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Plan-Level Fiduciary Services

 

Pasqua, CPA provides ERISA 3(21) registered investment advisory services giving plan sponsors the independent financial expertise that the Employee Retirement Income Security Act (ERISA) requires in order to prudently select and monitor the investment alternatives (funds) offered to plan participants.

We provide all of our services in a fiduciary capacity following the Center for Fiduciary Studies’ “Prudent Practices for Investment Fiduciaries” as reviewed and endorsed by the Fiduciary Task Force of the AICPA.

 

Investment Policy Statement (IPS) preparation

Our service begins with providing plan sponsors an Investment Policy Statement which outlines the processes and procedures that will be used to select and subsequently monitor the investment alternatives (funds) chosen.

 

Plan Lineup Selection and Monitoring

We analyze the total universe of funds available on the existing provider’s platform, putting the funds through our rigorous due diligence evaluation process.  We examine a fund’s track record, assets in the fund, composition consistency with asset class, style consistency, expense ratio/fees relative to peers, risk-adjusted performance relative to peers, and performance relative to peers.  We then select those 15-20 funds which when combined with each other, offers participants an optimum group of well-balanced investments from which to choose.

We then monitor the current funds in the plan lineup on a quarterly basis by applying the above evaluation process to determine if the funds should remain or be replaced.

 

Model Portfolios

Due to advancements in recordkeeping technology, most 401(k) recordkeeping platforms can now accommodate asset allocation Model Portfolios. This service, available only through ERISA 3(21) registered investment advisors, provides employees with an investment option that is tailored towards their specific investor profile while also being automatically managed and rebalanced on an ongoing basis.

This service is designed for the estimated 50-70% of plan participants who don’t have the time, confidence or interest in managing their assets and would rather have a qualified professional make the investment decisions for them.

Using institutional portfolio optimization methodologies, we create up to ten separate model portfolios for participants to choose from.  Each portfolio has a different percentage allocation in each of the 12 broad asset classes, and thus correlates with the different types of investor profiles that are found among participants.

Once we select the asset class allocation for each portfolio, we then choose from the plan lineup the most appropriate investment representing each asset class.

From a participant’s perspective, he or she is able to select a single investment which is diversified, cost efficient, and automatically updated/rebalanced according to his or her specific investor profile.

We then consider it our fiduciary responsibility to make sure that every participant becomes fully educated in understanding how to correctly choose the Model Portfolio most appropriate for their individual circumstances.

 

Acceptance of Fiduciary Responsibility & Liability

We accept in writing our status as both a Fiduciary and independent ERISA 3(21) Registered Investment Advisor, thereby virtually eliminating the sponsors’ fiduciary liability as it relates to the selection and monitoring of plan investments.

 

Quarterly Reporting

We provide benchmarking and performance reports quarterly.