FIA seeks to become a strategic partner with our defined benefit clients to help them successfully navigate pension plan management. Plan sponsors have to concern themselves with growing plan assets, funding volatility, liability management and perhaps ultimately terminating the plan. Below we outline FIA’s range of plan adviser services to help defined benefit plan clients find solutions to these concerns.
Each plan is unique, so upon establishing a relationship with a client, FIA conducts a thorough analysis of the current plan including its actuarial statement, investment policy statement, asset allocation, investment managers, and fees. The documented results of this study become a reference for all parties in the ongoing process of monitoring and evaluating the performance of the plan.
Typically, an asset allocation study is undertaken to validate or adjust the existing allocation. All managers of plan assets are researched, evaluated and graded. When it is necessary to add or replace a manager, we assist by screening the universe of managers and identifying candidates for interview and selection by the responsible committee or board. FIA participates in fee negotiation. As with all clients, ongoing monitoring of the plan is essential to long term achievement of investment objectives. We generally present performance reports quarterly and provide customized assistance to meet client needs.
In addition to asset allocation and manager selection, FIA works closely with our clients as they address the on-going challenges of managing the pension plan. We discuss topics such as dynamic asset allocation as the plan’s funded status evolves. This typically encompasses a long duration investing strategy that seeks to match the plans assets with its liability profile. Working with the plan actuary, FIA can help implement risk management strategies to help insulate the plan and its funded status as market environments change.
FIA can also be of assistance as plan sponsors (particularly frozen plans) contemplate winding down the plan. FIA has been analyzing and discussing with clients risk transfer strategies such as buy-in and buy-out annuitization options. These strategies can off-load liabilities of the plan but have accounting, investment and fiduciary oversight implications that require specific expertise.
Our defined benefit services include:
- Portfolio diagnostic review
- Investment policy statement review/development
- Asset allocation/liability review
- Portfolio de-risking glide path planning and development
- Customized investment portfolios/liability-driven investing program development
- Investment manager due diligence and selection
- Portfolio cost analysis/manager fee negotiation
- Portfolio performance / funding monitoring
- Coordination of plan termination analysis/options (when applicable)
- Custodian/trustee review
- Strategic guidance on relevant topics of interest
- Fiduciary Governance Calendar