CASE STUDY ONE
For a major financial institution who offers portfolio management services to third parties, we assume the responsibility for determining if an affiliated manager should be appointed to manage an investment portfolio for the plan, monitor that manager’s performance, and determine if it is appropriate for the manger to continue in that capacity. In so doing, our activities on behalf of the plan include:
- reviewing the manager’s performance compared to appropriate benchmarks
- analyzing portfolio characteristics to confirm consistency with stated investment strategy
- reviewing organizational items, including resources committed to the investment strategy, changes in personnel, and assets under management
- meeting with the manager on a regular basis to review portfolio and investment process
CASE STUDY TWO
For a plan whose sponsor ceased to exist, we implemented an asset allocation study, generated a revised investment policy to reflect the anticipated termination status of the plan, repositioned the portfolio in line with the new investment policy and continued to manage all of the investments through the date of termination. Our services included management of both public and private investments as well as cash management in support of ongoing benefit payments to participants and fee payments to plan vendors.
CASE STUDY THREE
A major financial institution retained Fiduciary Counselors to serve as independent fiduciary with regard to the spin-off of certain assets and liabilities totaling nearly $250 million from an existing defined benefit plan to a new, separate plan (the “New Plan”). We were to ensure compliance with the applicable provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), with respect to the New Plan in connection with the selection, valuation and allocation of commingled assets. Our review and analysis of the materials focused on determining that the method and calculation for the initial allocation and transfer of assets was appropriate, that the in-kind transfer of equity positions to the New Plan was done on a reasonable basis, that the appropriate funds were invested in the designated funds for the New Plan, and that the method and calculation for the final “true-up” transfer was appropriate.
We sampled and confirmed the pricing on a number of the transferred positions and found that the pricing correctly reflected the appropriate closing prices. We also reviewed and confirmed the futures positions and the cash amount transferred for the futures contracts. Based on our review, we determined that the share allocations were handled in a fair and reasonable fashion.
CASE STUDY FOUR
We were retained by a major insurance company (the “Company”) with regard to the redemption of certain investments held by their Separate Accounts. The assets held in the Separate Accounts supported group annuity contracts issued to various employee benefit plans (the “Plans”) and included “plan assets” for purposes of ERISA. The Company directed that shares held directly or indirectly by the Separate Accounts in a number of retail open-end investment companies registered under the Investment Company Act of 1940, as amended (the “Old Funds”) be redeemed and reinvested in similar open-end investment companies registered under the Investment Company Act of 1940, as amended (the “New Funds”), established by the Company and managed, in most cases, by the same asset managers.
The independent boards of directors of the Old Funds informed the Company that the requested redemption of the Separate Accounts’ shares would be conducted by means of an in-kind distribution of certain assets from the Old Funds to the Separate Accounts. The in-kind distributions included domestic and international equities and fixed income securities.
We reviewed the terms of the Redemption and determined that they were consistent with the terms of the Redeeming Funds as specified in each fund’s prospectus and policies. In addition, we reviewed the Redemption In Kind Certifications or Agreements provided by each of the Redeeming Funds. Based on our review of all material aspects of the Redemption, including the level of cash and the list of securities distributed by each fund in connection with the Redemption, we confirmed that the Redemption was consistent with the terms of the Redeeming Funds.
CASE STUDY FIVE
A major manufacturer retained Fiduciary Counselors as an independent fiduciary to determine specific securities within its fixed income asset classes to be transferred from one of its plans (the “Sending Plan”) to another (the “Receiving Plan”). We were appointed as an independent fiduciary with respect to the Sending Plan to negotiate and coordinate with the independent fiduciary for the Receiving Plan regarding the specific securities to be transferred.
In so doing we considered target asset allocation, transaction and other costs, operational complexity and the differing interests of the two plans and determined that the proposed transfer was fair and equitable and in the interests of the Sending Plan’s participants and beneficiaries.