Advisor Tools and Training

Retirement Management Systems Inc. (RMS) provides a reallocation and rebalancing service for people who would like to delegate the management of their employer-sponsored retirement plan account to a professional investment adviser.

While people participating in these retirement plans can receive some help through the plan (online tools, target date and risk based portfolios, etc.), there is an enormous need for independent advisors to supplement or replace these tools. We generally see two scenarios:

• First, because of trust or lack of service issues, a participant does not want to use the help tools offered by the plan. They look for alternatives in the community and your advisors are ready to help (if they have the tools).
• Second, a participant may already be working with your advisor and wants him or her to help with the retirement plan account. In our view, participants should be able to choose the advisor they want to work with, not be limited by regulatory issues that affect the investment advisory industry. If your advisors have the right tools, they can provide that service.

There is an enormous opportunity for advisors that can develop new and deeper client relationships by managing employer sponsored retirement plan accounts. The “Redefining Defined Contribution” study by McKinsey & Company estimates that $3 trillion will flow out of defined contribution plans over the next decade. Advisors who plan ahead and develop relationships BEFORE the participant separates from service will have a huge advantage in capturing those assets.

That is the mission of Retirement Management Systems:

• To empower independent advisors to develop client relationships, generate additional current revenue, and if appropriate, capture more rollovers by providing a managed 401(k)/403(b) account solution for their individual and plan sponsor clients.

There are a number of reasons why advisors have not been able to manage client retirement plan accounts on their own. The most prominent is lack of resources and procedures. Two others relate to the custody rules and potential fiduciary liability. Retirement Management Systems offers solutions to these issues.

• Resources and Procedures: In addition, providing a savings plan management service requires resources that many advisors don’t have, including research for portfolio construction, back office personnel and technology for trading and account auditing, account aggregation tools for reconciliation and advisor support, and administration personnel for billing and client communications.
• Fiduciary: RMS acts as the fiduciary in selecting and managing the qualified plan assets of the client. You take a solicitors role and are only responsible for educating the client about the differences between investment strategies.
• Custody: Accessing client retirement plan accounts requires a limited power of attorney (given by the client to RMS) and knowledge of client login credentials. The SEC’s custody rule requires advisors with that access to undergo an annual surprise audit. Retirement Management Systems complies with that requirement so you don’t have to. In addition, we maintain highly secure processes and systems for maintaining client logins.

Retirement Management Systems provides all the tools you need to offer this much needed service to clients.

RMS is an independent, SEC-registered, Investment Adviser. While RMS was founded in 2010, the principals of RMS have been providing this service to individual plan participants for more than 30 years. We currently manage more than $1 billion in defined contribution assets for more than 2,500 clients.

We recommend you start with your current client base and schedule 401(k) account reviews with all those who are still employed and likely to be participating in their employer-sponsored retirement plan.

There are a number of benefits clients receive from the Savings Plan Management service. Your job is to uncover their pain points and explain how Savings Plan Management can help alleviate them. Review the RMS Value Proposition slides that are available to include in your client presentations.

Pain points:

• I don’t know anything about investing
• I think I should be doing better
• I have better things to do with my time
• I don’t know where I stand on my path to retirement

Solution points:

• Prudently allocated portfolio based on your goals and risk tolerance
• Timely rebalancing and reallocations that can potentially enhance returns and mitigate risk
• Help with retirement goal setting so you know where you are on your journey and market related events don’t knock you off course
• Develop an understanding of portfolio behavior so you can stay disciplined to your strategy
• No other service offers the combination of an asset management service for defined contribution accounts alongside the financial planning and investment advisory expertise of a financial advisor of the client’s own choosing.

As a soliciting advisor, you will set the price for the Savings Plan Management service. The portion of the fee that RMS keeps is 0.12% of assets with a minimum of $240. For example, if the account balance is $250,000, RMS will retain $300 ($250,000 times 0.12%); however if the account balance is $150,000, RMS will retain $240 (our minimum).

The fee may be set as a percent of assets under management or as a flat fee. In either event, the RMS retained portion remains as above.

We recommend Advisors set a fee schedule that fits with how they plan on using the Savings Plan Management service within their firms. Some Advisors want to earn a current fee on Savings plan management clients, while others are looking to grow their book of business – think client service versus client growth.

The RMS Savings Plan Management advisory agreement for clients gives RMS a limited power of attorney for discretionary management of the assets in the client’s defined contribution account. Otherwise, it has all the usual language necessary for asset management agreements.

The agreement is available for completion in several formats – Paper, Online, and DocuSign. You will receive instruction on each once you are enrolled to offer Savings Plan Management.

If the client is participating in a defined contribution plan sponsored by a tax-exempt organization and custodied with Fidelity or TIAA-Cref, we MAY be able to access the account without the client’s login credentials. In addition, there may be an opportunity to remit the fees directly from the account. Please call John Blamphin or Kathleen Tesch and we will contact those custodians to determine the feasibility.

RMS utilizes a Customer Relationship Management and Portfolio Tracking application from Ebix Inc. called SmartOffice. This application gives you an online portal (SmartView for Advisors) on which you may view details about the client and account.

Once you have a client active with RMS, you will be given login information and instructions. If you ever need a refresher or a login reset, please call (888) 870-7674.

Client Data Request

Upon initial acceptance of a client, RMS constructs seven risk-based portfolios and trades the client’s account into the appropriate portfolio based on the initial Investor Profile and model selection.

Every quarter, based on the client’s start date (“Anniversary Date”), RMS either rebalances the existing model or reallocates the model based on decisions of our Investment Committee. The RMS Investment Committee meets quarterly to discuss the model allocations and make tactical asset class changes as valuations, momentum and economic conditions may warrant.

Each year, RMS sends a renewal notice to the client that contains an Investor Profile for them to complete. If the Investor Profile indicates a model other than the one they are currently invested in, RMS will send a notification to you (the advisor), asking for a confirmation that the client account should be rebalanced to the new model. If we do not hear from you, we will continue with the new model rebalance based on the new Investor Profile.

RMS collects the program fee from the client and remits any solicitor fees due to your parent Registered Investment Adviser firm. Timing is based on the timing of the payment received. So for example, if we receive a monthly payment from the client, you would see a solicitor fee the following month based on the monthly amount of payment.

RMS mails to clients a quarterly report that summarizes the market and economic conditions driving decisions in our portfolios. In addition, the report shows your name and firm contact information, along with a snapshot of the client’s account value, current investment model, and anniversary date.

As an advisor, you have ongoing responsibilities to ensure the smooth running of the RMS account and the continued opportunity for a relationship with the client.

• Call the client 2-4 times throughout the year
  Remember, the RMS program is about establishing a relationship with a client and it gives you a reason to stay in touch – so take advantage of it. We recommend you change the main topic of the call on each contact. For example:
  • Review the account, make sure they understand the investment model, the investment selections, etc.
  • Review the contribution amounts and (since they just filed their taxes) ask about increasing their contribution.
  • Review beneficiary designations – has anything changed?
  • Review their retirement goals and objectives and give them comfort that they are on pace to reach them.
• Review the monthly and quarterly reports that RMS sends to you:
  • Monthly Billing and Renewal Reports – the month prior to each client’s renewal date, RMS will send to you a report of those clients renewing in the following month. It will show the account balance, estimated fee for the coming year, RMS portion of the fee and Advisor portion of the fee. This gives you the opportunity to raise or lower the fee to accommodate the best interest of the client.
  • Quarterly Account and Strategy Reports – each quarter, RMS will send a list of all your clients, showing whether there are outstanding login information requests, unpaid/billing issues, and the current investment model selected. While we collect information from the client about these issues throughout the year, we rely on your help if a client is unresponsive.
• Help RMS collect and confirm information from the client.

• Complete the Advisor Enrollment Form so that we can get your pertinent details into our system.
• Review the starter kit of marketing and operational materials:
  • Client brochure
    • PDF in 8.5” x 11” format
    • Hard copy in 9” x 12” folder format
  • Customized one-page sell sheet (NOTE: If the material references you and/or your firm, you must obtain approval from your own compliance department)
  • Client advisory agreement
  • RMS ADV Part 2A
• For more detail, ask for an Operations and Marketing presentation

Savings Plan Management Agreement – Our investment advisory agreement for clients. This is the Solicitors version and is not to be used by SubAdvisors on the program.

RMS ADV 2A – Must accompany the investment advisory agreement for all new clients. The RMS Privacy Policy is found on the last page.

RMS Client Relationship Summary

Schedule B Instructions – For help completing the Schedule B of the Agreement documentation.

Cancellation Request Form — Must be completed to cancel a client from the RMS Savings Plan Management service.

Model Change Request Form — For use when requesting the change of a client’s investment strategy model.

Payment Method Update Form — Use when updating a client’s payment method, frequency or details.

Special Account Instruction — For use when client has special account holding or trading instructions for RMS. Used most often when a client has Company Stock holding requirements.

Advertising Review Request Form — For use when seeking approval for advertising/communication material not provided by RMS.