Compass Institute’s
Certified Structural Plan Diagnostic
The Certified Structural Plan Diagnostic (CSPD) is an
analytical report prepared by the Compass Institute for a Plan
Sponsor. The CSPD demonstrates for an existing Plan (or any
contemplated Plan), the expected long-term average annual return
(AAR) and Plan values over selected Market Cycles of:
-
Applying the Horizon™ UO-AAA risk
management strategy to the funds available in the Plan.
-
The Formulaic
Asset Allocation (FAA) funds available in the Plan (Lifecycle,
Target Date, Balanced and/or Strategic fund).
-
The Hybrid
FAA funds (if any) available in the Plan.
-
The Plan Index (the internal benchmark for
the Plan) based on an ongoing equal allocation of the total
investment into each of the Plan’s available funds.
Rationale
The passage of the Pension Protection Act of 2006 (PPA) contains
provisions establishing Qualified Default Investment Accounts (QDIA)
and has increased the momentum for Plan Sponsors to make Advice
Providers available to Participants. However, the Plan Sponsor has a
fiduciary duty to monitor the quality of the advice provided.
The Department of Labor has stated in its Field Assistance
Bulletin 2007-01, Section 601, February 2, 2007 that the Plan
Sponsor is required to address a complaint by a Participant about
the quality of the advice made available to them. The Participant is
allowed to bring this complaint to a court of law that will decide
whether the monitoring is appropriate. Plan fiduciaries should
periodically sample the quality of the actual advice provided to
Participants.
Note: Quality has typically meant processes but may now
mean performance because that is what an individual would be
most concerned about.
Combined with the recent Supreme Court ruling that allows an
individual to sue the Plan Sponsor, it is imperative that the Plan
Sponsor know what an Unrestricted Objective Adaptive Asset
Allocation Approach such as Horizon™ UO-AAA can be expected
to yield for their existing (and/or contemplated) sponsored
Retirement Plan.
Benefits to Plan Sponsors
Results are
presented for the in-depth analysis of two scenarios:
-
A lump sum (no contributions) traditional
AAR calculation,
-
A QDIA ’real-world’ ongoing contribution to
an initial Plan balance (which could be zero) for a typical 25-
35- and 45-year-old Participant in the Sponsor’s Plan.
The CSPD is available either audited by a
third party, Ashland
Partners & Company LLP, a leading global auditor of reported
investment Plan return results, or non-audited; it can be used as:
-
A decision tool for making an advice program
such as Horizon™ AAA solely available to Plan
Participants, or in addition to a currently available FAA advice
provider program, and/or
-
A decision tool for making a QDIA program
such as Horizon™ UO-AAA available solely to Plan
Participants or in addition to an FAA QDIA program currently
available, and/or
-
A formal fiduciary record document for a
Plan Sponsor’s files showing due diligence has been followed
regarding the application of appropriate asset allocation fund
management models and strategies for their Plan.
In-depth Consultation
On site, in-depth consultation to review the CSPD results and
implications with the Plan Sponsor’s management team is also
available.
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