403(b) Plans

We believe Newport Capital Group’s experience with mid to large-sized market, non-profit organizations has proven valuable to both plan sponsors and participants alike. This is largely due to the combination of our highly customizable service model and our overall experience in the defined contribution retirement plan space.

First and foremost, our initial consultation is focused on identifying the needs of each of our clients and creating a service deliverable blueprint that is unique to each organization. Within the non-profit market, we have found it especially true that two institutions with similar demographics and the same record-keeper can be vastly different in terms of overall plan fees, investment offerings, and participant education.

Modern 403(b) platforms afford cutting edge participant tools and wide-ranging investment choices for plan sponsors. Many plans have yet to be updated, and, as a result, a large number of legacy plans still exist. Rather than being record kept by one company, it is common for older plans to have arrangements with multiple service providers. Moreover, the aforementioned service providers may have sold individual annuity contracts directly to plan participants. These contracts are often restrictive and make it difficult for plan sponsors to fulfill their fiduciary obligation to prudently monitor and select investment options. Newport Capital Group has the experience necessary to upgrade clients’ plans, expand the availability of quality investment options, streamline a plan’s administration, and help untangle the complexities of provider annuities.

Flexibility has been critical in creating a retirement program that maximizes participant outcomes while minimizing liability to plan sponsors. When tailoring these programs, our experience with the defined contribution retirement plan space has allowed us to develop solutions based not only on current industry best practices, but also on ever changing legislation and regulation surrounding the management of retirement plans.

Our practice has always been to treat 403(b) plans with the same high standard of scrutiny applied to 401(k) and defined benefit plans. This approach has been successful, especially given the litigation issues faced by many large name 403(b) plan sponsors. Our firm has helped educational institutions and other not-for-profits become more hands-on and understand the implications that are associated with their fiduciary responsibility under ERISA. Through analysis of our clients’ plans, we have successfully consolidated multiple plans to reduce overall fees to plan sponsors and participants.

Newport Capital Group has extensive experience working with both Investment Committees and Boards of Trustees alike. Although many of the day to day decisions related to retirement plans are delegated to committees, it is often the case that the Board of Trustees serves as the final arbiter on matters of pay or broader corporate strategy. For these situations, Newport Capital Group is often asked to present analysis or offer additional due diligence in order to substantiate change. We invite the opportunity to work with Boards of Trustees and offer our experience and expertise in matters requiring the approval of a higher authority.

3(21) & 3(38) Fiduciary Services

Newport Capital Group can serve as both an ERISA 3(21) and ERISA 3(38) Appointed Fiduciary.

A fiduciary is an individual authorized by an express or implied agreement, like a trust or a defined relationship, to act with a high duty of care on behalf of another person, a beneficiary. The fiduciary must make prudent and informed decisions based on all available and material information, acting first and foremost on behalf of the beneficiary. Fiduciaries are required to avoid conflicts of interest and must place the interest of the beneficiary ahead of their own. Fiduciaries must also act in good faith, maintain confidentiality, and communicate by disclosing all pertinent information through the due diligence process.

 

 

 

A fiduciary is an individual authorized by an express or implied agreement, like a trust or a defined relationship, to act with a high duty of care on behalf of another person, a beneficiary. The fiduciary must make prudent and informed decisions based on all available and material information, acting first and foremost on behalf of the beneficiary. Fiduciaries are required to avoid conflicts of interest and must place the interest of the beneficiary ahead of their own. Fiduciaries must also act in good faith, maintain confidentiality, and communicate by disclosing all pertinent information through the due diligence process.

ERISA 3(21) Co-Fiduciary Advisor

  • We work with the plan sponsor to follow a due diligence process, including the adoption and implementation of an Investment Policy Statement to formalize that process.
  • Recommend investments to the plan sponsor, monitors those investments, and proposes appropriate replacements, as outlined in the Investment Policy Statement.
  • Advise the plan sponsor in regards to Participant Education following a formalized Education Policy Statement.
  • Provide counsel and guidance, but we do not have discretion.

ERISA 3(38) Discretionary Investment Manager 

  • We are appointed by a plan sponsor to manage the investment process of a retirement plan.
  • Only RIA, banks, or insurance companies are qualified to accept 3(38) appointment.
  • Investment Manager becomes “solely” responsible for the selection, monitorization, and replacement of investment options.
  • Plan sponsors and other plan fiduciaries are relieved of their responsibility for the investment manager’s decisions.
  • Plan sponsors retain residual duty to prudently select and monitor the investment manager.
  • We retain full discretionary authority to select appropriate investment options according to the Investment Policy Statement.

Committee Formalization

Many companies are not aware of their full fiduciary responsibilities under ERISA. Newport Capital Group will assist in the formation and operation of a retirement plan committee that will oversee the selection and monitoring of the plan’s investments and administrative service providers. We will provide ongoing fiduciary educational support to help make sure that each retirement plan committee member understands their fiduciary roles and responsibilities.

Participant Education

As a fiduciary partner of your committee, our combined role is to determine the level of participant education required by the committee and to build upon existing relationships with your service provider. We are specialist when it comes to the educational capabilities of over 20 service providers that we partner with our clients. In conjunction with you and your service provider, Newport Capital Group will help develop a detailed and comprehensive Education Policy Statement (EPS) based on actual plan data and demographics. This document will consist of a timeline that shows the education strategies and methods of communication that will be used throughout the year. 

Newport Capital Group will assist the committee in establishing the annual educational goals for the participant. We will also help determine the best topics to cover current issues, the best topics for specific age groups based on plan demographics, and the best topics to satisfy the committee’s 404(c) requirements. Then, we review the delivery methods to ensure a successful education session.

Newport Capital Group will coordinate the enrollment and education meetings with the providers, and document all education offerings in the plan’s fiduciary file. Most importantly, we will review the success of the education offerings with the service provider and the committee through reporting.

Fiduciary Compliance

We help mitigate your fiduciary liability. Our mission is to help plan sponsors fulfill their fiduciary responsibilities under ERISA. We serve as both a 3(21) and 3(38) fiduciary while providing assistance with fiduciary due diligence to be adopted by the committee. We will provide the committee with new legislation and ongoing litigation impacting retirement plans and explain what steps the committee needs to take in order to comply. Newport Capital Group conducts a due diligence Request for Proposal (RFP) on a periodic basis to give the committee the ability to deem the fees as reasonable. These processes include multiple policy statements, fiduciary education, and best practices to be followed by the committee, with the overarching goal of reducing fiduciary liability.

Investments

Newport Capital Group believes the selection of the Plan’s investment options to be among investment fiduciaries’ most important responsibilities. We will develop an investment lineup that provides an appropriate range of asset classes that satisfies the “broad range” criteria of DOL Regulation; and, that is consistent with the investment needs and abilities of the participants. These investment categories, and the investment options chosen to fill those categories, should allow participants to construct portfolios consistent with their individual goals and circumstances, like time horizons, tolerance for risk, etc. As a fiduciary, you have a duty to prudently select and monitor participant investment options. Monitoring should occur on a regular basis and utilize the same criterion that was the basis of the investment selection decision.

After determining the investment categories to be used, Newport Capital will choose specific investment options for each of those categories based on a combination of quantitative and qualitative factors. The ongoing monitoring of investments involves a regular and disciplined process. This process includes the confirmation that the selection process and its criteria continue to be satisfied; and that an investment option continues to be suitable and appropriate for the participants in the plan.

Target Date Funds

Target Date funds age-based retirement funds designed to provide participants with a solution through a balanced portfolio, whose allocation moves from an aggressive asset mix to more conservative over time as the participants approach retirement age.

Provider Independence

Every plan needs a record keeping plan administrator and our team can work with any in the marketplace. We currently maintain relationships with 20 different service providers. Newport Capital Group credits it’s flexibility to our independence; No fee or revenue share arrangements exist to jeopardize our judgment or potentially create a conflict of interest to sway our impartiality. Considerations’ pertaining to provider choice depends solely on the best fit for our clients. These may include employee demographics, education and wellness tools, technological capabilities, industry reputation, cultural fit and a litany of additional factors.

Plan Benchmarking and Fee Negotiations

Plan sponsors have a fiduciary duty to ensure their employees are not overpaying for the retirement plan’s administrative services or the underlying investment options. Periodically comparing a retirement plan’s fees and services is not only a fiduciary obligation, Newport Capital Group believes it is a necessary best practice and a fiduciary obligation to periodically compare a retirement plan’s fees and services.  

Service provider fee quotes may vary wildly based on variables such as industry, plan size, locations, cash flow, average account balance, and other factors. This is why Newport Capital Group undertakes an extremely comprehensive and thorough benchmarking process on behalf of our clients.

The benchmarking process has been successful for many of our clients in lowering administrative and investment fees, obtaining greater investment flexibility, and negotiating new services and agreements. Importantly, Newport Capital Group’s approach to benchmarking helps our clients fulfill their fiduciary responsibility to control and account for plan expenses and both sponsor and participants services.

Team Coordination

We want to be your first call. Newport Capital Group serves as an intermediary between the committee, the plans, and the service providers. We also assist professionals, including auditors, attorneys, and third party administrators. Newport Capital Group will negotiate on behalf of the committee with service providers to remedy fees and services that are not competitive. We work with plan committees to effectively organize resources offered by your service provider. By understanding both the goals of the committee and the distinct tools offered by your provider, we can ensure the plan, and its participants, are getting the most out of those tools available.