At NEFG, our mission is clear – to provide our clients with proper financial advice and guidance by employing the highest standards of care.
Fiduciary Best Practices
At NEFG, our focus is to provide guidance on fiduciary “best practices” to plan sponsors. The following steps are the framework of the services we offer to plan sponsors to assist them in fulfilling their fiduciary responsibility to plan participants.
401(k), 403(b) and 457 Retirement Planning
Plan Sponsor Fiduciary Duties
- Investment Policy Statement
- Quantitative & Qualitative Fund Analysis
- Prudently Select Investments
- Consistently Implement Results
- Independently Monitor Investments
- Defray Reasonable Fees
- Follow Plan Document
Protection for Participant Investment Decisions
- Broad Range of Investment Options
- Sufficient Investment Information & Education
- Description of Fees & Expenses
- 404(c) Policy Statement & Employee Notice
- Description of Investment Alternatives & Fund Facts
Fiduciary Investment Services
NEFG is required by law to place the interest of our clients before our own and fulfill the following critical fiduciary duties of trust and confidence:
- Investment Policy Statement (IPS) – A key driver in fulfilling fiduciary responsibility, an IPS leads to accountability and better, more consistent decision making.
- “Best of Class” Investment Choices – As independent Registered Investment Advisors, we advocate the use of “open-architecture” plans allowing access to an extensive offering of investment options without proprietary product restrictions.
- Independent Research – NEFG performs internal due diligence on investment managers utilizing resources such as fi360 and Morningstar, in addition to conducting regular calls with managers.
- Transparent Disclosure of Expenses – The Department of Labor (DOL) requires full disclosure of plan expenses and identification of potential conflicts of interest. NEFG provides full disclosure of Plan expenses in writing and has done so prior to DOL requirements.
- Independent Plan Administration – NEFG will work to coordinate efforts between you and your Third Party Administrator to assure plan compliance and fiduciary standards are being met.
As Registered Investment Advisors, NEFG is capable of functioning as either a Limited-Scope 3(21) or Discretionary 3(38) Fiduciary to the plan. The respective roles are defined as follows:
Limited-Scope 3(21) Fiduciary:
Someone who has been appointed by a “named fiduciary” with the responsibility to render investment advice to the “named fiduciary” and/or participants. Such advice is acted upon at the discretion of the “named fiduciary” or participant.
Discretionary 3(38) Investment Manager:
A fiduciary who has full discretion for investment selection and monitoring. The presence of a 3(38) relieves the plan sponsor from the fiduciary liability for the investment selection and monitoring.
Participant Educational Services
Northeast Financial Group, Inc. believes that proper employee education is the key to increased participation and savings rates. Our three-phase education program is designed to provide employees with the tools they need to best utilize the benefits of the plan and become better prepared for retirement. The education process is summarized below:
Step One: Group Enrollment
- Communicate the plan highlights
- Introduction of retirement planning basics
- Introduction of asset allocation basics
Step Two: One-on-One Enrollments & Reviews
- Meet with participants to discuss financial goals and objectives
- Determine an appropriate savings rate
- Determine participant risk tolerance
- Recommend a suitable asset allocation
- Follow up reviews to determine continued suitability
Step Three: Conduct Group Educational Seminars
- Provide periodic seminars on investment and retirement planning topics. Seminars can be tailored to specific employee groups such as those nearing retirement.
Driving Costs Down to Deliver Greater Participant Savings
Driving Participation Rates by Leveraging Effective Participant Engagement and Education
NEFG was engaged by a Community Healthcare Provider for fiduciary and education services for the organization’s retirement plan. NEFG recommended implementing moderate amendments to the plan’s design; adding auto-enrollment, auto-escalation and face-to-face enrollment meetings. Following implementation, the plan’s participation rate increased by 30% by the end of year one. NEFG’s approach will ensure better participant outcomes for retirement readiness.
Leveraging Independence to Reduce Costs and Increase Transparency
NEFG was engaged by a local Manufacturing company to assist with benchmarking the organization’s retirement plan. The plan was using an open architecture record-keeping system, a third-party administrator for compliance, and a traditional broker-dealer agent whose practice was primarily focused on wealth advisory services. After conducting the benchmarking service, it was deemed that the incumbent advisor was not only charging fees to the plan for services that were higher than average, but was also using revenue sharing mutual funds to collect additional compensation. It is not uncommon for traditional brokers to use this model, since part of the compensation brokerage firm advisors earn, are retained by the parent organization. Several recommendations were provided, and the firm partnered with NEFG as the ongoing fiduciary. As an Independent Registered Investment Advisor, NEFG is able to better control and transparently illustrate the fees billed for services and, in turn, institutionally price the plan’s investments to drive down costs in order to provide the best value for participants.
Optimize Plan Design to Reduce Plan Sponsor Expense
NEFG was engaged by a local sponsor to provide ongoing fiduciary support services. Upon review of the plan’s design, it was noted that the company had been using a traditional profit-sharing allocation. This existing formula resulted in a $1M annual profit-sharing contribution from the company, in order for the owners to maximize their contributions each year. NEFG recommended a plan amendment to change the calculation to a custom New Comparability formula. When implemented, the company was able to still maximize the owners’ contributions, but in turn saved the organization over $350,000 in ongoing participant profit-sharing contributions.
Financial Wellness Program
We understand your financial goals are unique to you, and your path to achieving them requires careful goal-setting, diligent planning, and ongoing monitoring of your investment decisions.