Please Note These Retirement Plans Are NOT A 401(k) Or 403(b) Retirement Plan

Defined Benefit Pension Plan Services Performed For Plan Sponsors¹ and Their Investment Committees:

Legend Financial Advisors, Inc^® (Legend) is a U.S. Securities and Exchange Commission registered investment advisory firm that manages monies for defined benefit pension plans on a discretionary basis. Legend is a Fiduciary and offers its service on a fee-only basis. It acts as a Fiduciary investment manager under the Employee Retirement Income Security Act of 1974 (ERISA).  Legend works together with the retirement plan’s sponsor and/or investment committee and follows the investment guidelines established by the retirement plan’s investment policy statement (IPS).

Legend helps the client oversee as well as coordinate the various facets of the retirement plan process in addition to acting as the Fiduciary investment manager.  Its state-of-the-art services incorporate the newest laws concerning the investment management aspect of retirement plans.  By acting as the Fiduciary investment manager, Legend reduces the potential liabilities of the defined benefit pension plan sponsor and its investment committee.

Legend Is A Fiduciary:

Legend, as a Fiduciary, places the retirement plan and the participants’ interests first, to ensure conflict-free services. Legend’s fees are always transparent.  all custodial fees charged to the defined benefit pension plan will be disclosed by the recommended custodians.

Low-Cost Investments:

Legend generally selects low-cost mutual fund and exchange-traded fund (etfs) investments including index and/or actively-managed options.

Low-Cost, Best-In-Class Service Providers:

Legend recommends, where possible, best-in-class record-keepers, administrators and custodians to the retirement plan investment committee to assist in providing cutting-edge defined benefit retirement plan services that minimize costs to both the retirement plan and the participants.

Aside from low costs, best-in-class defined benefit retirement plan providers can positively impact the plan sponsoring organization’s talent acquisition, retention, and employee satisfaction.  However, all decisions regarding any party that provides services to the retirement plan and its participants are made by the plan sponsor and its investment committee.

Avoiding Potential Retirement Plan Problems:

Implementing and managing a retirement plan can be a complex and high-risk effort if best-in-class defined benefit retirement plan providers are not selected.  Failure to do so can increase daily management burdens, costs and time spent by the defined benefit pension plan sponsor and its investment committee.  Furthermore, by selecting the wrong retirement plan providers, a defined benefit pension plan sponsor and its investment committee may be subject to an increased likelihood of litigation costs as well as possible violations of department of labor laws.

Coordinating With The Retirement Plan’s Actuary:

Actuaries address through their mathematical calculations several financial questions for defined benefit pension plans.  These include determining the level of annual contributions required to produce a certain income at retirement for plan participants as well as an assumed rate of investment return on the retirement plan’s monies.  as part of the funding process, the retirement plan sponsor (the employer) will retain Legend as the Fiduciary investment manager to develop an investment strategy to achieve the assumed rate of return over time while considering potential investment risks.

Key Points Contained In The Investment Policy Statement (IPS):

An investment policy statement (IPS) is a written document outlining the process for a retirement plan investment committee’s investment-related decision making.  Its purpose is to formally describe how investment decisions are related to a retirement plan’s goals and objectives, as well as document the retirement plan’s long-term outlook for the investments.  A written investment policy statement (IPS) can also provide a framework for participant communication and education including:

1. Define the retirement plan’s investment objectives.
2. Outline the roles of those responsible for the retirement plan’s investments including the investment committee and a Fiduciary investment manager.
3. Recommend appropriate asset allocation targets based on the defined benefit pension plan’s demographics, risk profile and projected cash flow needs.
4. Develop procedures for selecting and monitoring investments.
5. Establish investment procedures, measurement standards and monitoring criteria.
6. Develop guidelines for replacing specific investments and/or asset classes of investment managers that fail to satisfy established objectives.

Preparation Of The Investment Policy Statement (IPS):

If a defined benefit pension plan does not have an investment policy statement (IPS) Legend will assist the retirement plan investment committee with writing one.  If a defined benefit pension plan does have an investment policy statement (IPS), Legend will review it in-depth to ensure that it is current and meets the objectives of the retirement plan’s goals.

Thereafter on at least an annual basis, the investment policy statement (IPS) should be reviewed by both parties to determine if there have been any material changes to the goals and objectives or to the risk/return profile.  Included in this review is whether the stated objectives are still relevant as well as the continued feasibility of achieving the objectives.

Investment Management Services:

In addition to the items mentioned above, Legend, as the investment manager, provides the following services and procedural processes:

1. In conjunction with the defined benefit pension plan investment committee, Legend will determine the risk tolerance of the defined benefit pension plan.
2. In conjunction with the defined benefit pension plan investment committee, Legend will select the investment methodology (ex. mutual funds, exchange-traded funds and/or exchange-traded notes, individual securities, etc.) and management of retirement plan assets based on the guidelines and restrictions as outlined in the investment policy statement (IPS).
3. Legend will analyze the risk/return profile of each potential investment and prudently select those that are appropriate.
4. Legend will avoid prohibited transactions and conflicts of interest.
5. Legend will continually monitor investment performance and identify any changes in investments necessary as market conditions and/or cash flow projections change to maintain conformity with the investment policy statement (IPS).
6. Legend will monitor and minimize where possible all investment related expenses including management costs of investment products, redemption penalties, trading costs, custodial costs and other related costs. Legend will also periodically compare the above-mentioned costs to the marketplace.
7. Legend will hold periodic meetings/web conferences with the defined benefit pension plan sponsor and its investment committee to review investment performance.
8. Legend will communicate to the retirement plan investment committee all significant changes pertaining to the investment portfolio strategy or Legend itself.
9. Legend will use the same care, skill, prudence, and due diligence under the circumstances then prevailing that experienced investment professionals, acting in a similar capacity, and fully familiar with such matters, would use in like activities for comparable portfolios, with similar aims, in accordance and compliance with the uniform prudent investor act and all applicable laws, rules, and regulations.

Please Note:

¹Retirement Plan Sponsor:
This is a Designated Party, Usually a Company or Employer, that Establishes a Healthcare or Retirement Plan for the Benefit of the Organization's Employees.