Management Consulting Services
In addition to employer-sponsored retirement progarms, our consulting staff has expertise in matters of organizational management, reward systems, compensation management, technology development, systems implementations, business process re-engineering, and management reporting.
Employers have many choices to make in deciding on the type and features of a retirement plan or plans that most effectively meet their near- and longer-term objectives. Spectrum assists employers with understanding and quantifying the myriad of possible alternatives and selecting those that are most appropriate in each set of business and employment circumstances. Employee retirement plans are governed by a continuously changing and complex set of federal law and regulation. When the law changes, it is often necessary to review plan design in relation to such changes and refine plan design to respond most effectively to such changes. Spectrum analyses alternatives under such changes and advises employers as to their options.
Investment Advisor Selection Assistance
No aspect of a retirement program is more important than the management and investment of plan assets. Over an individual career, a one percent difference in annual investment performance can make as much as a 30% difference in financial outcomes. Most employers seek professional assistance and advice with respect to plan investments. In plans that allow employees individual choices for the investment of their own funds, such assistance may be even more important. The numbers of individuals and entities offering investment services are astounding. These range from individual stock and insurance brokers to Registered Investment Advisory firms specializing in retirement programs and fund management entities. There are more than 100,000 such service providers in the country. The number of potential investment alternatives is even more vast. There are more than 20,000 mutual funds from which to choose, in the United States alone. The numbers of stocks listed on exchanges runs to tens of thousands and there are many more potential unlisted investments.
Employers, as retirement plan sponsors, and Trustees, have certain fiduciary obligations imposed by law, to make prudent choices of advisors and to assure that costs incurred in the management of assets are reasonable. In order to assist clients with making informed choices as to individuals or entities that may assist with the management of plan assets, Spectrum has developed a set of Investment Advisor selection criteria. This includes: analyses of performance; investment selection methodology; and costs associated with particular investment management arrangements.
Investment Performance Analysis
Spectrum provides aggregate return on investment data as a part of its normal administration services in conjunction with annual reports to clients and periodic participants’ statements. Those data are summarized and do not provide any reference to investment performance relative to standard market indices. Although investment management organizations also provide performance data routinely, in some instances that data shows gross performance, without consideration of investment expenses. From time to time, clients may ask Spectrum to provide independent analyses of plan investment performance. In those instances, Spectrum’s analyses include:
- net performance over time on a period-by-period basis and on a cumulative annualized basis, with comparisons to market indices and separation of expenses;
- the impact on performance of trading and, in the case of participant direction, the impact on performance of periodic changes in participants’ investment directions; and
- reference to our latest updates on investment advisor selection criteria.
Distribution Analysis and Planning
Most of the focus on employer-sponsored retirement programs is devoted to accumulation of funds to be used to provide retirement security for individual employees. When employees retire, they are often left to their own devices or placed at the mercy of investment and annuity sales people. When retiring, individuals have a number of questions about what to do with the funds that they have accumulated while working, in employer-sponsored retirement plans. The key questions are:
- How should I invest my assets, in order to assure that I won’t run out of money until I die?
- How should I manage all of my assets, including retirement plan distributions, home equity, other savings and investments, and personal possessions?
The answers are not and should not be provided by employers. Spectrum makes available a distribution modeling service that helps individuals make informed decisions regarding the most effective options for them, in light of their personal situations, resources and objectives. This service, provided by an independent organization, is available to employees of Spectrum clients and includes an annual update during the life of the retiree and his/her spouse, if applicable. The cost of this service is paid from invested assets belonging to the individual. Additional information on this service is available on request. Spectrum is paid a share of the fees by the independent organization for its administration of the process.