Fiduciary Services

Gerald Asplund can serve as a 3(21) and a 3(38) Fiduciary, through LPL Financial's Corporate RIA.

Investment Due Diligence

Market Volatility makes it critical for retirement plan sponsors and fiduciaries to develop and maintain investment due diligence procedures and supporting documentation.  Highcroft will work with the retirement plan committee to develop and maintain the plan’s investment strategy, which is codified in an investment policy statement.  This investment policy statement is used as a guide to evaluate your current investment offerings, measuring them against applicable indices, your existing provider’s complete menu, and the broader universe of investment options.  The result is confidence that your plan’s investments are diversified, well managed, and meet the stated objectives of your investment policy statement.

We provide this comprehensive analysis by utilizing industry leading investment analytical tools.  Each investment is evaluated by more than a dozen different and objective analytical measurements, including:

• Upside & Downside Capture

• Style: Correlation & Style Drift

• Performance: Excess Return & Tracking Error

• Risk-Return: Standard Deviation, R-squared, Alpha, Beta & Sharpe Ratio

• Performing this analysis on a regular basis is essential to documenting compliance with Department of Labor guidelines and managing exposure to fiduciary liability.

Plan Benchmarking & Analysis

With powerful search and comparison tools provided by LPL Financial, Highcroft helps plan sponsors eliminate the confusion and frustration of selecting a 401(k) provider.  Our process dramatically reduces the amount of time plan sponsors must allocate to the evaluation of their plan provider.

We will analyze your current plan provider so that you will understand how the services you receive, and the fees that you are paying, compare to industry averages.  A report of findings is included to provide an objective, third-party opinion of the benchmarking results.  We can facilitate any recommendations including negotiating a reduction in plan expenses or negotiating improved services.

Plan Provider Selection & Due Diligence

Highcroft, Inc is your partner in the plan provider review process.  Highcroft employs a plan provider review process, which enables Plan Sponsors to eliminate the confusion and frustration of selecting a 401(k) provider, and dramatically reduces the amount of time plan sponsors must allocate to the evaluation of new plan providers.

The vendor selection process can be time-consuming, confusing, and frustrating.  All too often, standard vendor-provided proposals do not include enough information to determine administrative, recordkeeping, compliance, and employee communication services and standards.  Furthermore, total plan costs are usually impossible to determine from the face of the proposals.

Plan goals and objectives are first defined, then we help you identify potential service providers that have met your requirements.  Specific criteria are chosen on which to base the comparison.  Based on the best-fit providers and the specific criteria selected, a comprehensive comparison report is developed so that each provider can be reviewed on a level playing field.  Once a provider has been selected, we implement an ongoing review process to periodically review service contracts against services offered and fees charged to ensure they continue to be the most appropriate choice for the plan.

Employee Communication and Education

A successful communication program is critical to the success of a company’s plan.  We understand that the development of an effective communication program varies greatly from business to business and across industries.  We review the wide variety of options available with the retirement plan committee and create the most appropriate program for their particular employee population.  Consistent implementation of the plan increases employee understanding and participation while raising the profile and appreciation of the benefit.

Key components of our communication strategy include:

• All on-site meetings conducted by securities registered representatives

• On-site group enrollment meetings

• On-site individual enrollment meetings

• On-site group investment education meetings

• Access to on-line investment and financial planning

Maximize Executive Participation

Business owners and key employees are finding it more difficult to adequately save for retirement.  Why?  Qualified retirement plans and group insurance plans, even Social Security, place limits on contributions, layouts and tax advantages of benefits for highly-paid individuals.  Industry retirement experts suggest that we need at least 80% of pre-retirement income to maintain our current standard of living in retirement

We are highly experienced at assisting company owners and executives in understanding options available to assist them in achieving the contributions they desire to the company retirement plan.  Some of the most common services we provide include:

• Reviewing plan structure and discussing alternative plan design strategies that may allow company owners and executives to achieve maximum 401k profit sharing plan contributions.

• The development and consistent implementation of quality employee enrollment, education and assistance programs that seek increased participation by employees, and corresponding increases in the amounts company owners and executives can contribute.

• A specific strategy to help employers attain safe harbor funding for the plan and employees that may result in allowing owners and executives to achieve maximum funding at no net out of pocket cost to the employer.

• The integration of a Cash Balance Plan option that may result in the owners and executives ability to increase their tax deductible contributions.

Definitions:

Upside/downside capture ratio show you whether a given fund has outperformed--gained more or lost less than--a broad market benchmark during periods of market strength and weakness, and if so, by how much.

Correlation: A statistical measure of how two securities move in relation to each other. Correlations are used in advanced portfolio management.

Style Drift: If an investment is classified in one asset class, "Large Cap" for example, but its best fit index after RBSA analysis shows it is most correlated with a "Mid-Cap Index", then the fund is "style drifting". It has drifted from its target style and asset class.

Excess Return: Investment returns from a security or portfolio that exceed a benchmark or index with a similar level of risk. It is widely used as a measure of the value added by the portfolio or investment manager, or the manager's ability to "beat the market."

Tracking Error: A divergence between the price behavior of a position or a portfolio and the price behavior of a benchmark. This is often in the case investment that did not work as effectively as intended, creating an unexpected profit or loss instead.

Standard Deviation: Standard deviation is a historical measure of the variability of returns. If a portfolio has a high standard deviation, its returns have been volatile. A low standard deviation indicates returns have been less volatile.

R-squared: A statistical measure that represents the percentage of a investment company’s or security's movements that can be explained by movements in a benchmark index. For fixed-income securities, the benchmark is the T-bill. For equities, the benchmark is the S&P 500.

Alpha: Measures the difference between a portfolio’s actual returns and its expected performance, given its level of risk as measured by Beta. A positive (negative) Alpha indicates the portfolio has performed better (worse) than its Beta would predict.

Beta: Measures a portfolio’s volatility relative to its benchmark. A Beta greater than 1 suggests the portfolio has historically been more volatile than its benchmark. A Beta less than 1 suggest the portfolio has historically been less volatile than its benchmark.

Sharpe ratio: The Sharpe ratio is a risk-adjusted measure of the excess return (or Risk Premium) per unit of risk in an investment asset or a trading strategy.  

For Plan Sponsor Use Only - Not for Use with Participants or the General Public.  This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice.  Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.  In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

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