401k Retirement Planning

While many advisors are avoiding fiduciary responsibility by leaving the industry, Prism Capital Management, LLC is embracing it. We promise you transparency, integrity, and commitment to you and your company.

Prism Capital Management, LLC is your premier 401K specialist. We serve in a 3(21) and a 3(38) fiduciary capacity. We are one of the few advisory services that satisfy the requirements of both and here are the differences.

Any individual is a fiduciary under Section 3(21) if he or she exercises any authority or control over the management of the plan or the management or disposition of its assets; if he or she renders investment advice for a fee (or has any authority or responsibility to do so); or if he or she has any discretionary responsibility in the administration of the retirement plan.

Section 3(38) defines “investment manager” as a fiduciary due to their responsibility to manage the plan’s assets. ERISA provides that a plan sponsor can delegate the responsibility (and thus, likely the liability) of selecting, monitoring and replacing investments to a 3(38) investment manager/fiduciary. A 3(38) fiduciary may only be a bank, an insurance company, or a registered investment adviser (RIA) subject to the Investment Advisers Act of 1940.

Both 3(21) and 3(38) advisors accept fiduciary responsibility and adhere to ERISA §404(a)’s duty to serve solely in the interest of plan participants and both have to meet the “prudent man” standard of care. Plan sponsors retain the responsibility to select and monitor the adviser, regardless of their adviser’s fiduciary status.

The quality of your 401(k) plan will impact not only your team’s ability to retire well but your own ability to retire well, and your ability to attract and retain quality employees. There’s more to plan for than just performance. You’ll need to consider the fees charged by plan providers, the lifestyle and unique needs of your staff and the size of your match when deciding how well your team will meet their retirement goals.

As a sponsor and fiduciary to your company’s 401(k) plan, you have a responsibility to help ensure plan performance and success. Prism understands this to help protect you from liability and loss while promoting optimal plan outcomes.

Prism’s retirement philosophy is simple. We know that you’re busy and don’t have the time to manage your company’s 401(k) plan. We help you put all the pieces together to work properly.

Retirement Plan Services

Financial Advisor Fee and Service Communication

We value our relationship. Our business goal is to provide objective and thoughtful retirement plan solutions to plan sponsored and your participants.

As part of the annual services we provide, we document and fully disclosure our fees and services delivered during the year. The Financial Advisor Fee and Service Communication document outlines our fees, as well as the value we deliver across several critical plan components.

Plan Success Factors

There are many attributes that define a successful retirement plan. Our goal is to help you and your participants achieve retirement plan success.

Defined Contribution Plan Fees - A Primer

Plan fiduciaries must make decisions that are in the best interest of the plan participants and ensure the fees paid are reasonable.

Types of Fees in a Defined Contribution Plan

Plan fees fall into four primary categories:

  1. Financial advisor fees, which include:
    • plan design consulting
    • investment and fiduciary oversight
    • fund analysis and monitoring
    • participant communications
    • provider management
    • other consulting
  2. Investment management fees, which can include:
    • investment fees for funds' management
    • custody fees
    • 12b-1 fees
    • transfer agency fees
  3. Recordkeeping and administration fees, which can include:
    • trustee fees
    • recordkeeping administration and call center fees
    • audit/compliance fees
    • participant communication fees
  4. Participant transaction fees, which can include:
    • benefit payments such as distributions and loans
    • brokerage accounts, if utilized
    • participant advice

How Fees Are Paid

Consulting fees can be paid directly by the plan sponsor or, in some cases, may be paid by the plan if it is a legally permissible plan expense.

Investment management are typically embedded in the fund's overall expense ratio and paid proportionately by the participants in the fund. Rates of return communicated by the plan provider are net of fees charged.

Administration fees can be paid by the plan sponsor directly or allocated back to the plan (plan document permitting). Revenue-sharing received from investments in mutual funds can be used to offset administration fees.

Participant transaction fees are typically paid by the participants.

Factors Driving Fees

The characteristics of your plan, the investments offered, and the services you receive impact fees.

Primary factors determining fees are:

  • plan size, type and average participant balance
  • plan complexity
  • payroll frequency and format
  • transaction volumes
  • fund type and asset allocation (percent of assets in revenue-producing funds
  • cash flow going into revenue-producing funds
  • scope of services
  • communication program deliverables such as number of onsite locations, meeting frequency, customization requirements and print or electronic materials
  • level of automation versus manual processes required to administer your plan

Fee Disclosure

Fees should be documented and disclosed at the plan level and to participants on a periodic basis.

If you would like to request a copy of the Plan Service Statement, please click here.

Sponsor Benefits

Prism Capital Management, LLC is your independent advisory firm who empowers and equips their practice with client research, tools and delivery systems that produce measurable results. We develop individualized strategies and high-touch relationships. For you, it means the welcomed confidence of:

  • Act as investment fiduciary to plan
  • Act as fiduciary to participants
  • Investment policy development
  • Fund menu design
  • Investment monitoring/committee meetings
  • Fund replacement/fund manager search
  • Asset allocation modeling
  • Plan design consultant
  • Compliance review
  • Vendor search
  • Transition services to new record-keeper
  • Provider fee and service reviews
  • Provider management and oversight
  • Education program strategy
  • Employee meetings
  • Shared knowledge, applied analysis
  • Non-alignment with any single plan provider for impartial, objective, balanced advisory

Understanding The DOL Fiduciary Rule

As a business owner, you should know, laws are changing and your company’s 401K plan might be at risk. More importantly, you should know that you, the business owner, personally are liable.

One common misconception is that you are covered by your broker. This is simply not true. Just because your broker may be with a large Wall Street firm of sorts, they are not necessarily fiduciaries, nor will they take the fall for any plan irregularities, conflicts of interest and unreasonable fees of which your employees are not informed. You will.

The Department of Labor (DOL) is enforcing its new fiduciary laws regarding retirement plans. As a business owner with a 401K, you’re now facing unprecedented risk of lawsuits that can seriously damage your commercial and personal wealth. As the owner, you are considered the 401K plan administrator and legally have full fiduciary responsibility.

In 2015 alone, the DOL collected over $696 million for direct payments to plans, participants and beneficiaries from businesses, the Employee Benefits Security Administration (EBSA) closed 2,441 civil investigations with over 67% of those cases resulting in money for plans or other corrective action, and the indictment of 61 persons for crimes related to employee benefit plans.

Beginning April 2017, the Department of Labour (DOL) Fiduciary Rule will require those who advise you on your retirement plan - Such as broker-dealers, investment advisors, and insurance agents - to act in your best interests when they provide investment advice for a fee or other compensation. While brokerage firms have long operated under standards designed to take clients’ needs, risk tolerance and other suitability considerations into account, the rule addresses potential conflicts of interest that can arise. This however, doesn’t help you with existing plans already in place and they will need to be made compliant.

Sound complicated? It doesn’t have to be. We want to be a resource to help you understand the rule and its potential impact to you. We can help you every step of the way, decreasing your risk, decreasing your personal liability, and often, decreasing your fees. To help with your understanding, let’s look at some of the common questions and topics we’re hearing:

What is a fiduciary?

Basically ‘fiduciary’ means ‘involving trust’. So in financial terms, a fiduciary is someone you entrust with power or property, and who owes you good faith and trust. We see our fiduciary role in regard to investment advice for retirement plans as a positive step that reinforces our continued dedication to client needs.

Weren’t retirement investment firms already acting in my best interests?

Brokerage firms have long been required to base investment recommendations on your needs, risk tolerance and other suitability considerations. For decades, the Investment Advisers Act of 1940 has had a fiduciary standard in place for Registered Investment Advisers (RIAs).

But the DOL has taken things a step further to provide additional protection for investors. That means more client interactions, such as advice about rollovers to IRAs, will require all retirement advice providers to operate under a DOL fiduciary standard.

How does the rule impact retirement investors?

Financial firms are starting to adjust their advice, service and product offerings ahead of the rule’s applicability date, which, for aspects of the rule, is scheduled for April 10, 2017. Rather than take away services from our retirement clients, we plan to give you more tools and education - to provide more guidance and advice-orientated solutions for retirement investors or all abilities and sizes.

Prism Capital Management, LLC, has always taken the necessary steps to protect you from personal liability, fines and legal action and is DOL compliant, but not all companies are. You may not even notice the changes, or any added cost, but making sure you get this right at the start is key to avoid potentially devestating consequences later on.

Why did the DOL create this new rule?

The fiduciary rule is a key part of the Obama White House’s “Middle Class Economics” initiative. The DOL wants to reassure investors that there’s a level playing field, and that you can know the retirement-related investment advice you receive is in your best interest and not necessarily in the interest of the person/company giving you the recommendation. Think of it as putting ‘you first’ rather than their potential returns.

Did you know…?

The Employee Retirement Income Security Act (ERISA) administered by the DOL was enacted in 1974, and this is the first real rewrite since then. In 1974, individual Retirement Accounts (IRAs) had just been authorized, and there was no such thing as a 401k. Think of how many products did not exist then, such as exchange traded funds (ETFs) and options. It’s important for retirement investor protection laws to keep up with the changing financial world, and that’s one goal of the new DOL rule.

The DOL’s main goal for the rule is to provide stronger protections for the millions of Americans like you, who wish to build and protect their retirement nest eggs, and that of your employees.

Can I still trade options in my retirement account?

Yes, you can. Options and futures are permitted (for qualified clients), as are other products such as non-traded real estate investment trusts (REITs) and variable annuities, under the rule’s “Best Interest Contract Exemption” (“BICE”).

What’s a BICE?

Some brokerage firms and RIAs, because of their business structure, may have conflicts of interest in the retirement-related investment advice activities. So the rule allows brokerage firms and IRAs to enter into “Best Interest Contracts” with their clients under the rules “Best Interest Contract Exemption” (“BICE”).

The BICE allows firms to continue to use many current compensation and fee practices, but they need to disclose and mitigate conflicts of interest when providing investment advice to retirement clients. They also need to act in your best interests when doing so. And if they don't follow the requirements in the exemption, you’ll have a contract to hold them to it when the rule takes full effect on January 1st, 2018.

The BICE also requires financial firms to outline the services they provide to retirement clients and the cost for each service, adding more transparency to your relationship with your broker or advisor.

Will there be noticeable changes with Prism Capital Management?

We are already fiduciaries and comply with the DOL standards for this new legislation so our existing clients won’t see any significant changes. We already put them first and work in their best interests. We will continue to offer the best possible partnership with our clients and their experience with us.

We, of course, extend this to all new clients and dedicate ourselves to putting your best interests first and protecting you and your employees. It is important to all employees at Prism Capital Management to build a trusting, long term relationship with our clients to ensure they are confident and secure that their finances, and that of their employees, are protected in the most beneficial way.

Why is the DOL concerned about commissions and variable compensation?

The DOL believes commissions and other variable compensation sometimes can lead to advisors putting their interests, and possible monetary returns, ahead of the investors’. When the rule becomes fully effective in January 2018, you can still get advice that is commission-based but with the additional protection through the rule’s “Best Interest Contract”.

I currently work with an RIA. Will that relationship change? How will they be compensated?

Though RIAs have been required to act as fiduciaries under the Investment Advisers Act of 1940 for decades, there are some higher rule standards for them. While RIAs generally have fewer conflicts than full-service brokers, they are educating themselves on the nuances of acting in the “sole interest” of their retirement account clients under the ERISA standard and the rule.

In general, most RIAs get compensated through fees, usually based on the assets they manage for clients. This usually means there’s a clear alignment of interests. Prism Capital Management gives investors constant ongoing financial advice should you need it, and work alongside you and your employees to implement the changes to become DOL compliant.

The rule was instituted under the Obama administration. Is it conceivable the Trump administration could change, replace, or simply wipe out the rule?

If the rule is delayed or halted, it would have little to no impact on our practise as we are already fiduciaries and passionately believe that investment and financial decisions should be in your best interests and remain focused on complying with the rule. Whilst other firms may have had to make some major changes to adhere to the rule that protects you, we have not. We hope to provide you more tools and education so you can not only protect yourself from poor advice, but also, your employees. They put their financial future in your hands, and it comes with great responsibility. Our goal is to lessen that burden and relieve you of the pressure and worry of getting it right.

What does this all mean for you?

If you are audited once this rule is in place, you will be personally liable for any fines, fees or legal action should you not be compliant. This could lead to fees considerably damaging to your commercial and personal wealth, and even lawsuits.

The DOL plans to initiate audits of thousands of retirement 401K plans this year. The law and your responsibilities are extremely complex and you need to know every aspect of your plan’s fees, funds, fiduciary responsibility, education and service platforms. At Prism Capital Management, LLC our team is here to navigate that for you.

Not only that, you work hard for your money, and your employees work hard for you. They trust you to protect their retirement and investment funds that they receive through their employment. We want to make sure everyone get’s the service and returns they deserve without paying over the top fees for plans that are not your best option.

Prism Capital Management is a proven fiduciary and professional retirement plan advisor that you can trust, helping you confidently choose a financial path that is best for you, reducing your personal risk liability—unbiased by the demands of a corporate parent and without conflicts of interest.

Contact us now to help relieve the burden of your entire company's financial responsibility so you can concentrate on your next business endeavor and trust that you are in safe hands.

View Our 401k Video to Learn More...

Click on the video below to learn more about our 401k Retirement Planning Process.


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601 Union St, Ste 4200
Seattle, WA 98101

Phone: 844-443-4321
Fax: 844-443-4322


info@prismadvisor.com