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The AIFA Credential and Successful Retirement

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Written by Smart Investor | 17 January 2012

AIFA® stands for Accredited Investment Fiduciary Analyst™ and it's a sign that your financial advisor pursues the highest possible standards of fiduciary excellence. Retirement plan sponsors who want to do right by their employees should seek a financial advisor who holds the AIFA designation.
AIFA® and Your Company's Retirement Plan
Your employees have a better chance of retiring with dignity if your defined contribution retirement plan is overseen by a holder of the AIFA. Why? Because if your plan is managed properly, there's a higher likelihood that the plan will deliver good results.

AIFA designees apply the rigorous best practices for 401(k) plans that have been developed by the Centre for Fiduciary Excellence (CEFEX). CEFEX has put these best practices into an easy-to-use format to ensure consistency and improve the overall retirement plan fiduciary decision-making process.

You may be familiar with ISO standards for ensuring manufacturing excellence. AIFA credential holders bring the same high standards to systematically and efficiently reviewing your 401(k). It's important to be systematic so we don't miss any problems. Efficiency helps us keep costs low.

AIFA Designee Strengths and Fiduciary Standards
Here's how fi360, which provides training for the AIFA designation , sums up the AIFA designee's strengths:

AIFA designees' primary function is to perform, or assist in, assessments of an Investment Steward's, Advisor's, or Manager's conformance to a Global Fiduciary Standard of Excellence using fi360's ISO-like procedure of assessment. AIFA designees possess the ability and knowledge to advise clients of deficiencies in investment processes. It is also the required mark to perform a CEFEX Fiduciary Certification, the independent recognition of a fiduciary's conformity to all fiduciary Practices and Criteria.

Not just anyone can become an AIFA designee. They must:

  • Satisfy educational and work experience prerequisites, including earning the AIF designation
  • Complete specialized training and pass a comprehensive examination
  • Annually complete 10 hours of continuing education
  • Abide by a code of ethics

Your retirement plan can benefit from this deep expertise.

Looking for an AIFA designee serving Sacramento, Roseville, and Stockton, CA? Smart Investor serves all three cities from our base in Rocklin, CA. Contact us at 916-435-2100.

Key Questions for Your Retirement Plan Provider, Including the F-Word

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Written by Smart Investor | 27 December 2011

Retirement plan providers all talk a good game. Plan sponsors need to ask smart questions to identify the best candidates. To help you, Smart Investor will present a series of posts listing key questions for your potential providers. Today's post focuses on questions about services such as investment advice, education, participant communications, recordkeeping, and custody.

To fulfill your responsibilities under ERISA, the Employee Retirement Income Security Act governing retirement plans, you must understand in detail the specific services your vendors offer. So, ask the candidates, "What specific services do you provide and who will provide them?"

Walk away if your potential provider won't answer your questions in detail. The Department of Labor requires them to provide this information in writing before you engage them.

Use the F-Word for the Best Retirement Plan

The following question is critical: "Are you a fiduciary and do you accept fiduciary responsibility in writing?" A fiduciary advisor upholds the highest standards, acting in the best interests of plan participants and beneficiaries.

Not every provider is a fiduciary. Many are not as we discussed in "The Secret Your 401(k) Vendors Don't Want You to Learn: 'Co-Fiduciary' Doesn't Mean Much."

Hiring a fiduciary, especially a registered investment advisor who acknowledges status as an investment manager under ERISA Section 3(38) is best. This lets you delegate your fiduciary responsibility and liability to the advisor. Delegation is becoming more important as lawsuits for breach of fiduciary duty become more common.

Get the details on investment providers, recordkeepers, custodians, TPAs

Most providers work as a team with others, such as recordkeepers, custodians, and third-party administrators. Don't assume those others also act as fiduciaries. Ask for the names of the companies, the services they'll provide, and whether they will act as fiduciaries.

The list of services should also address whether the companies offer the following:

  1. Personalized one-on-one enrollment and fiduciary investment advice services for each of your participants
  2. Model investment portfolios, including a summary of their fund allocations, investment performance, expected rate of return and risk level
  3. On-line and 24/7 voice response system that allows participants to view and make changes to their accounts
  4. Participant communications and advice to help employees get the most out of the retirement plan
  5. Agendas and meeting minutes for your plan sponsor/trustee meetings with documentation demonstrating that you, the plan sponsor, is meeting your plan responsibilities

In future blog posts, Smart Investor will cover more important questions that plan sponsors must ask.

Looking for a registered investment advisor serving Sacramento, Roseville, and Stockton, CA? Smart Investor serves all three cities from our base in Rocklin, CA. Contact us at 916-435-2100.

After Occupy Wall Street, Occupy 401(k)?

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Written by Smart Investor | 14 December 2011

Retirement plan sponsors, beware! The anger that fueled Occupy Wall Street and, closer to home, Occupy Sacramento and Occupy Stockton, could spread to the 401(k) world.

You may think Smart Investor is kidding. But we're not.

Consider this statement by respected financial columnist Ron Lieber: "…people who are lucky enough to be employed and have a retirement plan ought to be staging a sit-in in the office of the person who runs that 401(k) plan." He made this comment in "5 Ways to Think About Nuisance Fees" in The New York Times (Nov. 18).

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Retirement Plan Sponsors’ 401(k) Perceptions vs. Reality

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Written by Smart Investor | 28 November 2011

Most plan sponsors don't feel the urgency of fulfilling their fiduciary responsibility to their defined contribution plans. There are three main reasons these business owners stick with their current plans, even if the plan has flaws that cost their employees. However, these reasons rest on mistaken assumptions.

1. Unaware of fiduciary status. These plan sponsors say, "What's a fiduciary? Who? Me?" Sometimes the fiduciaries’ identities should be obvious because they’re named in plan documents. Sometimes, identifying fiduciaries requires familiarity with the term’s definition. You are a fiduciary if you exercise control over the plan, provide advice to the plan or its participants, or select or supervise other plan fiduciaries. This broad definition embraces many employees at the plan sponsor who may never have heard the word "fiduciary."

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Your Employees Appreciate Your Company's 401(k) Plan

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Written by Smart Investor | 17 October 2011

Every employer likes to feel appreciated. So you'll be happy to learn that employees appreciate that you offer a 401(k) plan, as reflected in results of repeated surveys conducted by the Investment Company Institute (ICI).

A whopping 92% of participants agreed with the following statement, "My employer-sponsored retirement account helps me think about the long term, not just my current needs." As ICI President John Schott Stevens pointed out, "You don’t see majorities like that for most propositions that are tested in surveys—particularly not for a system that has taken some very hard knocks from the press and some policymakers." Stevens discussed this statistic in his speech on "Helping Working Americans Achieve A Financially Secure Retirement: How the 401(k) System Is Succeeding."

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Smart Investor is a unique wealth management firm based in Rocklin, California.  We are an independent, fee-only registered investment advisor serving entrepreneurs, small business owners, and retirement plan sponsors and participants. More

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For our clients, ‘wealth’ is about more than money.  It is your ability to do what you want, when you want and how you want.  Our responsibility is to help you get there. 

What We Do

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