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New telephone System

Next week we are scheduled to implement a new telephone system, so if you have any difficulty getting through, please be persistent. The vendor assures us everything will go smoothly, but...

By Appointment Only

We are changing the walk-in policy at our office location here in Davis. We are all out "in the field" more and more, so we will receive visitors by appointment only.

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ERISA Fiduciaries

ERISA Fiduciaries are persons who have the legal responsibility for managing the investments in an ERISA plan, most commonly 1 401(k), 403(b), or 457 plan. 

These investment fiduciaries are challenged by the need to foster a culture of fiduciary responsibility that is defined by reliable, fixed standards. The management of investment decisions is not an easy task, even for trained investment professionals; and a nearly impossible task for lay decision-makers who serve as trustees and investment committee members of retirement plans.

Since professional and lay decision-makers depend on an assortment of industry vendors for assistance in managing their diverse roles and responsibilities, it is important to foster and promote a culture of fiduciary responsibility with all involved parties.

 

It’s About Law

While Navion Financial Advisors does not practice law, fiduciaries are governed by one or more of the following:

ERISA—Employee Retirement Income Security Act (impacts qualified retirement plans)

UPIA—Uniform Prudent Investor Act (impacts private trusts)

UPMIFA—Uniform Prudent Management of Institutional Funds Act (impacts foundations, endowments, and government-sponsored charitable institutions)

MPERS—Uniform Management of Public Employee Retirement Systems Act (impacts state, county, and municipal retirement plans)

There are seven practices common to these laws.  They are:

1. Know standards, laws, and trust provisions.

2. Diversify assets to specific risk/return profile of client.

3. Prepare investment policy statement.

4. Use “prudent experts” (for example, an Investment Manager) and document due diligence.

5. Control and account for investment expenses.

6. Monitor the activities of “prudent experts.”

7. Avoid conflicts of interest and prohibited transactions.

 

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It’s About the “Tone at the Top”

Investment Stewards, Investment Advisors and Investment Managers who do not foster and promote a culture of fiduciary responsibility are going to lack the sensitivity and awareness to identify the fiduciary breaches of others.  When a fiduciary has its own conflicts of interests, then that fiduciary will be marginalized at best; corrupted at worst. 

“Society depends upon professionals to provide reliable, fixed standards in situations where the facts are murky or the temptations too strong. Their principal contribution is an ability to bring sound judgment to bear on these situations. They represent the best a particular community is able to muster in response to new challenges.”

Dr. Robert Kennedy, University of St. Thomas

 

It’s About the Benefits of Having a Defined Standard

A defined standard is useful to:

• Help to establish evidence that the Steward is following a prudent investment process.

• Serve as a practicum for all parties involved with investment decisions (Investment Advisors, Investment Managers, accountants, and attorneys), and provide an excellent educational outline of the duties and responsibilities of Investment Stewards.

• Potentially help to increase long-term investment performance by identifying more appropriate procedures for:

• Diversifying the portfolio across multiple asset classes and peer groups

• Evaluating investment management fees and expenses

• Selecting Investment Managers

• Terminating Investment Managers that no longer are appropriate

• Help uncover investment and/or procedural risks not previously identified, which may assist in prioritizing investment management projects.

• Encourage Stewards to compare their practices and procedures with those of their peers.

• Assist in establishing benchmarks to measure the progress of the Investment Steward.

 

It’s a Four Step Process

Navion Financial Advisors, LLC, offers the following services to sponsors of qualified retirement plans:

  • Plan Design and/or Review
  • Investment Policy Statement Design and/or Review
  • Vendor Analysis
  • Fee Analysis
  • Fund Selection Assistance
  • Fund Monitoring
  • Employee Enrollment Meetings
  • Employee Education

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For more information, or to discuss your fiduciary duty, please call (530) 297-7441, (800) 845-0365, or send us an email at info@nfadvisors.com.