fees – stepping into the spotlight
Retirement Plan Trends

34. About Ascensus

35. The industry’s largest independent services provider
35
Offering a unique, comprehensive perspective
As of June 30, 2016
retirement plans administered
$
136+
billion in retirement and college
savings assets under administration
1.6+
million IRA/HSA
accounts serviced
3.8+
million 529 accounts serviced
40,000+
enrollment meetings
conducted annually
through Total Benefit
Communications
4,200
ranked among top retirement plan providers most
associated with “good value for the money” in
Cogent Reports’™ 2016 Retirement Planscape®
Top Value529 Program Manager
ranked #1 529 program manager in assets
under Management by Strategic Insight
independent recordkeeper to
offer a scalable, fee-based
solution for financial
professionals
1st

36. Department of Labor Fiduciary Regulation

37. 37
What does the new DOL regulation do?
It updates the definition of a fiduciary
• The original regulation (from the 1970s) made it easy to be an advisor
and not take any fiduciary responsibility
• The new regulation pretty much makes all advisors a fiduciary
To ensure employers are adequately protected, advisors must make sure
their recommendations are:
• Impartial
• In the client’s best interest
• Illustrates fees in a transparent way
Is this a good thing – or a bad thing?
• For keeping your client’s interest in mind, we would generally agree that
this is a good thing!

38. Buy, sell, exchange or
hold securities or other
investment property.
Management of securities
or other investment
property (strategies,
portfolio composition,
selection of others.
Rollovers, transfers or
distributions (amount,
form, destination and
investment)
For a Fee? Recommendation? To Whom? By Whom?
OR
OR
Direct
Indirect
OR
Plan
Plan Fiduciary
Participant
IRA
IRA Owner
OR
OR
OR
OR
Acknowledges fiduciary status
Gives advice under an
agreement, arrangement or
understanding that it is based on
investor’s particular needs
Gives advice directed to a
specific recipient about an
investment or management
decision with respect to securities
or other investment property.
OR
OR
Defining investment advice
38

39. 39
Exceptions to recommendations/investment advice
Exceptions to
recommendations
or investment
advice

40. 40
What does this mean for my plan?
It depends on how your advisor is compensated
• If your advisor receive commissions (12b-1 fees from mutual funds or
commissions from insurance products) your advisor must use a Best
Interest Contract Exemption (BIC or BICE)
• The BIC exemption states that although your advisor is not receiving
level fees (fee-based compensation), they are still acting in your best
interest
• If your advisor charges a level fee (basis points or fixed dollar),
generally speaking have already provide you with a schedule of their
services and fees. The BIC exemption is not necessary.
Are there any advantages (or disadvantages) of commission vs. fee-based
business?
• Technically, no – but…

41. Plan fees – stepping into the spotlight

42. 42
Defining pricing with one of two adjectives
Opaque – difficult to understand or explain
• Generally how legacy provider pricing models work
• Often used based on average account balance or use of proprietary
funds
• Employer may think ‘Wow, my plan is free!’
Transparent – easy to notice or understand, honest and open, not
secretive
• Considered a newer, more progressive way to illustrate fees
• Often times called ‘required revenue’ or ‘explicit pricing’
• All parties simply tell the employer what they need to charge to service
the plan
• Employer’s first reaction ‘Wow, my fees went up!’

43. 43
Fees – explicit vs. implicit
Explicit/direct fees – commissions, fees and direct payments
Implicit/indirect fees
• 12(b)-1 fees
• Revenue sharing payments
• Marketing or distribution fees
• Underwriting compensation
• Shelf space fees
• Recruitment compensation
• Gifts and gratuities
• Expense reimbursements
• Other third party payments or indirect compensation

44. Retirement plan trends

45. Fee for service now the majority
45
Advisors making the move to fee-based business
19%
81%
23%
77%
2011 2015
Fee-basedCommission-based
Source:Ascensus platform, as of December 31, 2015.

46. I’m no expert…
46
Employers and employees embrace guided approach
99% 23%
% OF NEW PLANS OPTING
FOR QDIA RE-ENROLLMENT
% OF PARTICIPANTS
INVESTED IN QDIA
62%
defaulted into the QDIA
38%
elected the QDIA
Source: Ascensus platform, as of June 30, 2016.

47. Lower costs lead to higher utilization
47
Fee-based advisors continue to adopt lower cost funds
Source: Ascensus platform, Fee-based plans fund list, as of June 30, 2016.
4,949
5,984
4,185
4,859
2,270
2,082
1,384
931
0 BPS 1-25 BPS 26-50 BPS 50+ BPS
Available
Utilized

48. The shift to zero revenue
48
No-cost funds favored by advisors and employers alike
Source: Ascensus platform, Fee-based plans fund list, as of June 30, 2016.
1,521
2,270
2013
2016
0 BPS FUND UTILIZATION

49. Page
AGENDA
49
Harry Atlas, Esq. – Venable LLP
• Fiduciary Compliance for Retirement Plan
Sponsors
Anthony Bologna - Ascensus
• Fiduciary Training
Chase Deters - Raffa Wealth Management
• Fiduciary Review of Policies and Agreements

50. Thrive. Grow. Achieve.
Fiduciary Review
of Policies and
Agreements
Dennis Gogarty, CFP®, AIF®
Chase Deters, CFP®, ChFC®
Copyright Raffa Wealth Management, LLC . All Rights Reserved.

51. Page
AGENDA
51
Management Agreements
• Difference between 3(21) & 3(38) Fiduciary
• Ensure fiduciary roles are clearly outlined
Investment Policy Statements
• Fund Monitoring and Reporting
Requirements
• Responsibility for Add/Replacing Funds
Key Takeaway Recap

52. Page
INVESTMENT RELATED ROLES
52
What is the role of the Investment
Advisor?
1. To make recommendations to Trustees so
that the Trustees can make investment
related decisions.
2. To make investment decisions pursuant to
investment policy guidelines.
3. I don’t know

53. Page
FIDUCIARY STATUS
53
3(21) Fiduciary
• “A 3(21) investment fiduciary is a paid professional who
provides investment recommendations to the plan
sponsor/trustee. The plan sponsor/trustee retains ultimate
decision-making authority for the investments and may
accept or reject the recommendations. Both share the
fiduciary responsibility.”
3(38) Fiduciary
• “An [3(38)] investment manager is special type of fiduciary,
one who has been specifically appointed to have full
discretionary authority and control to make the actual
investment decisions. The manager may select, monitor,
remove and replace the investment options offered under the
plan.”
http://www.nipa.org/blogpost/1011572/169845/3-21-Versus-3-38-ERISA-Investment-Fiduciaries--
Decoding-the-Numbers

54. Page
MANAGEMENT AGREEMENTS
54
Investment Selection
3(21) Fiduciary Advisor:
• Client acknowledges that (i) it has selected the investment
managers and/or investments to be held by or offered under the
Plan, (ii) Advisor is acting in an advisory capacity only
and Advisor’s trading authority over the [investment managers
and/or] investments held by or offered under the Plan is limited
to placing orders to the TPA that have been authorized by Client.
3(38) Fiduciary Advisor:
• Client acknowledges that (i) Advisor’s trading authority over the
[investment managers and/or] investments held by or offered
under the Plan is limited to the Plan recordkeeping and
administrative platform selected by the client.

55. Page
MANAGEMENT AGREEMENTS
55
Investment Monitoring
3(21) Fiduciary Advisor:
• Advisor shall monitor the investment options ongoing and
provide a detailed report annually assessing the adequacy of the
investments in relation to appropriate benchmarks. Advisor
may recommend replacements for current funds due to a
variety of factors.
3(38) Fiduciary Advisor:
• Advisor shall monitor the investment options ongoing and
provide a detailed report annually assessing the adequacy of the
investments in relation to appropriate benchmarks. The
Advisor shall have the sole discretion and
responsibility to select, add, remove and/or replace
investment options due to a variety of factors.

56. Page
AGENDA
56
Management Agreements
• Difference between 3(21) & 3(38) Fiduciary
• Ensure fiduciary roles are clearly outlined
Investment Policy Statements
• Fund Monitoring and Reporting
Requirements
• Responsibility for Add/Replacing Funds
Key Takeaway Recap

57. Page
INVESTMENT POLICY REVIEW
57
Monitoring and Reporting
3(21) Fiduciary Advisor:
• If overall satisfaction with the investment option is
acceptable, no further action is required. If areas of
dissatisfaction exist, the investment advisor and Plan
Sponsor must take steps to remedy the deficiency. If over a
reasonable period the advisor is unable to resolve the issue,
termination may result.
3(38) Fiduciary Advisor:
• If overall satisfaction with the investment option is
acceptable, no further action is required. If areas of
dissatisfaction exist, the investment advisor must take
steps to remedy the deficiency. If over a reasonable
period the advisor is unable to resolve the issue, termination
may result.

58. Page
INVESTMENT POLICY REVIEW
58
Investment Selection Services
3(21) Fiduciary Advisor:
• The investment advisory consultant (investment advisor),
which is responsible for; (i) Assisting and making
recommendations to Plan Sponsor for the selection
and monitoring of the investment managers
3(38) Fiduciary Advisor:
• Advisor shall have the sole discretion and
responsibility to select, add, remove and/or replace
investment menus that provide a diverse selection of
investment options and otherwise comply with section 404(c)
of the Employee Retirement Income Security Act (ERISA)
that may be offered by the Plan.

59. Page
AGENDA
59
Management Agreements
• Difference between 3(21) & 3(38) Fiduciary
• Ensure fiduciary roles are clearly outlined
Investment Policy Statements
• Fund Monitoring and Reporting
Requirements
• Responsibility for Add/Replacing Funds
Key Takeaway Recap

60. Page
KEY TAKEAWAYS
60
1. Understand your plan’s fee structure, including how
any revenue sharing amounts flow
2. Stay updated on the competitive landscape for
recordkeeping services to ensure your plan is not
overpaying
3. Negotiate for revenue sharing to be rebated back to
an ERISA budget account or consider fee leveling so
that some participants are not subsidizing others.
4. Have an orderly process for evaluating investment
fund performance, and document the process
5. Review your management agreement and investment
policy statement to ensure clear outline of fiduciary
status, roles, and responsibilities

61. Page
DISCLOSURE
61
This information was gathered from reliable sources but
we cannot guarantee accuracy. Any performance related
information is based on participant responses and have
not been verified. Past performance is not an indication of
future results and any investment can lose value.
Performance results have been compared to balanced
benchmark portfolios comprised of broad market indexes.
The benchmarks were selected because we feel they are the
broadest market benchmark available in each broad
category. They may or may not be suitable benchmarks
for comparison to any particular investor’s portfolio or for
the average results reflected in this study. You should
consult with your investment professional to determine
suitable benchmarks for your portfolio.
Indexes do not reflect the fees associated with actual
investments and such fees would reduce the performance
illustrated.
Past performance is not an indication of future results. Any investment can lose value.