BMO designed the TDFs to provide investors, usually
retirement plan sponsors and their plan participants, with professionally
managed retirement savings solutions that are easy to understand and implement.
The firm also released four other funds taking a variety of
positions. These include:
BMO Small-Cap Core Fund, which pursues capital
appreciation by investing at least 80% of its assets in a broadly diversified
portfolio of common stocks of small-cap U.S. companies similar in size to those
within the Russell 2000 Index.
BMO Pyrford Global Equity Fund, which strives to
provide capital appreciation by investing at least 80% of assets in equity
securities of both U.S. and non-U.S. companies. The fund invests primarily in
companies that are located in developed countries outside of North America and,
at the time of purchase, have a minimum market capitalization of $2 billion.
BMO Multi-Asset Income Fund, which is designed
to maximize total return consistent with current income by investing primarily
in shares of different exchange-traded funds (ETFs) and mutual funds, including
other BMO Funds. The fund may invest in equity securities of varying market
capitalization and fixed income investments of varying credit quality.
BMO Global Natural Resources Fund, which seeks
capital appreciation by investing at least 80% of its net assets in common
stocks of U.S. and non-U.S. natural resources companies, defined as companies
that own, produce, refine, process, transport and market natural resources—and
companies that provide related services.
BMO designed the funds to help investors reduce risk while
still increasing potential returns, says Barry McInerney, co-CEO of BMO Global
Asset Management.
More information about BMO Global Asset
Management and the new funds is available at www.bmogam.com.
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But unless an unmistakable injury or illness crops up, many people
often put off trips to the doctor for far too long. Plan sponsors—especially
small-business owners—can find it extremely difficult to carve time out of a
busy schedule to conduct a thorough retirement plan review.
Most employers routinely review their retirement plan’s
investment performance, but it’s just as important to scrutinize plan
operations. Compliance missteps? Plan falling short of the employer’s business
objectives? Discovering these issues earlier rather than later allows an
employer to get the plan back on a healthy path—before problems become too costly.
Establishing annual plan reviews is more than just a good practice
for sponsors. Financial professionals can showcase their expertise as well as
the depth and breadth of their support services with strategies that facilitate
regular plan checkups. An effective plan review process can be a critical component
of a financial professional’s value proposition and can help reinforce client
relationships.
It can also be a useful talking point to use with prospects. New
client meetings are a perfect time to highlight expertise in this area. If the financial
professional wins the account, the foundation of a good annual plan review has
already been established.
Plan Wellness
A healthy plan is one that meets the employer's business
objectives and is compliant with related laws and regulations. Of course, one of
the biggest benefits of a healthy plan is that it keeps employees engaged and inspires
them to save for a financially secure retirement.
The annual plan review is the best time to revisit key
benchmarks such as current salary deferrals, average deferral rates and the
percentage of employees participating.
Each employee’s retirement readiness should be evaluated
based on their level of plan participation and where they are in their career
path. Older and longer-tenured employees will have different expectations than
younger and newly hired personnel.
Financial professionals can play a critical role in developing
an employer’s strategy to build plan awareness among employees and drive
participation. The goal is to match plan objectives with an actionable
engagement strategy, such as “lunch and learn” seminars, webinars, one-on-one
counseling, email updates, payroll stuffers, e-newsletters and other tactics to
educate and inspire employees.
Financial professionals are not involved in day-to-day
administration or compliance oversight for their clients’ retirement plans.
Under the Employee Retirement Income Security Act (ERISA), that is the
responsibility of the plan sponsor, usually with the help of a third-party administrator.
Yet it is clear that many clients and prospects are too busy running their core
business to pay much attention to plan health unless a problem presents itself.
Set Priorities
Financial professionals can help employers prioritize their
business objectives for the plan and find solutions to improve overall plan
health. They are also in a great position to help educate plan sponsors about
their fiduciary responsibility to ensure regulatory compliance by highlighting
ERISA’s five standards of conduct: loyalty, prudence, diversification, adherence
to plan documents and commitment to paying reasonable expenses.
Helping employers better understand their duties is the first
step toward helping them mitigate their fiduciary risk. Next is helping ensure
they have the appropriate products, services and tools to meet their
obligations.
Financial professionals can introduce employers to tools to
proactively monitor plan wellness. The Internal Revenue Service (IRS) and Department
of Labor (DOL) have created several plan checkup tools and corrections programs
that enable employers to evaluate a plan and fix plan errors at minimal or, in
some cases, no cost—if the problem is discovered by the employer. Much like
preventive health care, these programs are designed to encourage employers to
proactively monitor and correct issues before they become big problems.
Common mistakes the IRS finds when conducting plan examinations include:
Not covering the proper employees.
Not giving employees required information/notices.
Not depositing employee deferrals on time.
Not depositing employer contributions on time.
Not following the terms of the plan document.
Not administering participant loans correctly.
The annual compliance testing season winds to a close in the
spring for most plans, so it’s critical to introduce a plan checkup well in
advance to prospective clients and existing clients. Testing failures, low
participation rates and contribution limits are more pressing concerns for
employers at this time of year. Add a conversation about whether the plan is
meeting its business objectives, and you can have a valuable discussion about
plan wellness.
Items on the adviser’s to-do list could include:
Incorporate plan wellness support in your value proposition.
Consider updating your value proposition to include this if it is not already
in place. Add plan wellness to your quarterly meeting agenda or set a special
meeting.
Display tools that you can offer clients, such as a
compliance calendar, education policy, annual plan review checklists and plan document
checklists.
Do your homework. Review plan metrics and compliance testing
results before the meeting (many service providers like Guardian Retirement
Solutions have tools available to support you in this effort).
Offer solutions, such as the IRS checklist for conducting a
plan checkup, or a referral to their third-party administrator or plan
corrections resource if a compliance problem is identified.
An ounce of prevention is worth a pound of cure, as the old
saying goes, and so it is with retirement plan health. By paying early and
regular attention to the operational stability of clients’ plans, financial
professionals can offer that ounce of prevention and reinforce the trust
they have worked so diligently to earn.
Steve Davis is national sales manager at Guardian Retirement
Solutions
NOTE: This feature is to provide general information only,
does not constitute legal advice, and cannot be used or substituted for legal
or tax advice.