FiduciaryShield Launch

Fintech Firm BidMoni Launches FiduciaryShield, a Retirement Plan Platform That Assists Plan Sponsors to Meet their Fiduciary Duties and Reduce Plan Costs

Proprietary tech platform empowers plans to engage in a competitive bidding process for the first time, offering them significant savings and other fiduciary benefits

MOSS POINT, Miss., June 20, 2018 -- With America’s U.S. retirement savings deficit in the trillions of dollars and growing, BidMoni has announced the launch of FiduciaryShield, the first platform that allows retirement plans to quickly and easily solicit bids from dozens of the country’s top retirement plan providers.  FiduciaryShield analyzes proposals so plan sponsors and financial advisors can determine the best plan, document the entire process to stay compliant, and automatically monitor plans on a ongoing basis.      

FiduciaryShield was designed by retirement plan experts Stephen Daigle and Michael Steffan, who together bring 26 years of problem solving in the financial industry for some of the largest financial institutions in America.  CTO Kendall Dixon, president of Dixon Consulting and Development, is also a founder and brings expertise designing technology solutions to improve and simplify the processes of investment firms. 

Until now, companies wishing to provide a 401(k) plan needed to contact and request proposals from each individual plan provider they reviewed. This process could take months and the plan sponsor still had no easy way of comparing the resulting bids to ensure that plan costs and features were appropriate and reasonable, both of which are required under ERISA law.

FiduciaryShield enables plans of all sizes to conduct a robust Request for Proposal (RFP) process that can help them lower their costs and reduce the potential liabilities associated with their plans, while improving their plan’s quality. FiduciaryShield pairs users with industry leaders in retirement plan administration to provide these proposals.

“Offering employees the benefit of a retirement plan has become a burden for many plan administrators and business owners—but particularly for plans with less than $25 million in assets,” says BidMoni Co-CEO Michael Steffan, Jr. “We believe these plans should have the same competitive opportunities as larger plans.”

There is no cost to a plan for initiating the RFP process and it takes less than a half-hour to get started. If a plan sponsor selects a new plan provider, it pays FiduciaryShield a nominal fee to monitor the plan and provide ongoing alerts.

FiduciaryShield has partnered with First Ascent Asset Management to work with plan sponsors who want to delegate fiduciary responsibility for the management of plan investments.  First Ascent will serve as an independent “3(38) manager.” They accept fiduciary responsibility for selecting and monitoring investment options and can remove the conflicts of interest that have been the cause of many recent lawsuits.

The new platform is available to retirement plans of all sizes, including 401(k), 403(b), and 457(b) plans.  Financial advisors can bring this service directly to their clients, even if they are not, themselves, retirement plan experts.

“Throughout our careers, we have worked with school teachers and businesses big and small and we’ve seen the devastating impact that high investment fees and layered service fees can have on retirement savings,” said Founder and Co-CEO Stephen Daigle. “With FiduciaryShield, we are reducing the time and expense of plan sponsorship and helping plan sponsors discharge their legal obligations as a plan fiduciary.  Our goal is to create an open and transparent marketplace for companies to create the best plan for their employees. Ultimately, that will help to break down the barriers that have prevented individual participants from adequately saving and investing for retirement.”

About BidMoni 
BidMoni, Inc. is a Fin-Tech start-up designed to bring transparency and efficiency to employer sponsored retirement plans, including 401(k), 403(b) and 457(b) plans.  BidMoni’s flagship product, ‘FiduciaryShield’, provides plan sponsors the opportunity to have industry leading plan providers compete for their business.  FiduciaryShield is easy to use, helps satisfy the Department of Labor (DOL) requirement that plans pay only reasonable fees, and ensures that the process is fully documented. 

About First Ascent Asset Management 
First Ascent provides outsourced portfolio management services to financial advisors and their clients. The firm’s founder, Scott MacKillop, is a 40-year veteran of the financial services industry and has been providing asset management services to financial advisors for over 25 years. First Ascent is a registered investment advisor.

For more information please visit Bidmoni.com, or to schedule a demo of the platform, contact Support@Bidmoni.com.  Connect on Linked In: Michael Steffan or Michael@Bidmoni.com

 

Warning signs in my 401k

401K's provide your employees the opportunity to have sufficient money available upon retirement, so they can enjoy a comfortable lifestyle. As the employer offering this valuable benefit, have you given any thought as to how the plan you intend to provide should be structured? There is significant variability between competing plans in cost to the employer, service to the employee, transparency, flexibility, etc.; all of which must be carefully weighed before choosing what best suits your goals. It can be daunting and time consuming to sort through the choices available and then select a plan that truly satisfies you and your employees needs. Oftentimes, the choice made is not optimal, yet because the process was so painful, the plan chosen is kept anyways. In many cases, that plan stays in place for years.

The following are some of the red flags to look for in your current plan or your plan moving forward:

  1. Annuity Plan Platform

The Annuity plan platform is usually a pre-packaged plan. The plan often offers a set fund list along with pre-packaged plan agreement terms that require few decisions to be made by the plan sponsor. One of the drawbacks to this plan type is that it has been historically difficult to identify administration fees. That presents a challenge for the Fiduciary, as one of their main duties under the law is to insure plan fees are reasonable. Another drawback is that many of the funds within the plan are not easily traceable, as they lack a "ticker symbol". This makes it difficult to individually track and monitor those plan funds. In the long term, an annuity plan platform makes it difficult to change one plan feature, without having to change everything.

Better Alternative-

Open Architecture Platform

This plan provides a platform that allows more customization. Open architecture structure allows access to a universal selection of funds. This may entail slightly more work, but this sort of structure allows for a more transparent view of fees. Although we believe this structure to be more beneficial in light of fiduciary requirements, be aware! Not all platforms claiming to be “open architecture” are created equal.

  1. Proprietary Fund Requirements

It is easy to be drawn into a lower fee by offering certain proprietary funds recommended by your Recordkeeping firm. Although some of these funds may be suitable at the time,  if you need to change those options in the future, it can bring about more issues. If you replace those proprietary funds, how will it affect the pricing of the rest of the plan?

Better Alternative-

No Proprietary Requirements:

It is smart to receive pricing on your plan without any proprietary requirements. Most providers will then offer a discount if the proprietary offerings are utilized. This will provide a record of the discount that will be removed if funds are changed in the future.

  1. Revenue Sharing Funds

We believe this to be the number one red flag in a plan that needs to be evaluated. Are the funds in your plan currently paying a revenue share back to one of the service providers? In other words, are you providing the lowest available share price in your plan? With thousands of mutual funds/ etfs to sort through, you need to make sure you are offering the most cost effective share price to your employees.

Ex: Fund Share Class X has an expense ratio of 0.75%; the fund pays 0.25% to the record-keeper.

Better Alternative-

No Revenue Sharing.

Ex: Fund Share Class Y has an expense ratio of 0.5%; the fund pays 0% to the record-keeper.

It is obvious which one is better for your employees. The service provider fees should be transparent and not rely on indirect "sharing".

  1. You Select Investment Lineup

If you do not know who is selecting the investment lineup, it is probably you. You are responsible for this action on an ongoing basis. If your company has not specifically outsourced it thru a third party 3(21) or 3(38) agreement, then it is your responsibility. If this is the case, you need an investment policy statement on file as well as a system to regularly monitor and replace poor investments (and make sure to record the process of monitoring and/or replacing).

Better Alternative-

Ousource through Third Party Investment Advisor.

Unless you are experienced in this field and feel that you can meet the DOL definition of prudence, this is your best choice.

3(21)- will provide you a list of funds to select from, but you will be required to make changes to the plan if the funds are removed from the list.

3(38)- the third party manager selects your fund line up and continues to monitor and make changes on your behalf.

  1. Guaranteed Interest Option With Trade Restrictions

Your plan will generally offer an investment option for “conservative investors”. As we cannot recommend the best way to go, we can recommend what features to look out for. It is easy to be drawn to a very high yielding rate, but are there stipulations to your employees moving money out of the account? These stipulations can often limit participants to move only 20% a year out of the fund into other investments, and we have seen some as high as 10 year restrictions! You also need to be aware of potential plan level restrictions if you decide to change this fund in the future. Many funds require a systematic payment, or they are subject to an MVA (market value  adjustment). These will reduce the value of your employees accounts when the fund is liquidated.

Better Alternative-

Conservative Option With No Restrictions

No one wants to have the talk with an employee about why their money is stuck in a fund or why their balance dropped when the plan was changed, so stick with a liquid conservative option.

  1. Conflict of Interest

Did you make your decision based on what was in the best interest of the employees? You are representing your employees, so you cannot make a decision based on a benefit to you that is not also an available benefit to them. Whether you are helping a family member or you are connected to an association, your obligation is to the employees, period. A number of service providers offer to sponsor associations, conferences or scholarships-which are all positive-as long as that does not influence your judgment when deciding on the best plan for your employees.

Better Alternative-

Avoid Conflicts

Remember, even if there is no malintent, it can still be perceived as improper. If a service provider is attempting to push you to violate your Fiduciary duty, it may be best to go with another provider.

  1. Absent Advisor

Advisors are very common in plans, but you need to know what the advisor fee is paying for. Are they selecting the investments, meeting with employees, providing group education to the employees, or actively managing employee portfolios? Advisors can do all of these, some of these or none of these. It is important to know that the advisor servicing your plan is either earning his/her keep, or being under compensated for all they are doing for your employees.

Better Alternative-

Advisor Contract

Get a written description of what your advisor should be providing. This will allow you both to understand the expectations of the other. You will also be able to hold them accountable for the services that they agreed to offer. If they are not performing as expected, it may be time to consider a new advisor.

  1. Knowing Fiduciary Responsibilities as Defined by the DOL.

As written in the DOL 'Meeting your Fiduciary Responsibilities', these are the basic requirements of a Fiduciary:

  1. Acting solely in the interest of plan participants and their beneficiaries and with the exclusive purpose of providing benefits to them;
B. Carrying out their duties prudently*
  2. Following the plan documents (unless inconsistent with ERISA);
  3. Diversifying plan investments; and
E. Paying only reasonable plan expenses

 

*The duty to act prudently is one of a fiduciary’s central responsibilities under ERISA. It requires expertise in a variety of areas, such as investments. Lacking that expertise, a fiduciary will want to hire someone with that professional knowledge to carry out the investment and other functions.

 Fiduciary breach suits have focused much more on establishing a process and sticking to the guidelines, as opposed to the results. Watch out for new 401k providers offering “cost saving platforms”. That is not to say these solutions are not viable, but remember, the process is what is important. You need to be sure to compare multiple offers that are providing the same features. "Their ad said they were better" or "they said they are cheaper" does not count as a process. Lastly, providing full disclosure to all of your employees is often the best policy. Everyone needs a little accountability!

Better Alternative-

It is best to bid out your plan at least every 3 years (or as major changes occur) and conduct an ongoing monitoring of the plan between these periods to make sure the services provided are carried out and the employees are happy. You should also benchmark your plan fees (compare to other plans with similar demographics) annually to make sure that your employees are not overpaying. If you do not feel confident that you can perform these duties, then you need to find a service that can do them on your behalf.

Fiduciary Shield by BidMoni was created to assist plan sponsors in identifying these red flags while allowing a cost saving, more transparent plan to your employees. Access BidMoni.com today to allow industry leaders to compete for your plan.