Scope of Services
What do we do as retirement plan advisors/consultants?Plan Trustee Fiduciary Consulting
Our corporate clients are committed to fulfilling their fiduciary obligation to provide an exceptional retirement plan. We believe employers must take their fiduciary role seriously because the US Department of Labor takes it seriously.
How can Deschutes experience and expertise help?
“A fiduciary can also hire a service provider or providers to handle fiduciary functions, setting up the agreement so that the person or entity then assumes liability for those functions selected. If an employer appoints an investment manager that is a bank, insurance company, or registered investment advisor, the employer is responsible for the selection of the manager, but is not liable for the individual investment decisions of that manager. However, an employer is required to monitor the manager periodically to assure that it is handling the plan’s investments prudently.” -- US Department of Labor
- Our commitment to simple, transparent fee arrangements helps fiduciaries fulfill their responsibility to monitor costs.
- Our independence makes us objective. 100% of our revenue is paid by our clients. We have no other loyalties.
- We explicitly state that we act as a co-fiduciary with the plan sponsor.
- Experience—We are co-fiduciaries on retirement plans totaling over 14,000 participants and $800 million in assets.
Investment Selection
Our essential investing principles:
- Advisors should objectively select investment options from the complete universe of available funds. The advisor’s compensation should never be tied to the investment options chosen.
- Not all investment risks carry a reliable reward: some are worth taking and others are not.
- Portfolio strategies should offer focused exposure to all the risk dimensions of the diversified capital markets.
- Participant investment success will be based on consistent and disciplined exposure to diversified portfolios over time.
- In lower investment costs. The most reliable way to increase investor returns is to lower costs.
We rigorously apply these principals each and every time we recommend investment options for a corporate retirement plan. However, studies and experience shows that providing an excellent menu of investment options is only the beginning. Plan participants must be able to simply and effectively choose a professionally diversified mix of the available investment options. Our answer to this need is to create and offer complete investment models that can be chosen as a single investment option.
Model Portfolio Construction
In addition to providing consultation regarding fund options for a corporate retirement plan, we also provide recommended models of fully diversified portfolios that are constructed from the fund options.
Why is this so important?
I. Simplified Optimization of Risk Exposure
Successful investing means not only capturing risks that generate expected return but reducing risks that do not. Avoidable risks include concentrated positions in one stock or one segment of the market, betting on countries or industries and speculating based on market forecasts. To all these, diversification is the antidote.
Our models provide access to professionally constructed portfolios that diversify in the amount of stocks and/or bonds they hold (thousands) and in the type of investment held (US stocks, foreign stocks, commercial real estate, bonds, etc.). In this way, participants can effectively focus on the factors that drive investment returns and reduce excess and undesirable risk.
II. Discipline
Studies show that poor returns in 401(k)’s are primarily due to neglect, attempts at market timing, and frequent, counterproductive changed in participants’ investment holdings. Models help participants effortlessly and effectively stick to a long-term diversified investment portfolio.
III. Potential Increase in Participation:
Studies show that most 401(k) participants are not qualified to make investment choices. When participants are given choices that are too numerous and complex, their decision process can become frozen and the may choose not to participate at all. By providing pre-constructed models, participants can focus on the ONLY TWO decisions that are important:
- How much investment risk is appropriate given their situation and their retirement income goal?
- How much should they save to fund their retirement income goal?
We help participants answer these questions for themselves. The first step is meeting with them in person.
Periodic, face-to-face participant consultation
We believe all participants need and deserve one-on-one, in-person access to their 401K retirement advisor. In fact, we believe that this is the most important factor driving the ultimate success of the participants in saving and investing, and therefore the success of the plan as a whole.
Why?
- Participants are most successful when they follow professional advice regarding diversification and investment discipline, but, understandably, most participants will only take advice from someone they trust. In-person meetings are essential to establishing the trust that is necessary for the participants to follow our expert advice.
- Retirement is extremely important to almost everyone. Your participants have serious, personal questions about investing and planning that they need answered. The problem is that they probably don’t want to ask these questions in public, and they don’t want to talk about their personal situation to a stranger over the phone. Face-to-face meetings and the trust we build is the only way that participants will ask the serious questions to which they need answers.
- We need to understand a participant’s situation before we can provide quality advice. And, in order to know their situation, we need to spend time with each participant. This allows us to ask the question and gather the data that is necessary to provide them with a concrete retirement plan based on their ability to save and their future goals.
Our retirement plans help participants understand how they should invest and how much they should save.
Please contact us if you would like more information on our service oriented approach to retirement plans.
“Don’t simply retire from something; have something to retire to”