Stable
Value Pooled Fund Management
For smaller retirement clients, typically with $10 million or
less in stable value assets, FCM offers the opportunity to access
FCM's portfolio management expertise by participating in one of
its pooled collective trust funds. As in a mutual fund, the client
purchases units of participation or shares of ownership in the
trust. Thereby the plan benefits in the results of the fund as
managed by FCM in accordance with the stated objectives for the
fund, but the plan does not actually own the assets of the trust
nor does it have the ability to define investment objectives that
are unique to the plan.
Nondiscretionary
Portfolio Advice
For those plan sponsors who are comfortable with the fiduciary
responsibility attendant with serving as the investment manager
for their stable value fund but nonetheless wish to draw upon
the resources and advice of an expert in the field, FCM offers
on going nondiscretionary portfolio advice on a retainer basis.
Typically FCM is retained on an open-ended basis to assist the
plan sponsor in identifying an investment strategy and then implementing
that strategy while drawing upon FCM's credit research and expertise
in negotiating contracts. A "Placement Report" to provide documentation
for the plan sponsor's fiduciary files is provided within approximately
30 days after each calendar quarter in which an investment program
is carried out by the plan sponsor.
GIC
and Synthetic Wrapper Placements
An unbundled service for those plans who may wish assistance for
a specific GIC or synthetic wrapper contract purchase. This service
is part of what is provided in the ongoing Discretionary, Pooled
Fund or Nondiscretionary Portfolio Advice services described above.
Specifications are drafted and approved by the plan sponsor. The
specifications are published to the universe of potential bidders
and an auction market is created for the benefit of the plan.
A "Placement Report" to provide documentation for the plan sponsor's
fiduciary files is provided within approximately 30 days after
each calendar quarter in which an investment program is carried
out by the plan sponsor.
Contract
Renegotiations
Since GICs and other pension funding contracts as well as synthetic
wrap contracts are individually negotiated to begin with, it is
often possible to renegotiate such contracts later if the needs
of the plan change over time. FCM will accept assignments to apply
its knowledge and expertise in renegotiating such contracts on
an unbundled fee-for-service basis or as part of the ongoing Discretionary,
Pooled Fund or Nondiscretionary Portfolio Advice services described
above.
Issuer
Credit Evaluation and Monitoring
As part of the ongoing Discretionary, Pooled Fund or Nondiscretionary
Portfolio Advice services described above, FCM has developed a
highly regarded proprietary issuer credit evaluation capability
to assist in portfolio investment decisions. This expertise may
also be accessed on an unbundled basis by plan sponsors who elect
to manage their own portfolios.
Fixed
Income Investment Management Services
GICs are a type of investment contract issued by insurance companies
to tax qualified retirement plans, most frequently 401(k) plans.
Other types of investors including endowment funds, foundations,
corporate cash managers, defined benefit plans, and even the general
accounts of smaller insurance companies are finding fixed income
investment contract portfolios managed by FCM an increasingly
attractive alternative due to the high quality and very strong
performance record of FCM's portfolios. In this instance FCM will
provide much the same service as described above under Discretionary
Portfolio Management except that nonbenefit responsive investment
contracts will be employed rather than the GICs, BICs and synthetic
variants commonly used for 401(k) plans.
Single
Premium Annuity Purchases as Defined Benefit Plan Investments
or in the Event of a DB Plan Termination
When sponsors of defined benefit plans elect to terminate their
plan, they are obligated under law to purchase an annuity from
an insurance company guaranteeing to pay the accrued benefits
owed each participant under the terms of the plan. FCM's expertise
in negotiating insurance funding contracts in this inefficient
market can add significant value by decreasing the cost of the
annuity and thereby increasing the asset reversion to the plan
sponsor and/or the additional benefit payable to the participants.
In addition, when interest rates are high, some plan sponsors
elect to purchase annuities as a plan investment to lock in the
high returns even when they intend to continue the plan. FCM can
add great value as implied above, by taking advantage of the high
degree of market inefficiency which can often permit the purchase
of both high quality and high returns.
Department
of Labor Interpretive Bulletin 95-1
Department of Labor Interpretive Bulletin 95-1 Annuity Quality
Assessment Service. DOL Interpretive Bulletin 95-1 requires the
plan sponsor to place primary emphasis on the quality of the annuity
issuer. Moreover, unless the plan sponsor can demonstrate that
they have expertise in assessing issuer quality, they are obligated
under 95-1 to retain an expert to provide them with advice in
his area. Given FCM's long experience in assessing issuer quality
for both the purchase of both investment contracts and annuities,
it is not surprising that a growing list of both plan sponsors
and benefits consultants have retained FCM to help them satisfy
their obligations under 95-1.
Special
Consulting Assignments
From time to time, FCM is engaged for an assignment which does
not neatly fall into one of the categories described above. For
example, a Fortune 500 company retained FCM to assist them in
their search to select a bundled full service 401(k) service provider
in recognition of FCM's broad and extensive knowledge of retirement
plan and in particular 401(k) service needs.
Please
feel free to contact us at 1-203-269-0440
