Compliance February 2, 2015

Internal Controls Can Help Prevent Retirement Plan Fraud

The IRS has suggested a list of helpful internal controls for retirement plan sponsors.
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The Internal Revenue Service (IRS) said its Employee Plans Compliance Unit (EPCU) Fraud project revealed a significant percent of plans experienced fraud losses due to weak internal controls and risky investments.

The agency says good internal controls can help plan sponsors protect assets from accidental loss or loss from fraud, ensure the reliability and integrity of financial information, ensure compliance with various laws and regulations, promote efficient and effective operations, and accomplish the plan’s goals and objectives.

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Helpful internal control steps the IRS suggested retirement plan sponsors should take include:

  • Ensure the plan’s books and records are checked regularly by an outside third party;
  • Trace deposits and payments to original documents;
  • Have someone else review work when only one employee is in charge of plan operations;
  • Ensure the plan sponsor’s fidelity bond is current and in a sufficient amount;
  • Keep blank checks locked up;
  • Have outside professionals verify transactions;
  • Ensure any loans to third parties are in writing with all forms properly completed, adequately secured, and all interest payments made on time;
  • Reconcile bank, investment and account statements regularly;
  • Require two original signatures on checks or forms that involve plan assets;
  • Keep copies of plan documents including Form 5500 series returns and determination letters;
  • Ensure that payments are sent to correct vendors;
  • Request product and service providers promptly remove employees or trustees with signature authority after they retire or leave employment; and
  • Verify participants who are supposed to receive loans or other distributions actually received them in the correct amounts.

The agency also suggested some steps plan sponsors can take to avoid getting involved in a risky investment:

  • Be prudent in investments;
  • Question investments in hard-to-value assets including hedge funds and foreign assets;
  • Ensure that investment advisers act according to plan sponsor instructions and monitor their work regularly; and
  • Consult with a benefits professional to ensure that administrative procedures are in place to prevent fraud or dishonesty in the retirement plan.

More information about preventing retirement plan fraud is here.

Products February 2, 2015

Fidelity Investments Acquires eMoney Advisor

Fidelity Investments reached an agreement to acquire wealth planning software company eMoney Advisor.
Reported by

Fidelity leaders suggest clients across the firm’s operations will benefit from the implementation of eMoney tools and solutions. The Guardian Life Insurance Company of America retains a minority interest and remains one of eMoney’s largest clients under the terms of the acquisition.  

Fidelity says the move is part of its commitment to “deliver an industry leading suite of innovative and meaningful tools and technology to its customers.” Technology solutions from eMoney Advisor will transform the way financial professionals working with Fidelity deliver their expertise, the firms suggest, strengthening client relationships and helping advisers grow their businesses.

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Clients of Fidelity Institutional, the division of Fidelity Investments that provides clearing, custody and investment management products to registered investment advisers (RIAs), retirement recordkeepers and broker/dealers, will be among the first who can benefit from the affiliation with eMoney Advisor, according to Fidelity.

Fidelity’s acquisition of eMoney Advisor, which is subject to customary closing conditions and regulatory approvals, is part of Fidelity’s larger vision to continue enhancing its digital solutions across its retail, workplace and institutional channels, notes Michael Wilens, president of Fidelity Enterprise Services.

“Fidelity is a financial services firm with technology at its core,” Wilens says. “eMoney Advisor is another important vehicle through which Fidelity can exceed client expectations and maintain its edge in a rapidly changing technology environment.”

The firms say eMoney Advisor’s leadership will remain in place, with its founder Edmond Walters continuing to serve as its chief executive officer. The firm will remain focused on serving a wide range of financial services providers under Fidelity. Under the deal, eMoney Advisor will also maintain its current offices in Pennsylvania and California.

“Our affiliation with Fidelity, and its multi-billion dollar commitment to technology, only adds to eMoney Advisor’s already aggressive growth and innovation path,” Walters says. “We have a long track record with many of Fidelity’s 10,000 advisory firm clients and hope to extend our growth among that base, while deepening and expanding our many relationships beyond the Fidelity footprint.”

More information is available at www.fidelity.com.

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